Cablegate: Latvia: Increase in Natural Gas Tariffs

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E.O. 12958: N/A
TAGS: ECON EFIN ETRD LG

SUBJECT: LATVIA: INCREASE IN NATURAL GAS TARIFFS

1. On July 24, the Latvian State Public Utilities Commission
announced its decision on natural gas tariffs increases. Effective
October 1, natural gas tariffs will increase by an avaerage of 38%.
For households, the incease will be roughly 60% and for businesses
32-40%. A tariff increase was requested earlier this year by the
Latvia's central natural gas supplier Latvijas Gaze (LG), which
called for a 57-71% increase for households and 24-36% increase for
businesses. The Comission lowered various expense estimates
provided by LG by a total of LVL 14 million ($31 million USD) and,
therefore, adopted lower tariffs than requested.

2. Price inflation continues to grow as Latvia is moving towards
market-level enrgy prices. The latest rise in gas prices will have
both a direct and indirect effect on the consumer price index by
increasing heating, electritiy and overall production costs.
Inflation, which decreased by 0.2% points in June will likley jump
again in the fall, once the new tariffs go into effect.

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