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Ukraine raises domestic gas prices for second time in year

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KIEV, June 22 (RIA Novosti) - Ukraine's Justice Ministry said Thursday gas prices for domestic consumers would rise again starting July 1.

The ministry said it had registered a National Electricity Regulation Commission resolution, which "means the resolution came into force."

Earlier reports said the commission had planned to raise gas prices 85%. Energy companies said utilities would have to pay 686 hryvnias ($137) and households 548 hryvnias ($109) per 1,000 cubic meters of natural gas starting from July.

This will be the second gas price rise since the start of this year. Prices rose by 25% in May.

The decision to raise gas prices has proved unpopular. About 200,000 people took to the streets of major Ukrainian towns Wednesday to protest the move.

Russian gas monopoly Gazprom, Ukraine's main gas supplier, recently said it might raise the gas price for Ukraine from July 1.

In February, Russia already increased prices for Ukraine from $50 to $95 per 1,000 cubic meters, in a compromise that ended a bitter pricing row between the two countries at the start of the year, when Russia briefly cut off supplies to its former Soviet neighbor.

Ukraine's national oil and gas company Naftogaz has consistently demanded that domestic prices be raised.

In April, the company complained that it had to sell gas to households at a rate 60% lower than it purchased gas at from a trading company. Naftogaz said it could not afford to subsidize gas prices, as the company's loss in the first quarter had hit over $500 million and could reach $1.5 billion in 2006.

Ukraine's popular Channel Five reported June 13 that mayors in some Ukrainian cities intended to sue Naftogaz over gas price increases. They called them unjustified and demanded that the government compensate consumers' losses. The mayors earlier sent an appeal to parliament and the president.

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