Ukraine opens criminal charges against Yanukovych over 2010 gas deal

By bne IntelliNews October 22, 2014

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Ukraine's prosecutor general has opened criminal charges against ousted former president Viktor Yanukovych for signing a 2010 gas deal with Russia, according to internet portal prestupnosti.net. Under the terms of the so-called "Kharkiv agreements," signed in the East Ukrainian city of Kharkiv in April 2010, Russia gave Ukraine a 20% price rebate on gas supplied to Ukraine, in exchange for Russia leasing the Sevastopol naval base in Crimea for its Black Sea fleet.

Ukrainian President Petro Poroshenko on October 21 signed off on a law allowing for trial in absentia, which would enable Yanukovych, who has fled to Russia, to be tried in Kyiv.

The news comes as Ukraine and Russia are engaged in talks on revising the terms under which Ukraine buys gas from Russia, complicated by Ukraine's lack of cash to pay arrears and advances on supplies.

Under the terms of the "Kharkiv agreement," Yanukovych agreed to prolong the Russian lease of the naval base in return for the 20% price rebate on gas supplies from Russia's Gazprom, to be reached through Russia cancelling export taxes on gas supplies to Ukraine. This meant effectively that Russia could at any time revoke the price rebate without the risk of commercial arbitrage, since the price as specified in the contract remained at the higher level.

Ukraine is currently trying to renegotiate a price for Russian gas that would see Russia agreeing to a price of $385 per 1,000 cubic meters as commercial price between Ukraine's Naftogaz and Russia's Gazprom, while Russia wishes to see the price defined - as in 2010 - as a political rebate through cancellation of export taxes.

Ironically, one of Yanukovych's most controversial acts when in power was to back the trial and imprisonment of former prime minister Yulia Tymoshenko for her part in  signing a gas agreement with Russia in January 2009. 

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