Debt-ridden
Ukraine buys 1 bcm of Russian gas as winter gains force
Ukraine's
gas importer Naftogaz says it has paid $378 million to Gazprom for 1
billion cubic meters of Russian gas to be delivered in December, as
Kiev starts to feel the winter frost.
RT,
5
December 2014
“Naftogaz
Ukraine has transferred $378 million to [Russia's energy giant]
Gazprom in prepayment for deliveries of 1 billion cubic meters of
gas," a
statement released late on Friday said.
In
June, after Ukrainian energy giant had failed to pay a $5.3 billion
gas debt accumulated over months of getting fuel from Russia, Gazprom
switch to a prepayment system. Kiev was refusing to pay the price
under a standing contract, saying it was too high.
The
volatile situation intensified fears among EU consumers of Russian
gas that Ukraine would exploit its position of transit country and
start siphoning off the pipeline in the winter months.
In
late October, Ukraine, Russia and the European Union reached an
interim agreement to ensure Ukraine's gas supply until March 2015.
According to the deal, Kiev must pay Russia a total of $3.1 billion
by the end of 2014 in order to cover part of its outstanding debt
that Kiev acknowledges as rightful. In early November, Naftogaz
transferred the first $1.45 billion tranche.
According
to the October deal, Russia must restart the flow to Ukraine within
48 hours of receiving prepayment.
With
the start of the winter season in late October, Ukraine's gas
reserved have depleted by 17 percent falling to 13.9 billion cubic
meters as of December 1, according to data from Ukrtransgaz,
Naftogaz’s transport subsidiary. Ukraine’s national gas
corporation is in a financial tight spot at the moment. The company's
deficit is some 52 percent larger than that of Ukraine itself, the
country’s PM warned on Wednesday.
“I’m
worried more about Naftogaz’s deficit, which is larger than the
overall deficit of [Ukraine’s] national budget. The state budget
today is 68 billion hryvnas ($4.4 billion), and the deficit of
Naftogaz, which we financed because the tariffs didn’t correspond
with the market price for gas, is 103 billion hryvnas ($6.7
billion),” Arseny
Yatsenyuk said.
Reuters/Valentyn Ogirenko
Naftogaz
budgetary problems are to a large degree result of its obligation to
supply gas to some consumers regardless of whether they pay for it or
not and at a lower than market price. Ukraine has been allowing this
for years as a de facto form of government aid to poorer people and
some industrial consumers.
In
September, an IMF report said
that Ukraine's plans to overcome Naftogaz’s deficit by 2018 will be
difficult. To achieve this Naftogaz, according to Kiev's
calculations, has to have a debt of no more than 4.3 percent of GDP
in 2014 and 1.9 percent in 2015. But IMF calculations, point to a
negative dynamic with company's deficit amounting to 10 percent GDP
by the end of 2014.
Getting
a hold on the budget deficit – both within the government and key
state-owned companies like Naftogaz – is a requirement IMF put
forward to allow further loans to Ukraine. It also demanded a hike in
utility prices, which the Yatsenyuk government is currently putting
into place. The measures are causing understandable irritation among
the Ukrainian population, who are not thrilled to see their bills
skyrocket amid an economic slowdown plaguing the country.
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