Ukraine invests UAH 22 bln into Naftogaz equity

The Ukrainian government resolved on May 29 to increase the equity of Naftogaz of Ukraine (NAFTO) by UAH 22.27 bln by issuing additional shares. The state’s contribution, as usual, will be made via government bonds, which will be issued for no more than seven years and will have an interest rate of no more than 14.3%, according to the Cabinet resolution.

Alexander Paraschiy: This is the second contribution of the state into the monopoly’s equity this year, after UAH 11.1 bln was provided in February. The amount to be contributed this time is equivalent to USD 1.89 bln (at the official exchange rate), which is nearly enough to satisfy Gazprom’s recent request to pay of USD 2.0 bln by the end of May. At the same time, we do not expect Naftogaz will pay this bill unless Gazprom provides a discount for the natural gas that Ukraine has been importing since the beginning of April.

The third round of trilateral negotiations between the energy ministers of Russia, Ukraine and the EU will take place today. Like the previous two meetings, held on May 2 and May 26, the sides will try to negotiate what price Russia should charge for its gas supplied to Ukraine and when Ukraine should repay its debt for gas. If today’s meeting will be as fruitless as the previous two, which we expect, next week the EU countries will likely see reduced supplies of Russian gas going through Ukrainian territory.