The cabinet of Ministers of Ukraine has proposed issuing government domestic loan bonds worth Hr 14.866 billion in 2014 for the further capitalization of national joint-stock company Naftogaz Ukrainy.
“The approval of the requirement will allow the state to quickly take
measures to balance the financial state of the company in a simplified
way,” reads the revised draft law on the national budget for 2014.
Earlier Fitch said that the difference in tariffs for residential
customers and utilities in 2013 will result in the losses of Naftogaz
Ukrainy of $2.5 billion, and the cut in the price of Russian gas in 2014
from $400 to $268.50 per 1,000 cubic meters will reduce the deficit of
the national company to $1.4 billion.
Fitch said that tariffs for residential customers and utilities have
not been reviewed since August 2010 due to political pressure. In 2013,
Naftogaz’s purchases of gas from Gazprom may reach 13 billion cubic
meters (bcm) at $400 per 1,000 cubic meters, 8 bcm of which Naftogaz
will re-sell to utilities at $95 per 1,000 cubic meters. This translates
into nearly a $2.5 billion loss that Naftogaz needs to fund from the
state and transit fees.
Fitch said that Naftogaz continues to rely on state subsidies and
other forms of support to meet its obligations. In 2012, total state
subsidies to Naftogaz were Hr 10 billion ($1.2 billion), and in 2013
state support is expected by the company to have totaled Hr 19 billion
($2.3 billion).
Naftogaz Ukrainy unites oil and gas production assets in Ukraine, and
is the country’s gas transit, underground gas storage, and oil pipeline
transportation monopoly.
