Ukraine will pay for Russian gas on time

Ukraine will pay for Russian natural gas on time, President Viktor Yushchenko told Ukrainian TV station Inter on Thursday.

"The new rules [to arrange the Ukraine-Russia gas market] start with the government setting an example by paying all its commitments to Ukraine's Naftogaz," he said.

Russia and Ukraine reached an agreement on Tuesday to avoid a reduction in natural gas supplies threatened by Gazprom if Kiev failed to pay off its $1.5 billion gas debt. Ukraine agreed to start paying the debt on Thursday, and Russia agreed to remove intermediary traders.

Instead of using intermediary RosUkrEnergo to broker gas sales with Ukraine, Gazprom plans to establish a company on a parity basis with Naftogaz and another business concern to sell gas on Ukraine's domestic market.

Ukraine's first deputy prime minister, Oleksandr Turchinov, said Wednesday the price for Russian gas would remain at an earlier confirmed level of $179.5 per 1,000 cu m, and the transit rate would be $1.79 per 1,000 cu m for 100 km.