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Russia halves Belarus power supply, threatens to pull plug

Russia has halved power supplies to Belarus to press payment of a $50-million electricity bill (U.S.), and will halt deliveries completely unless it is paid in 10 days, a source at export monopoly Inter RAO said.

Russia's western neighbour, struggling with a balance of payments crisis that has forced it to devalue its currency, ran up arrears on electricity imports, which cover around 10 per cent of its needs, in March and April.

"If Belarus doesn't pay, supplies will be shut off entirely on June 19," the Inter RAO source told Reuters on Thursday. The state-controlled power company had no official comment.

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Russia's power network operator confirmed that supplies from Russia to Belarus were more than halved overnight to 200 megawatts from 460 megawatts.

Russia resumed supplies in February after they were halted for a year by problems with Belarus' power network.

Minsk said it hoped to resolve the matter soon.

"We will resolve the question of paying the debt as quickly as possible," said a spokeswoman for the Belarusian Energy Ministry. "However, it is important to note that the country has certain problems with its currency."

State news agency BelTA quoted an Energy Ministry official as saying the move would not cause power supply disruptions as imports account for only about 10 per cent of total consumption in Belarus.

Belarus has also stopped buying electric power from Ukraine, the official said.

Belarus' foreign exchange reserves fell in the month to June 1 by $200-million to $3.6-billion. It devalued the ruble by 36 per cent in late May and is struggling to curb inflation, which reached 32.6 per cent in annual terms last month.

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Minsk expects to receive $1.2-billion in loans from a Russia-led bailout fund this year and has turned to the International Monetary Fund for support.

As a condition of the Russia-led loan, Minsk must sell off state assets worth $7.5-billion within the next three years.

Russia's Gazprom is already in talks with Belarus on taking over its gas pipeline network used to transport some Russian gas to Europe.

Gazprom bought a 50 per cent stake in pipeline operator Beltransgas for $2.5-billion in 2007-2010 and is ready to pay the same sum for the remaining 50 per cent, Russia's ambassador to Belarus, Alexander Surikov, said on Thursday.

"We are not questioning Beltransgas's valuation," Mr. Surikov told reporters.

However, he said Russia disagreed with Belarus's demand that it be granted a discount on imported Russian gas following the sale.

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"We do not link a Beltransgas sale to changing … gas prices," Mr. Surikov said. "There are two separate agreements.

He said takeover talks could conclude this month. Mr. Surikov said he was unaware of any talks regarding potash miner Belaruskali - the country's main cash cow.

A source familiar with the situation told Reuters this week that a firm owned by Russian tycoon Suleiman Kerimov was close to buying a controlling stake in Belaruskali for $15-billion. The Belarusian government has not commented on the matter.

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