China Agrees to Lend Ukraine $3.7 Billion to Cut Gas Imports

China agreed to open a $3.7 billion credit line for Ukraine to build coal gasification plants and cut down on natural-gas consumption, according to the Ukrainian Energy and Coal Industry Ministry.

The funds will be also spent on encouraging utilities to switch to coal instead of gas, the ministry, based in the capital of Kiev, said today in an e-mailed statement. The agreement was signed on July 13.

Ukraine, which relies on Russia for more than 70 percent of its gas needs, wants to cut consumption of the fuel after prices jumped to $425 per thousand cubic meters last quarter.

Gas imports of 45 billion cubic meters of gas from Russia last year cost $13.9 billion, or 8.4 percent of Ukraine's gross domestic product, Deputy Finance Minister Anatilyi Myarkovskyi said March 16.