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Russia Sharply Raises Natural Gas Prices

February 2, 1993

MOSCOW (AP) _ Russia hiked the price of natural gas up to four-fold for domestic buyers Monday, dealing another blow to businesses and consumers ravaged by climbing inflation.

The cost for most Russian companies was to rise from 1,100 rubles to 4,000 rubles per thousand cubic meters, said Maria Selivanova, an official with the Russian state committee for prices. At the current exchange rate, that was about $1.92 to $6.99.

The price for residential customers was to rise about two-fold from 260 rubles to 600 rubles, or about 45 cents to $1.04 for 1,300 cubic yards.

The prices still will be small compared with the world level. But officials said they hoped it would help the gas industry pay for exploration and development of new deposits.

″We are not fans of rising prices,″ said Lira Rozenova of the state price committee, the ITAR-Tass news agency reported. But many gas deposits ″are not far from being exhausted, which would mean lower production.″

The statement seemed to contradict a prediction made last week by Rem Vyakhirev, chief of the monopoly Gazprom. He said natural gas output would rise by 50 billion cubic meters by 1996.

The government has said natural gas production fell last year by 0.4 percent. That was small compared with industrial output overall, which fell nearly 20 percent.

The new prices did not apply to exports from the former Soviet Union. Natural gas is top income-earner for Russia and other republics, which charge sharply different prices to foreign and domestic buyers.

Other members of the Commonwealth of Independent States will pay more for Russian gas, though not as much as the world price.

Inflation across Russia has soared in the past year well over 2,000 percent, but natural gas prices have been held steady since May, officials said in justifying the step.

″The soaring production costs put the industry on the verge of standstill,″ Selivanova said.

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