Ukraine, Ukrnafta ready to settle old debt issue, Vitrenko says

Ukraine’s biggest crude oil producer Ukrnafta (UNAF UK)
can soon receive from Naftogaz almost UAH 30 bln to repay its tax obligations,
Yuriy Vitrenko, the executive director of Naftogaz (NAFTO), reported on Feb. 3.
This is a part of an amicable agreement signed between Naftogaz and Ukrnafta in
February 2019, he wrote on his blog. As a part of the deal, Naftogaz will pay
about UAH 15 bln for the natural gas owned by Ukrnafta (2.06 bcm) and prepay
UAH 14.6 bln for natural gas that Ukrnafta will produce in the future. Naftogaz
will receive such money from the government (which must compensate for its
PSO-related losses), will pay it to Ukrnafta, and the latter will use the funds
exclusively to repay its tax obligations. Vitrenko expects that Naftogaz will
receive from the state budget the necessary funds to make such a deal.

The deal was approved by the Ukrnafta shareholder meeting of Mar. 28,
but the previous cabinet (led by PM Groysman) failed to approve it. The new
cabinet “has removed the limitations,” Vitrenko wrote.

Ukrnafta is owned by the government (represented by
Naftogaz) with its 50%+1 stake, while its second-largest shareholder (over 42%)
is a business group related to Igor Kolomoisky.

Alexander Paraschiy: It looks like the deal will be completed soon, which will allow
Ukrnafta to clean up its tax debt and recover its value for shareholders. From
a pragmatic point of view, the deal looks beneficial for all the sides. But
from a political standpoint, the deal looks questionable as taxpayers are left
footing the bill for Ukrnafta’s tax debt, which was generated by the odious
oligarch Kolomoisky, who was also behind the Privatbank debacle.