VIDEO

Russia scraps last gas discount to Ukraine, hikes price

A pressure gauge is seen at an underground gas storage facility in the village of Mryn, 120 km north of Kiev, on May 21, 2013. Russian Prime Minister Dmitry Medvedev said on Thursday, April 3, 2014, that he has scrapped the last discount on gas price
A pressure gauge is seen at an underground gas storage facility in the village of Mryn, 120 km north of Kiev, on May 21, 2013. Russian Prime Minister Dmitry Medvedev said on Thursday, April 3, 2014, that he has scrapped the last discount on gas price granted by Moscow to Ukraine, effectively raising the price by US$100 (S$126) to US$485 (S$612) for every 1,000 cubic metres. -- FILE PHOTO: REUTERS

MOSCOW (AFP) - Russian Prime Minister Dmitry Medvedev said on Thursday that he has scrapped the last discount on gas price granted by Moscow to Ukraine, effectively raising the price by US$100 (S$126) to US$485 (S$612) for every 1,000 cubic metres.

"I am taking the decision to denounce the government decree from 30 April 2010," Mr Medvedev said, referring to the discount on Russia granted to its neighbour in exchange for keeping its Black Sea Fleet facilities in Crimea's port of Sevastopol.

The decision means that "the price on gas for Ukraine is automatically...going up and will be US$485 for 1000cm starting in April," Gazprom chief Alexei Miller told Mr Medvedev as the two were shown meeting on state television.

Russian President Vladimir Putin on Wednesday ended Russia's agreements with Ukraine over the status of its Black Sea fleet, which had been based in Sevastopol since the tsarist era.

Moscow has in recent weeks annexed the peninsula.

Mr Medvedev added that Russia is looking into seeking further compensation from Ukraine for the discount granted since the 2010 agreement, which had prolonged Russia's Black Sea fleet lease to 2017.

Tensions between Moscow and Kiev are running high after a pro-West government came to power in Kiev following the fall of president Viktor Yanukovych and Russia seized the Crimea peninsula from Ukraine in defiance of the international community.

In a sign of relentless economic pressure on Ukraine, Gazprom earlier on Thursday said it is demanding that the country pays for all debt accrued for recent gas deliveries.

"Naftogaz Ukraine must take immediate measures to pay off the accrued debt," the Russian company said in a statement after Mr Miller met with head of Naftogaz Andrei Sobolev.

"At this time, the total debt by Naftogaz is estimated at over US$2.2 billion including deliveries in March," Gazprom said.

"So let our Ukrainian partners find the necessary finances to pay for their debt and make the current payments, since cooperation in this sphere, as well as other spheres, cannot continue any other way," Mr Medvedev told Mr Miller.

"People who make decisions in Ukraine now should understand this," he said.

Russia has repeatedly shown readiness to use gas as a lever in conflicts with Ukraine, which remains dependent on imports from its resource-rich former Soviet master to keep the country running.

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