KHARKIV, Ukraine, April 21 (Reuters) - Ukrainian President Viktor Yanukovich meets his Russian counterpart Dmitry Medvedev in eastern Ukraine on Wednesday for talks which Kiev hopes will lead to Moscow cutting the price of vital natural gas supplies.
The new Ukrainian leadership needs a lower price for its huge gas imports from Russia to nail down the detail of a 2010 draft budget and secure a $12 billion credit line from the International Monetary Fund.
Fresh credit from the Fund is seen by the new Yanukovich leadership as vital for helping the economy to recover from the global downturn, which battered its main export industries, and to restore investor confidence.
Newly elected Yanukovich, who will meet Medvedev in Kharkiv, will try to draw on the warmer relations he has sought to establish with Moscow to secure a cut in a price he says is unfair.
The present 10-year agreement governing Russian gas supplies to the ex-Soviet republic was signed early in 2009 by the previous Ukrainian administration which the Yanukovich administration has accused of leading the economy to ruin.
Ukraine paid $5.6 billion for total imports of 26.8 billion cubic metres of Russian gas in 2009 and has agreed to import 36.5 billion cubic metres this year. It struggles every month to meet its bill.
Russia has said it is ready to revise the present gas deal with Ukraine, "including on price parameters", on the basis of proposals made by Yanukovich, though it is not clear what concessions it will try to wring from Kiev.
These may include allowing Russia and the European Union to co-manage and upgrade Ukraine’s outdated pipeline system.
Kiev may also allow Russia’s Gazprom to increase its share of the Ukrainian gas market, propose co-ownership of future nuclear power reactors to be built by Russian loans and ease restrictions on Russian investment.
Yanukovich may also open up the possibility of Russia’s Black Sea fleet extending the lease of its base in Crimea, Ukraine, beyond 2017.
A lower price for gas will help Kiev balance its books and achieve draft budget targets that will unlock fresh credit from the IMF.
Deputy Prime Minister Sergey Tigipko said on Tuesday he would put to the IMF in Washington later this week a draft proposal from the government for a new $12 billion programme over 2 1/2 years.
The ex-Soviet republic of 46 million people had been on a $16.4 billion bailout programme from the Fund.
But that programme was suspended late last year because the previous administration of Viktor Yushchenko reneged on promises of fiscal restraint.
(Editing by Matthew Jones)
