Viktor Khristenko said: "We plan for 100% liberalization of gas prices and of the electric power market by 2011."
The minister said all Russian electric power will be traded on the market, adding that the country's electricity demand is expected to hit 1,426 billion kilowatt hours (kWh) by 2015, a 45% increase from an estimated 980 billion kWh in 2006.
Khristenko said domestic gas prices will be based on an average export price, but will be at least 40% below the global market rate, as it will not include exports duties and logistic expenses.
The implementation of a new scheme will be based on long-term contracts, of up to five years. The scheme will initially be implemented for contracts between electric power sector players and natural gas producers, the minister said.
The power sector "will close take-or-pay long-term deals [on natural gas supply] starting next year. But other consumers will also have the right to do this," he said.
The official also urged for expansion of the spot segment of the natural gas market (with 'tomorrow' settlements), which currently stands at only $10 billion cubic meters a year, and said it would take about 18 months to improve the situation.
