Kievenergo Heating Tariffs to Increase 2.8 Times in December

TheKiev City Administration raised tariffs for heat supplied to the city 2.8 times beginning Dec. 1, 2006. Alexander Paraschiy: The new tariffs are expected to fully cover the production costs of Kievenergo (KIEN: BUY). In general, this will decrease KIEN’s losses from supplying heat in 2006, which are not expected to be less than USD 50 mln. With the gas price increasing in January 2007, KIEN’s costs for producing heat will continue to grow. We expect the tariffs to be revised in early 2007 again because a new law, which comes into effect in 2007, will force the local administration to set justified tariffs or compensate the difference to KIEN.