Ukraine rejects Russia gas price hike and threatens legal action

Ukraine has rejected Russia’s Gazprom gas price hike and threatened legal action.

Ukraine’s interim PM Arseniy Yatsenyuk said Moscow’s hikes were a form of “economic aggression”.

His energy minister said Ukraine would try to negotiate a gas deal, but warned that if talks failed Ukrainians should prepare for Russia to cut off supplies.

Moscow says the price change is due to Kiev’s failure to pay its bills.

Russia’s state-controlled company Gazprom has raised the cost of gas to Ukraine by 81% to $485.50 (354.33 euros) from $268.50 for 1,000 cubic metres.

The increase comes amid tense diplomatic relations following Moscow’s annexation of the Crimean peninsula.

Arseniy Yatsenyuk said Russia was trying to punish the new leaders in Kiev after last month’s removal of the Moscow-backed government of President Viktor Yanukovych.

“Political pressure is unacceptable, and we are not accepting the price of $500,” he told ministers on Saturday.

“Russia was unable to seize Ukraine by means of military aggression. Now they are implementing plans to seize Ukraine through economic aggression.”

Arseniy Yatsenyuk said the price Russia was demanding was the highest in Europe, and that Ukraine was prepared to continue to buy at the previous rate of $268.50.

Energy minister Yuriy Prodan said that if no deal was reached, Ukraine would take action at an arbitration court in Stockholm.

“We are not trying to break our contract but to set up a fair price,” he said, adding that that Ukrainians should prepare for the possibility of supplies to be cut off.

The price increase could also affect gas supplies to Europe, as 40% of Russian gas to the continent travels through Ukraine.

Yuriy Prodan has said Ukraine would meet its commitments to supply gas to Europe no matter what happened.

Gazprom says Ukraine’s gas debts to Russia stand at just over $1.7 billion.

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