RusEnergy

31.03.2005 11:40 MSK MosNews - Russia's President Vladimir Putin has asked Prime Minister Mikhail Fradkov and Industry Minister Viktor Khristenko to prepare the drafts of government decrees that will abolish state regulation of natural gas prices, business daily Vedomosti reported on Wednesday, March 30. If the decree is signed into force this year, at the beginning of 2006 Russia's natural gas monopoly Gazprom will liberalize prices and sell its gas at market prices. As MosNews reported last week, the head of Gazprom, Alexei Miller, came up with a suggestion to abolish state regulation of natural gas prices for industrial consumers. He believes that industrial users should buy gas at a special stock exchange, while the government can still regulate gas tariffs for the housing and utilities complex, schools, hospitals and general population. Industrial consumers make up 70 percent of Gazprom's total domestic sales. The average price of natural gas sold to these users in 2004 amounted to $36 per 1,000 cubic meters. Natural gas that was sold by Gazprom for market prices cost up to 1.5 times more, experts said. Economists say that if the liberalization plan is realized, the price of gas may double, and this will have a negative affect on the profitability of the power generation, petrochemistry and metallurgy sectors. It should also be noted that Gazprom has been making profits from selling gas to industrial consumers for two years now which is another argument against price liberalization. Meanwhile, Prime Minister Mikhail Fradkov has already given his approval to Miller's initiative, saying that it is a move "in the right direction". But Economy Minister German Gref and Industry Minister Viktor Khristenko have both spoken out against Miller's suggestion.