The Cabinet issued an order defining the procedure by which Naftogaz would be compensated for loss-making sales of gas to municipal heating enterprises. The losses will be compensated from the state treasury following the approval for the Fuel and Energy Ministry. Vladimir Nesterenko: It is positive that the government has specified who and how Naftogaz will be compensated, and the decision means that the promise to compensate the loss was not just talk. However, it is still unclear whether Naftogaz will be able to repay tax arrears of USD 0.5 bln this year, as called for in the 2007 Budget. The debt can be partially financed by selling Naftogaz’s non-core assets. The recently announced sale of Megabank (MEGA: BUY) and Ukrgazbank (UGZB) stakes should bring about USD 25-20 mln, which obviously falls short of the sum Naftogaz will need to come up with.