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Ukraine may have to raise domectic natural gas prices-Yanukovich

“All we want is to have an average European price for imported gas,” Yanukovich told journalists yesterday

NEW YORK, October 18 (Itar-Tass) — Ukraine will have to raise natural gas prices for the population, if it fails to agree on lower prices for gas imported from Russia, Ukrainian President Viktor Yanukovich said at a meeting with foreign journalists on Monday.

“All we want is to have an average European price for imported gas,” Yanukovich told journalists yesterday in his office in the capital, Kiev. “Should we fail to get it, we will be forced to raise the domestic price,” Yanukovich was quoted by the Bloomberg agency.

Currently, Kiev is seeking a possibility to revise the natural gas agreements concluded with Russia in January 2009 by Ukraine’s former Prime Minister Yulia Timoshenko, who on October 11 was sentenced to 7 years imprisonment.

According to Bloomberg, the country must balance the books of state-run energy company NAK Naftogaz Ukrainy to gain access to its next payment from a $15.6 billion emergency loan from the International Monetary Fund. Ukraine, which depends on Russia for more than 60 percent of its gas, is trying to renegotiate a 2009 contract with its eastern neighbour that ended a disruption of shipments.

Former Prime Minister Yulia Timoshenko in 2009 agreed to the 10-year gas-supply agreement after a price dispute halted supplies to more than 20 countries. The ex-premier last week was sentenced to seven years in jail for abuse of power when signing the deal, which Yanukovich has called “discriminatory, unfair and enslaving.”

Ukraine wants to cut its gas imports to 27 billion cubic meters next year from an estimated 40 billion in 2011, lowering the price to $230 per cubic meter from next year’s expected average level of $415. Russia has rejected the demands, arguing that the terms of the 2009 agreement must be honoured, Bloomberg reported.

The IMF last year approved a $15.6 billion loan to Ukraine, the second in two years, after the economy contracted more than 15 percent. The IMF released $3.4 billion in two instalments before freezing the next tranche, due in March, over the government’s failure to raise gas rates for households. The lender delayed a visit scheduled for August to October 24, Prime Minister Nikolai Azarov said last week.

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