Recent gas payment gives Ukraine short reprieve

9th June 2009, Comments 0 comments

Crisis-battered Ukraine may face problems in coughing out the next payment for June’s gas deliveries, sources said.

Moscow – Ukraine on Monday won only a short reprieve by tapping into its reserves to pay a Russian gas bill, with a summer of supply disruptions to Europe from a new Kiev-Moscow gas crisis still a real threat.

After warnings that a missed payment by Kiev could lead to a repetition of the New Year's halt in energy transit through Ukraine, Russian gas energy giant Gazprom confirmed that it had received Ukraine's May gas payment in full.

But both Moscow and the European Union – which receives one-quarter of its gas from Russia – said the settlement gave Kiev only a brief breathing space before Russia comes knocking for the next payment in early July.

"It is not the end of the problem at all," a source close to the European Commission said.

Gazprom spokesman Sergei Kupriyanov told AFP it was "unlikely" that Ukraine would be in a position to afford the next payment for June's deliveries.

Russia had warned repeatedly that crisis-battered Ukraine would have trouble paying its bills and that missed payments could lead to a repeat of the January gas crisis, which disrupted gas supplies to Europe amid a cold winter spell.

Over 80 percent of Russian gas deliveries to end clients in the European Union travel through Ukraine's pipeline network.

Russian analysts said the lack of strong statements from the bloc was puzzling given the possibility of a new gas standoff similar to that of last January, which was Europe's worst energy crisis of modern times.

"Europe's position is strange, they are keeping mum and not saying anything," said Artyom Konchin, a gas analyst with UniCredit in Moscow.

"They appear to be unwilling to insure themselves against the next crisis," added Vyacheslav Bunkov, a Moscow-based gas analyst with Aton brokerage.

But in a sign that the EU was becoming increasingly concerned about the prospect of another energy cut-off, a delegation from the European Commission was expected to arrive in Moscow on a fact-finding mission Tuesday.

"After that they will go to Kiev," said a spokeswoman for the European Commission in Russia, without providing further details.

Russia has said it does not want to bail out Ukraine's crisis-hit finances on its own, offering the EU to share the risks and come up with a syndicated loan.

Ukrainian President Viktor Yushchenko admitted on Friday Ukrainian state gas company Naftogaz did not have the money to cover the gas bill, which it put at USD 647 million (EUR 464 million, CHF 707 million).

"The situation is critical, I will be frank. And has never been like that before," he said, adding that he had no other choice but to order an "emission of resources" to make the payment.

A central bank official said part of an International Monetary Fund loan had been transferred to the state savings bank Oshchadbank, which in turn picked up the gas tab.

In November 2008, the IMF approved a two-year stand-by credit arrangement to Ukraine totalling USD 16.5 billion.

"There have been no emissions of currency," Sergei Kruglik, director of external economic relations at Ukraine's central bank, told AFP.

"The government has the money. There is an IMF loan. Part of that money has been provided to Oshchadbank and Oshchadbank made the payment."

Yushchenko's top energy aide Bogdan Sokolovsky said it was a "normal refinancing scheme," denying that it would accelerate inflation in Ukraine.

He could not say whether the same scheme will be used to cover the next bill, due in July.

"I would want us to do without a credit next month," Sokolovsky told AFP.

AFP / Expatica

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