Ukraine rejects Russian gas deal

Ukraine has rejected a Russian offer to maintain gas supplies at current prices until April on condition Kiev then agreed to a four-fold price hike, Russia's state-owned gas giant Gazprom said.

    President Yushchenko has insisted on a fairer gas price

    Sergei Kuprianov, a company spokesman, told the Interfax news agency on Sunday: "We have received the official response: The Ukrainian side has rejected our offer." 
      
    Gazprom, which controls a third of the world's natural gas reserves, had threatened to cut gas supplies to the former Soviet republic at 0700 GMT Sunday, if a deadline, which expired at midnight, for accepting the offer was not met.
      
    The row has caused concern in western Europe, which depends on gas supplies from Russia via pipelines through Ukraine, and cast a shadow over the start to Russia's 2006 presidency of the Group of Eight industrialised nations. 
      
    Vladimir Putin, the Russian president, had offered late on Saturday to delay the increase until April, but Viktor Yushchenko, his Ukrainian counterpart called for a fair price, not one "that has the look of political pressure". 
      
    Russian dependence

    Ukraine relies on Russia for about a third of its natural gas supplies.

    "The [Ukrainian] people will feel nothing"

    Yuriy Yekhanurov

    Kiev officials say a cut-off will mean a drop in supplies for industrial centres, but no immediate effect for ordinary people, as the country has enough reserves to last the winter. 
      
    Yuriy Yekhanurov, the prime minister, said: "The people will feel nothing." 
      
    Kiev has been paying $50 per 1000 cubic metres. Gazprom wants $230, arguing that a Soviet-era tariff needs to be increased to market rates.

    Ukraine says it can pay more, but only after a transitional period, and that the final figure still needs negotiating.

    SOURCE: AFP


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