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Belarus expects Russia to lower gas prices

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Belarus, which is struggling to stabilize its finances after a sharp devaluation of its currency, expects Russia to lower natural gas prices to ease the crisis, Belarusian First Deputy Prime Minister Vladimir Semashko said on Thursday.

Belarus, which is struggling to stabilize its finances after a sharp devaluation of its currency, expects Russia to lower natural gas prices to ease the crisis, Belarusian First Deputy Prime Minister Vladimir Semashko said on Thursday.

"One of the major reasons for what has happened (the currency crisis) is that the cost of energy products has risen considerably, by $4 billion," Semashko said.

The Belarusian government hopes "for a considerable reduction of gas prices," he said but declined to specify the size of gas price cuts expected by Minsk.

Russia's natural gas price for Belarus rose to $244.70 per 1,000 cubic meters in the second quarter of this year from $223 per 1,000 cu m in the first quarter.

Gazprom's four-year contract with Belarus, under which the ex-Soviet republic pays for natural gas supplies at a considerable discount to European gas prices, expires this year. A new agreement is expected to be based on a market price formula.

In spring, the Belarusian government was forced to devalue the national currency to 4,930 per dollar from 3,155, freeze prices on some staple foods and introduce fuel rationing in a bid to keep the lid on a deepening financial crisis.

The Belarusian ruble collapsed in the first five months of the year as the result of a large trade deficit, generous wage increases and loans granted by the government ahead of the December 2010 presidential elections.

Belarusian President Alexander Lukashenko has demanded the government take measures to achieve a unified national currency rate of 5,000 Belarusian rubles to the dollar by the end of the year, Semashko said.

"The president and the National Bank have been assigned the task of unifying exchange rates at 5,000 or slightly higher," Semashko said.

The Belarusian ruble currently has several exchange rates. The official exchange rate is 4,960 Belarusian rubles to the dollar, while exchange offices sell the national currency at slightly over 5,000 while the exchange rate on the black market is over 6,000 Belarusian rubles.

Semashko also said that the state-run potash producer Belaruskali expected to get a $1 billion loan from Russia's leading fertilizer company Uralkali as prepayment for potash supplies.

Russian billionaire Suleiman Kerimov, a core Uralkali shareholder, is reported to be interested in buying a controlling stake in Belaruskali, which the Belarusian government intends to privatize to boost state coffers.

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