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Russia's UES, Gazprom agree on long-term gas supplies-2

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MOSCOW, August 13 (RIA Novosti) - Unified Energy Systems (UES) of Russia and energy giant Gazprom have agreed on long-term natural gas supplies to wholesale generating companies and territorial generating companies, a spokeswoman for UES said Monday.

"Typical contract terms between Gazprom and Unified Energy System (UES) on long-term gas supplies for electric power plants have been agreed, but the quantities have yet to be confirmed," Margarita Nagoga said.

She declined to specify a date for the formal contract signing between Gazprom and the energy companies.

A source at one energy company said the issue of gas supplies for some plants still had to be agreed.

Russia's power sector is undergoing radical changes aimed at increasing the efficiency of power plants and developing the industry by attracting investment. Once the reforms are complete, the potentially competitive sectors - generation, sales and repair companies - will become mainly private and will compete with one another.

During the ongoing restructuring process, specialized structures have been established - 14 territorial, six wholesale generating companies, and hydropower operator HydroOGK - in place of the old vertically integrated companies.

However, natural monopolies - power transmission and dispatching - will remain state-controlled.

Long-term contracts are designed to address the issue of pending gas shortages on the domestic market.

With this in mind, the Russian government earlier made the decision to raise prices for domestic gas to the same levels as exports by 2011. In 2008-10, regulated prices will be raised 25%, 27.7% and 27.7% each year, respectively.

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