As promised in the economic measures announced by Prime Minister Simeon Saxe-Coburg back in August, the government hiked prices on Monday. Electricity and heating for households were increased by 10 per cent by a government decision made last Thursday.

"The decision was made after a heated debate which took over an hour and a half," said Minister of Economy Nikolai Vassilev. "The price increase will not affect the industrial sector, therefore no inflation pressure is expected."

Earlier on Thursday, the State Telecommunications Commission (STC) approved the new prices for telephone calls of the Bulgarian Telecommunication Company (BTC).

Vassilev explained that electricity and heating prices had been kept at unrealistically low levels since 1999 by the previous government, while the prices of fuel and oil products increased several times. The inflation index has risen by 15 per cent since then, the economy minister added.

"The increase on electricity and heating is only 10 per cent, although energy companies report a 35 per cent difference between earnings and expenditure. Their losses will be partly offset by the higher prices from October 1," Vassilev announced.

During the debate, Minister of Labour and Social Policy Lidia Shuleva, and Agriculture Minister Mehmed Dikme, expressed concern over the social cost of the increase, especially in some regions. Tsvetelina Uzunova, head of the Government Information Directorate, said the Ministry of Labour and Social Policy was ready with a program for allowances to poor people.

Milko Kovachev, chairman of the State Agency for Energy and Energy Resources (SAEER), is to submit a report and proposals for cutting the losses of power generating and heating companies.

The daytime electricity price rose from 0.089 leva/kWh (kilowatt per hour) to 0.098 leva/kWh, and the nighttime price went up from 0.049 leva/kWh to 0.053 leva/kWh. The price of central heating increased from 36.41 leva/MWh to 40.051 leva/MWh.

Meanwhile, the STC approved the BTC's proposal for an average increase of 6.3 per cent in the prices of phone calls effective October 1. The STC turned down the proposed new prices earlier last month demanding a more detailed proposal from the BTC, concerning its price policy.

On Monday, the prices of local calls increased by 20 per cent, while international calls went down by an average of 19 per cent. Prices of long-distance calls in Bulgaria have remained flat so far. The initial fee for obtaining a new phone number was decreased by almost 40 per cent. At the same time, the monthly subscription fee rose by 1.50 leva.

The BTC kept the preferential tariff packages and discounts offered to disabled and poor people. The company justified its demand of price hikes with the recent income increase and inflation growth since the last revision of prices that was made at the end of last year. The increase would affect mainly digital lines subscribers, whose calls are charged with 12 impulses per minute (a call, made from an analogue number is charged one impulse, regardless of its duration).

Shuleva, responding to an MP's question in Parliament, announced on Friday that monthly heating allowances for disadvantaged groups would be increased by 16 per cent. She promised that her ministry would change the scheme of heating allowances payable between November 2001 and March 2002.

The maximum monthly allowance will be 37.50 leva, up by 16.7 per cent from the current 32.12 leva. Heating allowances will amount to 89.3 million leva for the coming winter, up from almost 74 million leva last winter. The monthly allowance is payable to unemployed people, families with many children, single parents, pensioners with small pensions, disabled people and low-income families.

Disabled people are entitled to an income-based telephone allowance, which will rise to eight leva from 5.11 leva on average. Children whose capacity for social adaptation is reduced over 90 per cent will also be entitled to an allowance.