ORDER OF THE GOVERNMENT OF THE RUSSIAN FEDERATION

of December 31, 2010 No. 1205

About enhancement of state regulation of gas prices

For the purpose of enhancement of pricing on the gas delivered on the domestic market, the Government of the Russian Federation decides:

1. Determine that since 2011 for 2017 inclusive (further - transition period):

regulation of wholesale prices for the gas extracted by Gazprom open joint stock company and its affiliates, delivered within the Unified gas supply system on the domestic market to all consumers (except the population and the consumers specified in Item 15.1 of Basic provisions of forming and state regulation of the gas prices and rates for services in its transportation in the territory of the Russian Federation approved by the order of the Government of the Russian Federation of December 29, 2000 N 1021) it is performed on the basis of the formula of the gas price providing step-by-step achievement in transition period of equal profitability of supply of gas to the external and internal markets and considering the cost of alternative types of fuel (further - formula of gas price);

the wholesale prices for gas calculated according to formula gas prices are used in case of the conclusion of delivery agreements of gas, except the population and the consumers specified in Item 15.1 of Basic provisions of forming and state regulation of the gas prices and rates for services in its transportation in the territory of the Russian Federation approved by the order of the Government of the Russian Federation of December 29, 2000 N 1021.

2. Determine that Federal Antimonopoly Service establishes decreasing coefficients, and also coefficients determining price differentiation on natural gas by regions of the Russian Federation, being components of formula of gas price and considering features of pricing in the domestic market proceeding from the average parameters of annual change of wholesale prices for gas for all categories of consumers set by the Government of the Russian Federation, except the population.

Paragraph two of ceased to be valid.

Paragraph third ceased to be valid.

Paragraph fourth ceased to be valid.

3. Approve the enclosed changes which are made to acts of the Government of the Russian Federation.

4. To Federal Antimonopoly Service to perform monitoring of application of formula of gas price.

Approved by the Order of the Government of the Russian Federation of December 31, 2010 No. 1205

Changes which are made to acts of the Government of the Russian Federation

1. In Basic provisions of forming and state regulation of the gas prices and rates for services in its transportation in the territory of the Russian Federation approved by the order of the Government of the Russian Federation of December 29, 2000 N 1021 "About state regulation of gas prices and rates for services in its transportation in the territory of the Russian Federation" (The Russian Federation Code, 2001, N 2, Art. 175; 2002, N 21, Art. 2001; 2006, N 50, Art. 5354; 2007, N 23, Art. 2798; 2009, N 5, Art. 618; N 30, of the Art. 3842):

a) in Item 2:

the tenth to state the paragraph in the following edition:

"regulated wholesale price for gas" - the gas price approved in accordance with the established procedure (or the gas price determined on the basis of the formula of the gas price providing achievement of equal profitability of supply of gas to the external and internal markets approved by federal executive body in the field of state regulation of the prices (rates) and considering the cost of alternative types of fuel) on which it shall be implemented on leaving the system of the main gas pipeline transport by suppliers of gas (the gas supplying organizations) to directly final consumers using gas in fuel quality and (or) raw materials or the organizations for further sale to final consumers (in case of absence in the scheme of supply of gas of trunk gas pipelines - the gas price approved in accordance with the established procedure, on which it shall be implemented on entrance to gas distribution networks by suppliers of gas (the gas supplying organizations) to directly final consumers using gas in fuel quality and (or) raw materials or the organizations for further sale to final consumers);";

after the paragraph of the tenth to add with the paragraph of the following content:

"transition period" - the period from 2011 to 2014 inclusive during which actions for creation of conditions for practical implementation of the market principles of pricing on the gas delivered by Gazprom open joint stock company and its affiliates (including application of the formula of the gas price providing achievement of equal profitability of supply of gas to the external and internal markets and considering the cost of alternative types of fuel), and preparation for transition from state regulation of wholesale prices for gas to state regulation of rates for services in its transportation on trunk gas pipelines are performed;";

b) third Item 6 to state the paragraph in the following edition:

"At the second stage the transition period during which conditions for practical application of the market principles of pricing, including the applications of formula of gas price creating basis for restriction of the sphere of state regulation of pricing in the gas industry, establishments of rates for gas transportation services on trunk gas pipelines and gas distribution networks are created is determined.";

c) to add the subitem "e" of Item 11 with words ", and also applications of method of comparison of level of wholesale price for gas with level of prices for gas in the foreign markets";

d) the paragraph one of Item 11.1 to state in the following edition:

"11.1. Regulation of wholesale prices for gas for gas supply systems within which supply of gas to the foreign markets is performed is performed on the basis of formula of gas price.";

e) to declare the subitem "v" of Item 15.1 invalid;

e) state Item 15.2 in the following edition:

"15.2. As the extreme minimum level of wholesale prices for gas for consumers, the stipulated in Item 15.1 presents of Basic provisions, till January 1, 2011 the regulated wholesale prices for gas established proceeding from the average growth rates of wholesale prices determined by the Government of the Russian Federation, and after January 1, 2011 - the wholesale prices determined by federal executive body in the field of price regulation (rates) by formula of gas price taking into account the established minimum and maximum price levels calculated by the specified formula are used.

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