The Ukrainian government has stepped up its role in the management of national gas importer, distributor and producer Naftogaz Ukrainy, as the company failed to repay its Eurobond loans.
Naftogaz said it asked the authorities to authorize these payments to investors, but the government did not provide the requested authorization despite “the risks and negative consequences for Naftogaz and the country”.
The company said it has enough funds in its bank accounts to fully repay its first Eurobond loan which expired earlier this year and to make a coupon payment on the second loan which is not due. before 2024.
It would be 335 million euros (300 million dollars) for the first loan and 45 million euros for the second issue of eurobonds.
As part of the domestic gas market reform that was completed before the Russian invasion of Ukraine began in late February, government control over Naftogaz was reduced to minimize the risk of conflicts of interest.
In order to increase the independence of Naftogaz, all important decisions for the company have been entrusted to the company’s supervisory board, composed of independent directors.
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Naftogaz has warned that due to the default on Eurobonds, the company will effectively lose access to loans from international financial institutions and may not be able to secure the loans needed to purchase natural gas for underground storage. before the high energy consumption in winter.
It is estimated that Naftogaz needs about $5 billion in financing to buy between 3 and 5 billion cubic meters of natural gas to be pumped before the end of October, the deputy head of the parliament’s tax committee, Yaroslav Zheleznyak, wrote. on his social network.
“The government is now fully responsible for setting up such financing to buy gas for the winter,” Naftogaz said.
An unidentified government official in Ukraine, quoted by the Kyiv-based Interfax-Ukrayna news agency, said the government could not allow state-owned Naftogaz to pay foreign creditors because authorities earlier demanded this. month a suspension of one to two years of payments under the sovereign debt of the country.
Authorities expect to see a 35-45% decline in economic activity in Ukraine this year due to the impact of the war on businesses and the population, according to reports in Kyiv.
The war devastated private regional gas distributors across the country who said they were unable to continue delivering gas to households and industrial consumers.
These distributors had delivered gas to around 10.1 million households, but the authorities ordered Naftogaz to become their new gas supplier in May and June to replace the old distributors.