Ukraine faces 44% gas price rise

Russian tanks arrive at Ostryakovo railway station in Crimea. Picture: AP
Russian tanks arrive at Ostryakovo railway station in Crimea. Picture: AP
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RUSSIA has sharply increased the price for supplying natural gas to Ukraine and threatened to reclaim billions of pounds worth of previous discounts, in a move intended to rock the new government in Kiev.

The move came as Ukrainian police acted to disarm members of a right-wing nationalist group after a shooting spree in the Ukrainian capital.

Alexei Miller, head of Russia’s state-controlled Gazprom gas company, said it had withdrawn December’s discount. This means the price of 1,000 cubic metres of gas will rise from $268.50 to $385.50, an increase of $117 (£70) or 44 per cent.

The discount was part of a financial lifeline president Vladimir Putin offered to Ukraine’s pro-Russian president, Viktor Yanukovich, after his decision to ditch a pact with the European Union in favour of closer ties with Moscow. The move fuelled three months of unrest which led Mr Yanukovich to flee to Russia in February.

Radical nationalist groups played a key role in his ousting, but they quickly fell out with the new government. Many activists are still encamped on Kiev’s Independence (Maidan) Square and have signalled their intent to remain there until a “legitimate” government is ­elected.

Last week, one of the leaders of the extreme nationalist group, Right Sector, was shot dead while resisting police.

Right Sector members then besieged parliament for several hours, breaking windows and demanding the resignation of interior minister Arsen Avakov.

They lifted the blockade after MPs set up a panel to investigate the killing.

Late on Monday, a Right Sector member shot and wounded three people outside a restaurant adjacent to Independence Square, including a deputy city mayor, triggering a stand-off that lasted overnight. Police responded by surrounding the downtown Dnipro Hotel, where Right Sector had set up a base, demanding those inside lay down their weapons and leave.

Mr Avakov said Right Sector members agreed to disarm and were escorted to a suburban camp by security service officers.

The Ukrainian parliament then voted to order police to disarm all illegal armed units.

Last month, authorities launched a broad appeal for the voluntary surrender of weapons, many of which went astray from police depots during months of unrest.

The government has said a similar amnesty will remain in effect throughout the month.

If police disarm nationalists and other radical groups, it would undermine Russia’s key argument for intervention: the allegation that the new Ukrainian government was kowtowing to nationalist extremist, who threaten the rights of Russian-speakers in the east and south of the country.

Nato foreign ministers were in Brussels yesterday for a two-day meeting to consider further steps in the wake of Russia’s annexation of Crimea, including measures to reassure the Baltic states, Poland, and Romania that the North Atlantic Treaty Organisation would help guarantee their ­security.

Russia has pointed at the perceived threat from ultranationalists to defend its annexation of Crimea, and has concentrated tens of thousands of troops along its border with Ukraine, fuelling fears of an invasion.

But Mr Putin and other officials have said Russia has no intention of invading Ukraine.

German chancellor Angela Merkel in Berlin said there was no confirmation that Russia had withdrawn troops from its border with Ukraine. Even if Mr Putin had removed some troops, she said, “it is also certainly not the final step… the troop concentration on the Ukrainian border is very high”.

The Russian gas price move is a major blow to Ukraine, which is already teetering on the verge of bankruptcy.

Gazprom’s said that the decision to charge a higher price in the second quarter was made because Ukraine has failed to pay off its debt for past supplies, which now stands at $1.7 billion.

Ukrainian consumers will be hard hit by the price rise. They have benefited in the past from subsidised prices, which have also inflated the national debt.

Ukraine had already agreed to withdraw subsidies under the terms of an International Monetary Fund, $18bn bailout. Household gas prices were set to rise by 50 per cent from 1 May under the terms set by the IMF.