Kiev: Ukrainian Prime Minister Arseny Yatsenyuk Monday declared a state of emergency in the energy sector after Russia suspended its natural gas supplies to the country.
"I authorise the energy ministry and justice ministry to prepare a draft law on state of emergency in the energy sector," Xinhua quoted Yatsenyuk as saying.
Yatsenyuk asked the National Regulatory Commission to set "economically justified" tariffs for the transit of Russian gas through Ukrainian territory, saying Kiev has no plans to "subsidise" Russia any longer.
He also instructed the energy ministry to prepare a bill to woo investments from the US and the European Union to finance the modernisation of Ukraine`s gas transit network.
Earlier in the day, Russian energy giant Gazprom said it has filed a lawsuit at the Stockholm arbitration court demanding Ukraine pay off some $4.5 billion of gas debt and decided to introduce a prepayment regime with Ukrainian gas firm Naftogaz.
In a countermeasure, Naftogaz also filed a lawsuit at the Stockholm court to contest the pricing of natural gas it imports from Gazprom, claiming that it has "overpaid" Russia by around $6 billion due to an "unfair" gas contract.
"The lawsuit also contains a requirement to recover an amount of money from Gazprom, which Ukraine has overpaid since 2010," Naftogaz said in a statement.
The two sides have been locked in dispute for three years over a 2009 contract under which they agreed to tie the price of gas to the international spot price of oil.
Russia initially demanded Ukraine pay $485 per 1,000 cubic metres of gas. Moscow then offered to remove an export duty, which would cut the price by $100. Ukraine had been holding out for a lower price of just over $268.
On Friday, Ukraine said it was ready to pay $326 for the next 18 months while the two sides worked out a long-term price deal, but the two neighbours failed to reach a compromise during their weekend talks.