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Ukraine’s 2012 budget based on gas price of $416 per tcm

22 December 2011 23:00 (UTC +04:00)

Baku-APA. The Ukrainian parliament approved the 2012 budget with the average gas price of $416 per thousand cubic meters, almost the same as in late 2011, APA reports quoting RIA Novosti.

Ukraine has long been seeking to alter the terms of the gas deal it signed with Russia in 2009. In the fourth quarter of 2011, Ukraine pays $400 per 1,000 cubic meters for Russian gas, but wants a price not exceeding $250 per 1,000 cubic meters.

The draft budget’s approval has been postponed twice in the hope that the price formula will be reviewed. It was approved in the second reading on Thursday, receiving 250 "yes" votes in the 450-seat parliament, well above the required minimum of 226 votes.

Prime Minister Mykola Azarov, who discussed gas deals with his Russian counterpart Vladimir Putin earlier this week, said the new budget’s approval should not be dragged on and go ahead despite the results of gas talks with Russia.

The budget puts the budget deficit at 2.5 percent GDP, economic growth at 3.9 percent, annual inflation at 7.9 percent.

The Russian-Ukrainian deal ties the price of gas to oil prices, which have risen strongly since 2009, boosting Ukraine’s gas bill. Russian gas giant Gazprom said the contract is unlikely to be reviewed this year.

A lawmaker of the pro-presidential Party of Regions, Vasyl Horbal, said the current Russian gas price will have a negative impact on the Ukrainian economy, making many Ukrainian companies uncompetitive.

"Our companies, namely food industry companies, will lose their competitiveness to similar companies in Belarus, for example," Horbal said, adding that Belarus bought Russian gas at $165 per 1,000 cubic meters.