Mining and smelting enterprises of EIA will bear considerable economic losses in case of rise in prices for gas - head of profile association

/INTERFAX-KAZAKHSTAN, Astana, January 27, 06/ - Association of mineral, mining and smelting enterprises (AMMSE) of Kazakhstan are worried about forthcoming growth of prices for gas. As it is known, AMMSE represents interests of the republic's mining and smelting enterprises, which are included in Eurasian industrial association (EIA). In case of prices increase for natural gas these enterprises will bear considerable economic losses, Nikolai Radostovets, executive director of AMMSE announced on Thursday at special meeting in competition protection committee of Industry ministry. "The matter here is about unexampled increase of prices for wide circle of enterprises and population. (...) This threatens competitiveness of Kazakhstan production. Particularly, in SSPU this will result in decrease of sales volumes", - N.Radostovets announced. Referring to experts of association, he said, that "if such decision will be taken (about increase of prices for gas. - "IF-K"), payments in budget and off-budget (from SSPU. - "IF-K") will decrease by KZT8 bn. (current 132.38/$1). As it was informed, recently state company on transportation of gas KazTransGas warned forthcoming rise of prices for gas in regions, which consume imported by Central Asian and Russian gas, in connection with increase of release price of this fuel by its producers. KazTransGas JSC submitted corresponding application to competition protection committee (CPC) of industry and trade ministry of Kazakhstan. Particularly, according to N.Radostovets, company KazTransGas Distribution (subsidiary of KazTransGas) plans to raise prices for gas for SSPU by more than 40%, for Kazchrome - by 47.9% in comparison with December 2005. (SSPU, Sokolovskoe -Sarbayskoe production unit and company Kazchrome are included in EIA). At that N.Radostovets, noting, that KazTransGas Distribution has not yet signed contract with Russian Gasprom about supply of gas for consumers of Kostanai oblast, where SSPU is situated, stressed, that, as per the republic's legislation, this subsidiary of KazTransGas, which occupies dominated position in internal market of gas supply, to ground increase of its rates should provide CPC with contracts concluded also on gas import. In this connection Yerken Kaseev, first deputy general director of KazTransGas Distribution, who participated in the meeting informed, that contract with Gasprom will be signed in nearest time, at that price of supplied gas will be $45 per 1 th. cubic meters against $35.2 in 2005. Meanwhile Dmitrii Sterligov, director of Budget planning and analyses department of KazTransGas Distribution explained, that main reason of applying to CPC to get permission for increase of rates is increase of prices of natural gas imported in Kazakhstan as it occupies in structure of final price of gas for Kazakhstan consumers from 56% to 64%. So, he informed, since January 1 of the current year Russia increased price for supplied gas by $9.8 per 1 th. cubic meters, Uzbekistan - by $13, and Turkmenistan - by $15 in comparison with level of 2005. As per press release spread by CPC, price of Uzbek gas in 2006 for Kazakhstan will be $57.24, Turkmen - $55 per 1 th. cubic meters. In this connection the company, D.Sterligov said, notified CPC about planned increase of prices for gas in regions, where import gas is supplied. Particularly, taking into account "planned trade extra charge of the company for 2006", which is "KZT383.47 for 1000 cubic meters", and also growth of prices for import gas, he informed, cost of gas will increase for consumers in Southern-Kazakhstan oblast (SKO) by 29%, Zhambyl - by 22%, Almaty - by 26%, Aktubinsk - by 25%, Kostanai - by 37%. High growth of price for gas consumers in Kostanai oblast is connected with the fact, D.Sterligov explained, that "in 2005 KazTransGas Distribution did not have extra charge on this region, gas was sold at a loss". The above increase of prices for gas, he noted, is calculated "not for population, but for the company's consumers - big industrial enterprises and sale companies in cities". Meanwhile, according to CPC estimations, growth of prices for gas for population of SKO may be 18%, Aktubinsk oblast - 27%, Kostanai - 23%. D.Sterligov informed, that at present time KazTransGas Distribution supplies gas to 7 from 16 regions of Kazakhstan. At that 5 regions are supplied with import gas: SKO, Almaty oblast and Almaty (Alma-Ata) - with Uzbek, Aktubinsk - with Uzbek and Turkmen, Kostanai - with Russian. In Zhambyl oblast industrial enterprises get from KazTransGas Distribution Uzbek gas, and population - gas of local Amangeldy gas field, in Kyzylorda oblast all consumers are supplied with oil accompanying gas of Akshabulak field (situated in the same region), the company's representative informed. Reviewing results of the meeting, Aliakpar Matishev, chairman of CPC noted, that "the matter requires fast solving in nearest 2-3 days" taking into account situation, formed with gas supply on each of the above regions. As per legislation, profile committee should take decision on the company's application, submitted on January 6, during a month from the moment of its submission. As it is known, EIA together with Kazchrome and SSPU includes also Aluminium of Kazakhstan JSC, Eurasian energy corporation JSC (both in Pavlodar oblast), coal pit of Shubarkol Komir JSC (Karaganda oblast, in center) and coal mining Mugoteks JSC (Eastern-Kazakhstan oblast). [2006-01-27]