MOSCOW, Aug 29 (Reuters) - Russian President Vladimir Putin has rejected World Trade Organisation (WTO) demands to end heavy gas subsidies to win membership, Russian news agencies reported on Thursday.
Russia is anxious to join the international trade club because of the improved access to export markets but fears that it will be forced to sweep away protective barriers for local industry before they are ready to compete.
"As a condition of joining the WTO, this doesn't suit us," Putin was quoted as saying by Interfax at a coal industry gathering in Siberia's Kemerovo region.
"Low prices on gas are our natural advantage," Putin said, adding that other WTO candidates did not face similar demands.
"I consider it unfair if we have to face them."
Russian companies enjoy a big competitive edge through access to energy at heavily subsidised prices, keeping production costs low compared to European and North American industry.
The European Union has accused Russia's steelmakers of exploiting cheap energy to dump products on Western markets.
Russia sits on half the world's natural gas reserves and provides Europe with a third of its imports.
Exports to Europe are lucrative and vital for state controlled natural gas monopoly Gazprom (GAZPPE.RTS)(GAZPq.L) because the government forces it to sell gas at a loss on the domestic market, effectively subsidising the entire economy.
Gazprom says its export prices, which fluctuate along with international oil and oil product prices, range from $90-$130 per 1000 cubic metres while it loses up to $1.5 billion a year selling gas to domestic consumers at $20 per 1000 cubic metres.
Gas price regulation helps the government maintain low regulated electricity rates.
But 'natural monopolies' such as Gazprom and state power utility Unified Energy System (EESR.RTS) have been branded by the government as inefficient and the government has insisted on tight caps on rate hikes, saying they should cut costs first.
Gazprom is allowed to hike rates by 20 percent next year.
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