Ukraine to raise gas prices

Gas prices are to rise in Ukraine as a result of the ongoing fallout following Russian president Vladimir Putin's decision to move troops into the disputed Crimea region.

The interim Ukrainian government, which was put in place when the previous administration was forced out following widespread protests in the Ukrainian capital Kiev, announced the news.

Ukrainians have been buying gas at heavily subsidised rates as a result of the nation's close links with Russia, but the nation is now trying to forge its own path and become part of Europe.

Yury Kolbushkin, budget and planning director at Naftogaz, which is the country's state energy company, revealed that as well as gas prices rising for the public, costs for district heating companies would also rise by 40 per cent at the start of July.

Ukraine is committing to increasing its gas prices as part of an attempt to convince the International Monetary Fund to give it an aid package, a step that could improve Ukraine's eventual chances of becoming a member of the European Union.

Bailout deal

IMF negotiators are still in Ukraine as talks over a package of measures worth billions of dollars – which will be used to cover gaps in the budget needed to pay foreign loan repayments – as discussions continue to be thrashed out.

Ukraine is also on alert to the possibility Russia may try to annex off even more of the former Soviet Union region, after its successful capture of the Crimea area. After Mr Putin moved troops into Crimea earlier in the year, MPs in the area voted in favour of it rejoining Russia.

A large proportion of Crimean residents identify themselves as being Russian and polls showed an overwhelming level of support for joining Russia and leaving Ukraine.

Investors around the world have been waiting to see what impact Mr Putin's tactics will have on the price of various commodities. As Russia controls much of the planet's gas supply, it is likely the cost of this fuel will be going up in the coming months.

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