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UPDATE 3-Ukraine leader vows hold on gas prices in TV talk with people

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(Globalpost/GlobalPost)

* IMF has told Ukraine it should end subsidies for home gas

* Ex-Soviet republic negotiating $15 bln loan from IMF

* Yanukovich makes slew of promises to shore up public image

By Richard Balmforth

KIEV, Feb 22 (Reuters) - Ukrainian President Viktor Yanukovich pledged on Friday to keep down the price of gas in the home, using a four-hour, televised question-and-answer session to counter an image of being out of touch with his people.

Yanukovich, expected to seek a second term in power in 2015, made a series of promises - to fix bad roads, improve grim conditions in industrialised eastern areas, build new sports facilities and improve social benefits like medical insurance.

"For me, all citizen people are equal - those who voted for me or those who did not vote for me," he said.

"I ask you to collect all your complaints and I promise that I will look at them all personally and will give you an answer personally with my own signature."

The 62-year-old leader, whose Party of the Regions lost seats in an election in October while retaining its majority, appears rarely in public and has not given a national press conference for over a year.

Commentators say his aides fear this is damaging his image and could rebound on his re-election prospects in 2015.

Since he took power three years ago, the former Soviet republic's relations with Russia have worsened because of a continued wrangle over the high price of Russian gas.

The jailing of ex-prime minister Yulia Tymoshenko, his arch-rival, for abuse of office has kept political tension high at home and alienated the U.S. and European Union governments.

The International Monetary Fund, Ukraine's biggest lender, has warned Kiev that it faces a second year of near-zero growth and says its economy is vulnerable to further shocks due to its high current account deficit.

At Friday's "meet-the-people" show, at which groups were herded into designated spots nationwide to ask questions, Yanukovich sought to convey that he had brought stability after the zig-zags of previous leaderships.

"This could be seen as the start of a campaign (for re-election) though this is still far off," said Mykhailo Pohrebinsky of the Kiev Centre of Political Research.

TRUST ISSUES

"Most of all, this is an attempt to correct the way people are now looking at the presidency. There is a feeling in the president's team that all is not right, that there are problems of trust towards the presidency, that dialogue has to be restarted," Pohrebinsky said.

The boldest of Yanukovich's promises was not to raise gas prices, a pledge which may complicate another round of talks next month with the IMF over a new $15 billion loan.

The IMF, which is in talks with Kiev over a new stand-by loan, insists Ukraine raise heavily-subsidised gas prices to cut its budget deficit and make state finances sustainable.

"You can be certain of this. We are not going to raise gas prices for the population or for industry," Yanukovich said.

Ukraine relies on gas imported from Russia but the high price paid - $430 per thousand cubic metres - hurts its economy.

"Yanukovich now seems to be closing the door on gas price hikes, and an IMF agreement, and moving back towards trying to cut a deal with Russia," Standard Bank analyst Timothy Ash said.

Yanukovich's government has tried unsuccessfully to persuade Russia to lower the price of gas, fixed in a 10-year contract brokered in 2009 by the Tymoshenko government. Yanukovich said: "I think we can revive normal relations with Russia in the gas sector and we are working on this. We are not losing hope."

Russia has long said it would cut the price only if Ukraine either allows Moscow to take over its pipeline network, which carries the bulk of Russian gas shipped to Europe, or joins the Russia-led Customs Union trade bloc.

Kiev has rejected both options and Yanukovich on Friday reiterated that gas pipelines were not for sale. However, in what appeared to be an offer of compromise to Russia, he said Ukraine could rent them out.

Yanukovich heads for Brussels on Monday for a summit with the European Union, which has condemned Tymoshenko's jailing.

http://www.globalpost.com/dispatch/news/thomson-reuters/130222/update-3-ukraine-leader-vows-hold-gas-prices-tv-talk-people