Kiev privatization favours 'helped keep Russian gas prices down'

Oct 16, 2006, 14:44 GMT

Moscow - Promises from Kiev to 'help' Russian companies acquire stakes in Ukrainian aircraft production and utilities framed an August deal that left the price of Russian gas to Ukraine unchanged till year's end, Vedomosti reported Monday.

The newspaper quoted an unidentified former Ukrainian official as saying the country's prime minister, Viktor Yanukovich, agreed to help Russian firms buy into the Ukrainian aircraft industry in return for a cap on the price of gas at 95 dollars per 1,000 cubic metres.

At the time, Russian Prime Minister Mikhail Fradkov said the cap and an agreement to keep to a minimum any increase in the 2007 price came after the countries agreed to allow Russian companies to buy into Ukraine's electricity sector.

A Russian government official said the country was interested in participating in the privatization of Ukraine's electricity and aircraft sectors, but that the sectors were unrelated to gas, Vedomosti reported.

Russia's gas supplies to Ukraine have become a hugely contentious issue not only for the two former Soviet republics, but for all of Europe, in the past year.

Russian gas monopoly Gazprom halted the flow of gas into Ukraine for two days in January after the two countries failed to agree on prices.

The stoppage caused a panic in Europe, which receives 25 percent of its gas from Gazprom. Most of that gas is shipped through Ukraine.

Ukraine's largest government-controlled aircraft production and repair companies were united in 2005 as the Antonov National Union.

Producer of legendary Soviet aircraft like the An-2, An-22 and the world's largest airplane in service, the An-225 Cossack, Antonov had turnover of 230 million dollars in the first 5 months of 2005.