BELARUS NEWS AND ANALYSIS

DATE:

03/01/2007

Belarusian official says nation will get by

But he urges Russia to cancel oil tax because of natural gas hike

By YURAS KARMANAU

Associated Press

MINSK, BELARUS - A price increase for Russian natural gas will be painful but manageable, a Belarusian official said Tuesday, and urged Moscow to scrap a new customs duty on oil exports to Belarus.

First Deputy Prime Minister Vladimir Semashko suggested Moscow's energy price hikes could damage relations between the neighboring former Soviet republics, saying that "from love to hate is just one step."

"The rise in energy prices for Belarus is a difficult test for the economy," Semashko said at a news conference, two days after his government averted a threatened gas cutoff by agreeing to pay the Russian state gas monopoly Gazprom more than twice the 2006 price this year and even more in the future.

He said the gas price increase - from $47 to $100 - would likely nearly double the price Belarusian enterprises pay, but that the increase could be managed and would not lead to significant hikes in utilities costs for individuals.

"I think this is all manageable," he said.

Semashko stressed, however, that Belarus wanted Russia to reverse its decision to charge a customs duty of $180 per metric ton of oil exported to Belarus as of Jan. 1, claiming it was imposed as a pressure tactic during the dispute over gas prices.

Belarus has halted imports of Russian oil, saying the duty would end up being passed by Russian exporters to Belarus through price increases - depriving the Belarusian government of profits it has reaped by exporting oil products made from cheap Russian oil.

Belarus is offering to share the income from oil sales if Russia scraps the customs duty, and Semashko said that Minsk was willing to discuss a 50-50 split. Earlier, the government had offered Russia a 15 percent share.

Oil resale profits and the gas Belarus bought from Russia at bargain prices helped President Alexander Lukashenko keep the country's Soviet-style centrally planned economy running and, as a result, maintain his popularity and grip on power.

Source:

http://www.chron.com/disp/story.mpl/business/4440111.html

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