A working meeting between Alexey Miller, Gazprom's Management Committee Chairman and Valery Kokov, President of the Kabardin-Balkar Republic was held today at Gazprom's Headquarters.

The parties debated the implementation of a Cooperation Agreement adopted between Gazprom and the Kabardin-Balkar Republic. In particular, the parties focused on the need to improve the discipline of current gas payments and settle the Republican previous gas debt to Gazprom.

Reference:

The 5-year Cooperation Agreement between Gazprom and the Kabardin-Balkar Republic was concluded on 27 February 2003.

In 2004, Gazprom's gas deliveries to the Kabardin-Balkar Republic have been paid for at 31.9%.

As of 1 June 2004, the Republican total gas debt accounted for over RUR 2.3 billion, some RUR 422 million up against 1 January 2004 and RUR 868.2 million up, as compared to 1 January 2003. The debt largely grew due to nonpayments on the part of the population, that accounted for RUR 829.64 million (35.5% of the overall debt) and fuel and power companies, RUR 880.49 million and 37.7%, respectively. At the same time, the gas debt of budget-financed entities and other gas consumers of the Republic totaled RUR 9.05 million (0.4%) and RUR 615.03 million (26.4%). This year, the Republic hasn't made yet payments for the gas received from Gazprom between 1994 and 2003.

The 2004 budget of the Kabardin-Balkar Republic envisages full payments for gas deliveries by Gazprom to local budget-financed companies. RUR 57.8 million, or 68% of the Republican gas needs, are to be earmarked for granting gas privileges and subsidies to eligible consumer categories.

Last year, Gazprom piped over 1.4 bcm of natural gas to the Kabardin-Balkar Republic and the same amount is targeted for this year.

As of 1 January 2004, the gas supply network of the Kabardin-Balkar Republic was developed at 95.5%, including 97.6%, in the cities and towns and 92.4%, in rural area. The same parameters throughout Russia account on an average for 52.7%, 60.2% and 33.1%, respectively.

DIVISION OF RELATIONS WITH MASS MEDIA