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By Orhan Coskun
ANKARA, Nov 3 (Reuters) - Turkey will have to raise its electricity prices by at least 10 percent from Jan. 1 as a result of natural gas price increases announced at the weekend, government sources said on Monday.
Turkey raised household gas prices by 22.5 percent on Saturday and increased industry gas prices by 22 percent, effective from Nov. 1, in a move set to exert fresh inflation pressure.
The sources told Reuters that around half of the country's electricity is produced by natural gas and said the hikes would have a direct impact on electricity sector costs.
Under a cost-based pricing system introduced from July 1, electricity prices will need to be set again on Jan. 1, 2009.
The mechanism, introduced by the High Planning Board, applies to all state energy companies. It is seen as a key step before fresh privatisations of power distribution and production facilities.
If oil prices maintain their current levels and if the exchange rate remains stable, Turkish natural gas prices may be cut in 2009, the chairman of state-owned pipeline company Botas said on Monday.
According to data in September, gas accounted for 48 percent of the electricity produced in Turkey while the contribution from hydroelectric power stations was less than 20 percent, one source said.
Another source said Turkish electricity companies were expected to present their price recommendations to the energy market regulator EPDK soon.
"There will need to be a hike of at least 10 percent in electricity used by consumers from January 1," the source said.
Total receivables due to Turkish state energy companies currently stood at eight billion lira ($5.23 billion), Energy Minister Hilmi Guler told a news conference, adding natural gas in Turkey was currently being sold to consumers at no profit.
Turkish annual consumer price inflation stood at 11.13 percent in September and October data will be announced after the market closes on Monday. (Reporting by Orhan Coskun, writing by Daren Butler, Editing by Anthony Barker)