January 08, 2008 |
Naftogaz of Ukraine is on the verge of bankruptcy, Ukraine’s Prime Minister Yulia Timoshenko was quoted by RBC Ukraine as saying yesterday after a meeting with Naftogaz’s new Chairman Oleg Dubina. Timoshenko announced that the company had huge debts that it was unable to pay back.
Timoshenko also stressed that allegations that some 30bn cubic meters of gas were available in gas storages were groundless and the company’s actual resources were close to nonexistent. Whatever reserves are now stored in the facilities belong to criminal organizations, and it is yet unclear what has to be done about them, the Prime Minister stated.
According to Timoshenko, the gas storage facilities have been leased to “shadow companies” at a price at least ten times below the global market for a period of 25 years. Timoshenko also said that Naftogaz of Ukraine had no approved gas balance for 2008.
Meanwhile, to remedy the situation the Ukrainian government at its first meeting this year scheduled for January 9, 2008, is expected to set up a commission with special authorities to supervise the financial and economic activities of Naftogaz, to find those to blame for the artificial bankruptcy as well as to help the company out of the crisis. The special commission will bring together representatives of Ukraine’s Main Control and Revision Office, State Tax Administration, State Property Fund and Interior Ministry.
However, despite the looming financial crisis for the company, Ukraine is set to meet its gas supply commitments to both European and domestic consumers. In addition, Dubina is expected to produce data on the actual gas production cost in Ukraine so as consumer gas prices could be revised. Preliminary estimates indicate that Naftogaz’s 2007 loss will be double the size of its 2006 loss, with its payables exceeding its receivables by several times for the first time in its history.
|Status||Default||Country of risk||Maturity (option)||Amount||Issue ratings (M/S&P/F)|
|redemption default||Yes||Ukraine||09/30/2009||500,000,000 USD||Withdrawn/-/Withdrawn|
|Full company name||PJSC "Naftogaz of Ukraine"|
|Country of risk||Ukraine|
|Country of registration||Ukraine|
|Industry||Oil and gas|