Russians face fuel price hikes

Russian rail passengers are set to face ticket price rises

MOSCOW, Russia -- Russian consumers face price hikes of up to 35 percent on their fuel bills this year.

The government has decided to allow state-controlled monpolies of natural resources to increase prices after years of artificially low charges which has left them debt-ridden.

Recognising it now wants more revenue from its natural resources the government has allowed the electricity monopoly Unified Energy Systems and the gas giant Gazprom to significantly raise prices.

Russians will see their electricity prices increase by 32 percent and natural gas by 35 percent this year, officials said Tuesday.

But even so the government refused to allow the debt-laden companies to increase prices by as much as they wanted.

UES had asked the government to approve a 44 percent boost in prices, and Gazprom had asked for a 37.5 percent increase.

The Ministry of Economics and Trade objected, convincing Prime Minister Mikhail Kasyanov that the higher increases would push inflation well above the 10 percent to 13 percent rate targeted in the 2002 budget, the Vedomosti daily reported on Tuesday.

The head of the electricity giant, Anatoly Chubais, welcomed the new rates.

"Our suggestion was more radical, but I think that the decision that was finally taken is a sound one," he said.

"More important than the extent of the increase is the fact that a decision was taken."

The increases will be implemented in two stages, in February and June.

Chubais also said his company was in preliminary talks with Germany's EON Ag and France's Electricite de France about possible investments in Russia's electricity sector.

Russians will also face big rises in their rail fares also, up to 26 percent, as the Railways Ministry has also come under pressure to improve revenues.