* Price hike linked to oil-indexed contract with Gazprom
* Business says the increase serious hit to industries
By Angel Krasimirov
SOFIA, March 31 (Reuters) - Bulgaria will raise wholesale natural gas prices by 29.6 percent from April 1 to reflect higher prices of alternative fuels on international markets, the energy regulator said on Friday.
The sharp increase is an early test for the new government, which is expected to be formed next month after an early parliamentary election on Sunday.
Bulgaria gets almost all its natural gas supplies from Russia's Gazprom under a oil-indexed contract.
Utility prices are a politically sensitive topic in the European Union's poorest country because they make up a large portion of monthly household expenses. High electricity bills sparked nationwide street protests which toppled the government of Prime Minister Boiko Borisov in 2013.
The April hike is expected to hurt gas-dependent Bulgarian industries, weighing on their competitiveness, and translate into higher bills for hot water and heating to households.
The State Commission for Energy and Water Regulation said in a statement it had set gas prices at 382 levs ($208) per 1,000 cubic metres for the second quarter of 2017.
It said the new gas price was still lower than the price at the beginning of last year when it was 405.6 levs per 1,000 cubic metres and was a direct consequence of the increase of global oil prices and stronger U.S. dollar.
Bulgarian regulations require the gas wholeseller, state-owned Bulgargaz, to set the gas price quarterly, based on its contact with Gazprom with the energy regulator taking the final decision.
The new hot water and heating prices - expected increase between 20 and 35 percent -- will be announced next week.
The double-digit hike in gas price prompted heavy criticism from local employers and industrialists.
"The increase will seriously affect industry in Bulgaria," Bozhidar Danev, executive president of Bulgaria's largest industrial association BIA, told Reuters, adding that chemical and metallurgical companies will be most affected.
The higher prices will also influence bread prices, because 60 percent of the bakeries work on gas. ($1 = 1.8324 leva) (Reporting by Angel Krasimirov; Editing by Ruth Pitchford)