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Ukraine Says Pays $900 Million Russian Gas Bill On Time

Naftohaz headquarters in Kyiv
KYIV (Reuters) -- Ukraine paid in full and on time its last monthly bill of 2009 for Russian gas, state energy firm Naftogaz has said, referring to the steepest payment it had to make for that year worth almost $900 million.

Ukraine's late payments in previous years have caused rows with Moscow that a year ago lasted three weeks and led to gas supply cuts to Europe, leaving millions out in the cold.

This year, as Ukraine gears up to a presidential election on January 17, officials in both Moscow and Kyiv have said a "gas war" would be avoided. Ukraine has paid every bill on time in 2009, despite a crippling economic crisis.

"Yes, we have paid up," a Naftogaz spokesman told Reuters. Energy Minister Yuri Prodan said the bill amounted to $892 million.

The finances of the state energy firm Naftogaz have been stretched for several years as it pays ever higher prices for Russian gas but is forced to sell it on domestically at still subsidised tariffs.

Last year, the government helped Naftogaz pay its bills in a variety of ways, including through the issue of domestic short-term bonds which have subsequently been bought by the central bank or a state bank using freshly-printed money.

President Viktor Yushchenko, a rival of Prime Minister Yulia Tymoshenko, repeated his criticism of the government's handling of Naftogaz's finances and demanded that the central bank help.

A Finance Ministry official had already said that the central bank and the government would come up with the payment.

"Acting Finance Minister Ihor Umansky is at the central bank at the moment," a deputy finance minister told reporters. "They are looking over this problem and then we will pay on time."

Ukraine has been paying around half a billion dollars or less per month for Russian gas. The figure changes month by month depending on the quarterly price and volumes it buys.

Its bills have gone up because the gas prices rose but so did volumes as winter set in. Russian officials also suggested Kyiv was stocking up as the price rises further -- to about $300-310 per 1,000 cubic meters in the first quarter from $208.12.

Although Moscow and Kyiv avoided a row, Moscow did briefly cut oil supplies to another ex-Soviet state neighboring Europe -- Belarus -- over subsidies. The two sides have yet to agree a contract although supplies are now flowing normally.