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Last Updated: Tuesday, 7 November 2006, 22:27 GMT
Russia 'could cut Georgia's gas'
Flag outside Gazprom headquarters in Moscow
Georgia says the price rise is "politically motivated"
Russian energy giant Gazprom has threatened to halt supplies to Georgia unless it agrees higher gas prices.

Authorities in Georgia have refused to agree to the new tariffs, saying they are Russia's way of punishing it for its Western-leaning policies.

Gazprom has rejected the claims saying commercial pressures have forced it to more than double its prices.

In January, Russia briefly halted supplies to Ukraine in a similar row, which sent shockwaves across Europe.

Russia halted gas supplies to Ukraine on 1 January, after Kiev rejected a price rise that would have taken the cost of gas from $50 to $230.

The switchoff disrupted supplies to several European countries, prompting the European Union to say it would have to "learn the lessons" and find ways of improving security of energy supplies.

Hefty increase

In the latest dispute, Gazprom wants to raise the price paid by Georgia for each 1,000 cubic metres of gas to rise from $110 to $230 in 2007.

Such an increase would mean consumers would be paying as much for their gas as their wealthy European neighbours. The average wage in Georgia is around $100 a month.

However, Gazprom has said it is willing to lower its tariffs if the country hands over some of its gas infrastructure to the company.

Georgian President Mikhail Saakashvili has denounced Gazproms moves as "political", and linked them to an ongoing diplomatic row between the neighbouring countries.




SEE ALSO
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02 Nov 06 |  Business
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09 Oct 06 |  Business
Russia's Gazprom profits rocket
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