Russia Cancels Black Sea Fleet Gas Discount for Ukraine

MOSCOW, April 3 (RIA Novosti) - Since Russia has terminated agreements with Ukraine on the basing of the Black Sea Fleet, it has also retracted a related discount on export duties on gas destined for the country, Russian Prime Minister Dmitry Medvedev said during a meeting with Gazprom CEO Alexei Miller on Thursday.

Miller told the prime minister on Thursday that gas prices for Ukraine will increase by $100 to $485.50 per 1,000 cubic meters beginning in April.

"In our future relations with our Ukrainian partners, with consumers, there are standards of set prices for customs duties on gas without using any discounts or preferences. This decision needs to be considered in the future payments of Ukrainian consumers," Medvedev said.

Ukraine received a $100 discount for Russian gas under the 2010 deal in exchange for extending the lease allowing Russia's Black Sea Fleet to be stationed in Ukraine. In December, Ukraine received another gas discount, effectively cutting the price to $268.50 per 1,000 cubic meters of gas.

Earlier this week, Russia canceled the December gas discount, raising the price to $385.50 per 1,000 cubic meters of gas. Russia also froze payouts as part of a $15 billion loan deal, agreed between Russian President Vladimir Putin and Viktor Yanukovych, who was ousted in February as a result of an illegitimate coup.

http://en.ria.ru/russia/20140403/189019662/Russia-Cancels-Black-Sea-Fleet-Gas-Discount-for-Ukraine.html

Ukraine had for years sold gas to consumers at a heavily discount price below cost. Under the terms of the IMF loan agreement a 50% price increase will be imposed on consumers May 1st with the expectation that future increases will be imposed until the price consumers pay reaches at least cost to government.