BELARUS NEWS AND ANALYSIS

DATE:

25/07/2007

Belarus Asks for Time to Pay Gas Bill

By Anna Smolchenko
Staff Writer

Men standing near a Gazprom compressor plant in Belarus. Gazprom is buying half of Beltransgaz for $2.5 billion.

Gazprom officials will head to Minsk on Wednesday for a new round of talks on Belarus' gas debt, the company said Tuesday.

The two sides failed to reach agreement in Moscow on Tuesday as a delegation led by Belarussian Energy Minister Alexander Ozerets asked for more time to make a $450 million payment for gas deliveries, Gazprom spokeswoman Tatyana Golubovich said Tuesday.

Gazprom is negotiating a fine for late payment, Golubovich said. Belarus missed a payment deadline Monday.

Valery Golubev, the deputy CEO leading the talks for Gazprom, is scheduled to attend a shareholders meeting of Beltransgaz, the Belarussian gas pipeline firm, in Wednesday on Minsk.

Golubev will likely be elected to Beltransgaz's supervisory council at the meeting, and "talks will continue after that," said Andrei Zhukov, a spokesman for the Belarussian Energy Ministry, Interfax reported.

Later this month, Belarussian Prime Minister Sergei Sidorsky may come to Moscow to negotiate a raft of issues, including the gas deal and a $1.5 billion loan Minsk is eager to secure from Moscow, an official at the Belarussian Embassy in Moscow said by telephone Tuesday.

The two main sticking points in the talks are how much time Belarus will be given to make the payment and the amount of the fine, Golubovich said.

Zhukov declined to comment on the talks but expressed hope that a compromise would be found.

Ozerets stayed for an extra day, after originally being scheduled to fly back to Minsk on Monday evening, Zhukov said by telephone, in a possible sign that the talks were tougher than Minsk expected.

At the start of this year, Gazprom raised prices for Belarus to $100 per 1,000 cubic meters from the heavily subsidized previous price of $46. As part of the gas-pricing deal, Gazprom agreed to buy a 50 percent stake in Beltransgaz for $2.5 billion. Gazprom has so far paid $625 million for 12.5 percent.

The phasing out of subsidized Russian energy is putting the authoritarian regime in Belarus under greater strain, and President Alexander Lukashenko on Monday fired a series of energy officials, including the head of Beltransgaz, Dmitry Kazakov.

"No economy can so quickly digest such a sharp hike for energy resources," Lukashenko's press service quoted him as saying Monday.

Last month, Sidorsky complained at a meeting with Prime Minister Mikhail Fradkov that the gas price hike had contributed to a negative trade balance with Russia of $2 billion from January to April.

Some experts said, however, that Belarus could afford to pay a higher gas price but was playing for time to win concessions, including better credit terms from Moscow.

"The Belarussian authorities are charting a course toward accumulating more debt," said Yaroslav Romanchuk, head of the Mizes research center in Minsk, citing a budget surplus of 5 percent and $2 billion in Central Bank reserves. He estimated that Belarus had managed to wangle $45 billion in subsidies and concessions from Moscow over the past decade.

Sidorsky could come to Moscow next Monday, a Russian Embassy official in Minsk said, RIA-Novosti reported. Alexander Timoshenko, a spokesman for Sidorsky, said Tuesday that he was not aware of plans for such a visit.

Speaking by telephone from Minsk on Tuesday, Romanchuk speculated that Lukashenko might give Sidorsky a series of unrealistic tasks to be completed in Moscow, so that he would have a pretext to fire him.

Source:

http://www.themoscowtimes.com/stories/2007/07/25/044.html