Still paying less:Ukrainian public
Ukraine breaks IMF gas price deal
Ukraine failed to raise domestic gas prices as of 1 October - despite promising the International Monetary Fund (IMF) and the European Union it would do so in exchange for loans and to help its own budget.
The government said it would raise household gas prices on 1 September and utility prices on 1 October, both by 20%.
That had been a condition of the IMF's $16.4 billion bailout package and under an EU-brokered $1.7 billion gas infrastructure loan, a Reuters report said.
Commentators warned that Prime Minister Yulia Tymoshenko's government would be unwilling to raise gas prices ahead of a 17 January presidential election in a nation where heavily subsidised energy prices dating from the Soviet days is treated as a right.
Tymoshenko, her rival President Viktor Yushchenko and opposition leader Viktor Yanukovich are set to run in the vote.
"No one will raise any price before the election," Vasyly Yurchyshyn, analyst at the Razumkov think tank told Reuters.
"It will have a negative impact on the government's ratings and that means on the ratings of one of the main presidential candidates," he said.
Former Prime Minister Viktor Yanukovich lies in front in polls for the vote with about 24% to 25%.
Although Tymoshenko lies 10% behind, analysts say it will be a close run race in a second round of voting. Yushchenko looks set for a crushing defeat with support of just 4%.
The IMF and the EU wanted Ukraine to raise domestic prices to help state energy company Naftogaz, whose finances have been wrecked in recent years by importing Russian gas at increasingly expensive prices and selling it on at far lower rates at home.
A spokeswoman at the state energy regulator said today the prices for utilities have remained the same, at just over $100 per 1,000 cubic metres, because a government decision had not yet come into force due to "legal problems".
The government failed to raise household prices on 1 September because its decision had been challenged in court by trades union.
The spokeswoman said the court case continues and prices remain the same.
Naftogaz has been buying gas from Russia at average price of $228 per 1000 cubic metres this year - far lower than the $100 per Mcm utilities pay to Naftogaz.
Utilities are also Naftogaz' biggest debtors, owing about 3 billion hryvnias ($375 million).
Naftogaz's inability to cope with such a shortfall is costing the government billions, at a time when it is trying to cope with a deep economic recession, a falling hryvnia currency and a destabilised banking sector.
The energy company was declared to have gone into restricted default on its $500 million Eurobond after its failure to redeem it on its 30 September maturity.
An IMF mission to assess Ukraine's progress as part of its standby programme and decide whether to release a fourth tranche of $3.8 billion is due to arrive by the end of October. It was not immediately available for comment.