Russia sharply raised the price it charges Ukraine for natural gas yesterday – turning up the heat on the financially stricken government in Kiev.
Alexei Miller, the head of Russia’s state-controlled Gazprom natural gas giant, said the company had withdrawn December’s discount, which put the price of gas at $268.50 per 1,000 cubic metres, and set the price at $385.50 for the second quarter.
The discount was part of a financial lifeline that Russian President Vladimir Putin offered to Ukraine’s president Viktor Yanukovych after his decision to ditch a pact with the European Union in favour of closer ties with Moscow.
The move fuelled three months of protests that forced Mr Yanukovych to flee to Russia in February.
Mr Miller said an increase was justified because Ukraine’s debt for unpaid gas bills now stood at £1billion.
“The December discount for gas cannot be applied any more,” Mr Miller said, adding that the transportation tariff for Gazprom’s gas to Europe via Ukraine was increasing by 10%, in line with earlier agreements.
The new head of Ukraine’s state energy company Naftogaz, Andrei Kobolev, is expected to visit Moscow this week for talks on Russian gas supplies.
Ukraine has been working on reducing its dependence on gas from Russia, which meets half its gas consumption.
Before the December discount, Ukraine paid a price of around $400, which Kiev said was unaffordable for its fragile economy
Gazprom has suggested a new conflict over gas payments and supplies – like disputes in 2006 and 2009 that halted supplies to Ukraine and onward to Europe – could break out, though it has said it has no interest in a resumption of such disputes.