Bulgaria's State Energy and Water Regulatory Commission (SEWRC) will allow the ceiling for gas prices to rise by 23.9 per cent as of October 1, the commission's chairperson Konstantin Shousholov told reporters on September 30 after meeting with the consultative council that gathers government officials, labour unions and employer organisations.

The increase is significantly lower than the 36 per cent demanded by state-owned gas firm Bulgargaz, the amount the company says it needs to stay afloat and avoid debts to its own main supplier, Russia's Gazprom. It is also lower than the 28.8 per cent SEWRC said last week it was ready to offerto Bulgargaz.

Prices could grow even more on January 1 2009, Economy and Energy Minister Petar Dimitrov said, as quoted by Dnevnik daily. If the current oil price and US dollar exchange rate stays unchanged, the regulator will have to allow a further 21.4 per cent increase at that point, he said.

Labour unions remained unconvinced by the need to raise the gas prices and Ivan Kokalov, vice-president of the Confederation of Independent Trade Unions in Bulgaria (CITUB), one of the two influential trade union blocs in the country, threatened to take the regulator to court if the cumulative increase of gas prices is higher than 24 per cent.

It is unclear whether the labour unions still plan to go ahead with the protests initially scheduled for October 2 against the drastic price hike.

Employer associations were, for once, in full agreement with the labour unions and warned that the measure threatened to put a large part of Bulgaria's industry out of business, while protesting that the regulator was not being transparent in the way it was fixing the price, website mediapool.bg reported.

Dimitrov countered saying that at 538.66 leva a 1000 cu m of gas, the new price ceiling approved by SEWRC, the price paid by end-users was lower than what Bulgargaz paid Gazprom for it. "We reached an agreement between the state, SEWRC and Bulgargaz. Everyone must be clear that untili January 1 next year the price at which the gas will be sold in the country will be lower than the price it is bought for at Bulgaria's border. That's the most that can be done," he said, as quoted by mediapool.bg.

The planned price hike would require SEWRC to review the ceiling of central heating prices, given that gas accounts for the lion's share of the raw materials used by heating utilities. A 10-12 per cent upward revision as of November 1 is expected.

The second stage of the planned gas hike, on January 1, could prompt a second increase in central heating prices as well, Shousholov was quoted as saying by Dnevnik.