Russia raises price of gas to the Ukraine by 65%

In a move that will heighten pressure on the interim government in Kiev, Russian energy giant Gazprom announced a sharp increase Tuesday in the price it charges Ukraine for natural gas.

Starting Tuesday, Ukraine will be charged $385.50 per 1,000 cubic meters of gas, up from the previous rate of $268.50, Russian state news agency RIA Novosti quoted Gazprom Chief Executive Alexei Miller as saying.

The move ends a discount that was agreed to before Yanukovych was ousted in February after months of street protests.

The gas price hike will only increase the pressure on Ukraine's interim government as it seeks to stave off economic collapse.

Ukraine, which is heavily reliant on Russia for energy, is also $1.7 billion in arrears in its payments for gas already supplied, Miller said, according to RIA Novosti.

The International Monetary Fund last week agreed to lend Ukraine up to $18 billion over the next two years in return for a package of reforms, including to its energy market.

Kiev has been running dangerously low on cash to pay for imports and service its debts since the ousting of Yanukovych, which killed off a $15 billion financial lifeline from Russia.