russia • gas UES claims it was forced to impose electricity cuts across 11 regions of the vast country after Gazprom reduced gas supplies to the power company following a wrangle over payment arrears between the feuding electricity supplier and gas monopoly.

Gazprom began cutting deliveries to UES’s power stations on 1 April, saying it did not have enough gas. It wants UES to pay for further supplies in cash, and to settle arrears of $1.57 billion. In return, UES head, Anatoly Chubais said he wanted Gazprom to reduce its export shipments to hard currency markets, and shift supplies to domestic markets, to make up for a shortfall, a proposal that was ruled out by the deputy prime minister.

The country is set to increase domestic charges for electricity by an average of 40 per cent, and for natural gas by an average of 21 per cent in an effort to stave-off the full-blown energy crisis. Viktor Kalyuzhny, the fuel and energy minister, announced the measures following the personal intervention of President Putin.

The hike in tariffs could raise an extra $500 million each in revenue Gazprom and provide a welcome improvement in finances for the two.