KIEV, Dec 25: Ukraine’s government has raised the gas price ceiling for industrial consumers by 30 per cent for next year following a price increase for imported gas likely to intensify pressure on local producers and fuel inflation.

The government said in a statement on Tuesday it had allowed a rise in the ceiling to $185 per 1,000 cubic metres (tcm) from $143 in 2007.

The news follows an agreement signed with Russian gas export monopoly Gazprom, under which Ukraine is to pay $179.50 per tcm from next year against $130 at the moment.

Economists say the increase will hit the competitiveness of Ukrainian producers, especially the chemicals and steel sectors, and fuel inflation.

Ukraine consumes around 75 billion cubic metres (bcm) of gas per year and imports 55 bcm. It also produces around 20 bcm per year which is used by individuals for heating needs.

Economy Minister Bohdan Danylyshyn told reporters gas prices for residential customers would remain unchanged next year.

He also said new Prime Minister Yulia Tymoshenko’s government hoped to avoid recession in the economy and curb inflation next year.

Former prime minister Viktor Yanukovich’s government had forecast gross domestic product growth of 7.0 per cent in 2007 and 6.8 per cent in 2008. But consumer price growth is now forecast at 14.5 per cent, far in excess of initial projections.—Reuters