Cabinet decides to pump USD 1 bln into Naftogaz equity

The Cabinet of Ministers of Ukraine decided on Jan. 9 to issue local bonds to raise the share capital of Naftogaz (NAFTO) by UAH 8 bln (USD 1 bln), according to a government decree which was made public on Jan. 14. The government will contribute local bonds with par value of UAH 8 bln. The five-year bonds will have a coupon rate of no more than 14.3%, according to the decree. The January contribution equals the total amount that the government planned to invest into Naftogaz equity in 2013. Last year, the government contributed UAH 12 bln to Naftogaz in the same way.

Alexander Paraschiy: While raising Naftogaz share capital in the beginning of the year has become routine for the government, this time it does not look timely. It shouts out loud that the Ukrainian government has no plan to deal with Naftogaz’s cash deficit in the way demanded by the IMF, which is by raising retail natural gas tariffs. The Cabinet’s decision looks particularly confusing against the background of yesterday’s messages from first deputy PM Arbuzov on the government’s readiness to find common ground with the IMF.