Russia raises gas price for Ukraine

MOSCOW — Russia's top natural gas producer, Gazprom, said on Tuesday it was increasing the gas price for Ukraine by more than 40 percent to be $385.5 per 1,000 cubic metres in the second quarter from the previous rate of $268.5.

The decision, which had been clearly flagged by President Vladimir Putin, ended a discount that had been agreed in December, before the crisis over the ouster of Ukraine's Moscow-backed president and Russia's annexation of Crimea.

Gazprom's Chief Executive Officer, Alexei Miller, said that Ukraine's debt for unpaid gas bills stood at $1.7 billion as of Tuesday.

On December 17, 2013, Ukraine started to buy natural gas from Russia at a 33 percent discount in return for Russia's use of the Crimean port, Sevastopol, for its Black Sea Fleet.

However, last Friday, Russian President Vladimir Putin ordered the termination of a number of Russian-Ukrainian agreements, including the one that gave Ukraine a discount on the price it pays for Russian gas.

"The December discount for gas cannot be applied anymore," Miller said, adding that the transportation tariff for Gazprom's gas to Europe via Ukraine was increasing by 10 percent, in line with earlier agreements.

The International Monetary Fund has agreed a $14-18 billion standby credit for Ukraine, in exchange for painful economic reforms, as part of a $27 billion international package aimed at getting the country's economy on its feet.

The IMF should be ready to hand over the first $3 billion of the new aid package this month, its top European official has said.

Even so, Prime Minister Arseny Yatseniuk has said Ukraine will need energy from the EU to protect it from the repercussions of its standoff with Moscow, on which it depends for over half its oil and gas.

Meanwhile, The United States has de-facto suspended talks with Russia about exchanging information on taxes under 2010's Foreign Account Tax Compliance Act (FATCA), in a sign of a deepening rift over Moscow's actions in Ukraine, Vedomosti daily reported on Tuesday.

Tension between Moscow and Kiev rose when Russian forces took control of Crimea last month after Ukrainian President Viktor Yanukovich was deposed in February following months of anti-government protests. The Black Sea peninsula voted on union with Russia in a referendum which the United Nations General Assembly declared invalid. Russia formally annexed Crimea on March 21.