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Russia hikes gas price for Belarus

Vladimir Radyuhin

MOSCOW: Russia has more than doubled the price of natural gas it sells to Belarus, ending the era of cheap energy supplies to former Soviet republics.

Under a five-year contract signed in Moscow five minutes before the New Year, the price will rise to $100 per 1,000 cubic metres in 2007, from $46 last year, and increase steadily to the level paid by European countries [over $250] by 2011.

Belarus is the last former Soviet state to embark on a gradual transition to market prices for Russian gas as Russia's state-owned gas monopoly Gazprom moved to end Soviet-era subsidies to neighbouring countries.

Gazprom had threatened to cut off supplies to Belarus from January 1 if no contract was signed, as it did with supplies to Ukraine in a similar price dispute a year ago. Belarus' autocratic leader Alexander Lukashenko had fiercely resisted the price hike saying it would ruin long-standing plans for reunification with Russia.

However, Moscow felt Mr. Lukashenko had been paying lip service to the idea of union to get cheap oil and gas. Higher oil and gas prices will deal a heavy blow to the unreformed state-run economy of Belarus, which heavily relied on cheap energy imports from Russia to stay afloat.

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