Russian government prepares three-stage reform plan for Gazprom

Dec 06, 2000 01:00 AM

The Russian government has prepared a reform program for Gazprom that is expected to be carried out in three stages. To begin with, prerequisites for independent gas extractors' competition with Gazprom subsidiaries on the domestic market are to be created by introducing uniform transportation rates and equal access to the transportation network.
Gazprom's 17 transport subsidiaries are to merge into one or several major companies, with extracting companies to form new joint-stock companies, in which controlling blocks of shares will be exchanged for fewer Gazprom shares. In addition, the first phase also provides for the foundation of the Russian natural gas exchange.
As a result, independent gas suppliers are expected to account for 16-18 % of the local market by 2002, with the domestic wholesale gas price to reach $ 18-20 (21.6-24.0 euros) per 1,000 cm by 2003. At the second phase, the Federal Energy Commission will be asked to forgo the strict regulation of wholesale gas prices and confine itself to fixing regional ceilings.

Transportation rates are, however, to continue being regulated as before. Independent companies will be permitted to export gas to CIS countries, while Gazprom will retain control over gas exports beyond the CIS. The wholesale price of gas on the domestic market is expected to rise to $ 28-30 per 1,000 cm (33.6-36.0 euros) by 2005 and $ 43-45 (51.5-54.0 euros) by 2007-2008.
Gazprom will continue financing major investment projects, including export projects. With this aim, in addition to borrowing and relying on its own resources, Gazprom will draw on those of gas extracting companies, which will be accumulated in a centralized investment fund. At the third phase the government plans to practically fully abandon domestic gas market price regulation and only retain its control over gas transportation rates.
Independent companies will be permitted to export gas beyond the CIS under Gazprom's supervision.

Source: Vedemosti via Newsbase
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