Why does Belarus buy gas for $119 and sell to households for $214?

Under a Cabinet of Ministers’ resolution effective January 1, the population of Belarus pays as twice as much for the natural gas from Br242 per one cubic meter in December up to Br462 today.

Here is how this affects the family budget. One month ago, a family of three used to pay Br3600 for an average of 15 cubic meters according to the gas meter. Now you will have to pull Br6900 out of your pocket or Br3000 more. Those with no gas meters will be affected more: from Br5808 in December up to Br11000 for a family of three.

This is not all. If we calculate what we pay for gas, we will end up with $214 per 1000 cubic meters, the world price indeed! This is surprising, because the country buys the Russian gas for $119 and fights for every extra dollar. At the same time, the government charges its population $95 more.

Last year, the Ministry for Housing and Communal Services reported that households paid 100 percent of gas bills. That cost $112. The deference between the domestic price and the price charged by Gazprom was only $12. This year, the price of the Russian gas for Belarus grew by 20 percent and at almost 8 times (!) for the population. The European Radio for Belarus decided to find out why we observe such a big difference, but all the officials that we reached by the phone, declined to comment.

Cabinet of Ministers: We don’t give any answers. Sorry.
Energy Ministry: We can’t help you. This is a Cabinet of Ministers’ resolution. Let’s them comment on it.
Economy Ministry: We don’t have this resolution.

The European Radio for Belarus asked economist Alena Rakava to comment on this situation.

“Beltransgaz pays taxes. Then it sells gas to Beltopgaz. Beltopgaz also incurs expenses. It pays taxes in order to maintain all the pipelines. Besides, they subsidize the condensed gas at the cost of the natural gas. It is a very complex scheme”, she said.

The European Radio for Belarus called Beltransgaz to find out what it charges Beltopgaz after all the taxes and transportation costs.

Beltransgaz’s press office: This is a commercial secret.

In May 2007, Belarus Vice Prime Minister Uladzimir Syamashka noted that under the deal between Beltransgaz and Gazprom, a domestic wholesale extra charge by Beltransgaz would amount to only $8.

Beltopgaz confirmed to the European Radio for Belarus the domestic price has grown by 99.9 percent.

Economist Alena Rakava says that the difference of $95 between the purchase price and the price for the population is normal for a European country where households’ income is much higher, but it is a significant rise for Belarus.

“Even at the toughest times we would not stun the population with a one-time cost rise. We must protect our population, our economy, and our gas consumers. If we are to give in to something, this will not be the interests of our people; they are not that wealthy. Let’s look for a way out”, said the president at the meeting on gas tariffs for households in January 2005…

By the way, none of the officials risked to give us 100 percent guarantees that this is the last gas price growth this year…