BELARUS NEWS AND ANALYSIS

DATE:

02/03/2007

Beltransgaz Risks Becoming Unprofitable

Gazprom on Thursday expressed concern over plans of Belarusian officials to scrap an extra charge that the country's gas consumers pay to the Beltransgas gas transit system. If the charge is waived, Beltransgaz will lose up to $390 million and stop turning profit just after Gazprom has secured a 50-percent stake in the pipeline operator. Belarus, in its turn, is anxious to ease the price burden for consumers after Russia has raised gas prices for its neighbor.

Speaking to the State Duma on Thursday, Gazprom deputy chief executive Valery Golubev said Belarus is set to lift an extra $18 per 1,000 cu. meters of gas that local consumers pay for services of Beltransgaz. The Belarusian gas system risks losing between $360 and $390 million annually and ultimately becoming unprofitable, Valery Golubev underscored.

The Russian gas monopolist is soon to pay $2.5 billion for 50 percent in Beltransgaz. Gazprom noted that the extra charge was calculated in last year's evaluation of the Belarusian gas system when the company was said to be worth $5 billion. Gazprom now waits for the Belarusian government to confirm that the charge will not be waived.

Independent experts point out that Belarus is trying to level off the negative impact of higher gas prices at the expense of Gazprom. Belarusian industrial producers started paying $160 per 1,000 cu. meters of gas after Russia had raised the prices from $47 to $100. As a result, inflation in industrial and technical sector reached a staggering 17 percent in January alone.

A Kommersant source close to the Belarusian government reports that the extra charge is most likely to be preserved, though a number of key consumers will probably keep enjoying privileged tariffs.

Belarusian and Russian authorities are to finalize the purchase of Beltransgas in Minsk on Friday, the RIA Novosti news agency reports. The issue of the extra change may also be settled during the talks.

Source:

http://www.kommersant.com/p746802/Gazprom_Belarus_Charge_Beltransgaz/