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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Who Needs Additional Gas?

13 October, 1998 - 00:00


An energy market collapse just before the winter may cause new debts.

Ukraine's government entrusted national stock company Naftohaz Ukraina
to sign a contract with Russian Gasprom for the purchase of 5 billion cubic
meters of natural gas which will be consumed in the last three months of
the current year, Interfax-Ukraine reports.

It turns out that the state, represented by Naftohaz Ukraina chairman
Ihor Bakay cares about its citizens, who do not want to freeze in their
concrete apartment buildings. The only question is, who will pay for the
energy resources? Naftohaz passed endorsing the agreement on over to Ukrhazprom
joint stock company, which is currently undergoing serious reorganization
and does not have any money to cover the contract (as much as $200 million).

Experts pose two possibilities to the situation. Russian Gasprom may
refuse to cooperate with Ukrhazprom, which is practically liquidated. However
if the agreement is signed, the debt will rest in the hands of the state
budget because state company Naftohaz Ukraina will be the successor of
Ukrhazprom. This company is unlikely to create an effective system for
collecting gas payments by the end of the year.

Then why should we carry this 5 billion gas burden? There is another
explanation. According to Bakay, the Russian side has already signed the
agreement. Why did they do it? Is it not an attempt to force Ukraine to
pay for gas consumed during the first three months of the year, when there
were no limitations? Back then, due to limitless agreements, Ukraine pumped
out of the European gas pipeline almost 1.5 billion cubic tons beyond the
norm, which it has yet to pay back. And as you remember, Ukrainian Prime
Minister Valery Pustovoitenko promised to help Russia, which is suffering
from a financial crisis. Apparently the time has come. Instead of 4 billion
cubic meters (Bakay's data, reported by Interfax-Ukraine) needed to establish
the balance, Ukraine is forced to buy 5 billion cubic meters.

 

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