Duma forecasts gas price growth

Pricing policies suggest that gas prices should grow faster than the inflation rate, Valery Yazev, a member of the State Duma Committee for the Energy Industry, Transport and Communications stated at a meeting of the Russian Gas Society in Moscow today. According to him, the price growth index for 2003-2005 is about 35 percent, which means that in three years, gas will be 2.5 times more expensive. Eventually, the opportunities of regional budgets will decline.

Yazev suggested the regulated market be divided in three parts. The first one will include the social sector, the second one - the manufacturing industry and the third one - the electrical energy industry. In his opinion, there are currently serious restrictions for creating a non-regulated sector. The external restriction is long-term contract liabilities, which cannot be reduced. The technical restriction is the capacity of the gas transportation system, which restricts access of independent gas producers to it. Yazev considers it reasonable to execute an experiment by Gazprom for selling 5 percent of gas sold in Russia, at an open price; this amount would be 16 billion cubic meters of gas.