Ukraine kicks to touch on gas crisis

The Wall Street Journal (subs. req’d) is reporting that Ukraine is to settle the $2 billion debt to Gazprom via loans to the public gas company Naftogaz from two state-owned banks.  As Edward explained a few days ago, the gas debt is one of the open wounds of the economic crisis in Ukraine, with many questioning whether stabilization is possible with the huge gas debt unresolved.  And this solution really does nothing to resolve it.  The debt is now just shifted from Naftogaz to the state banks, and none of the ideas to put the gas transactions on a more sustainable path (e.g. by raising transit fees for gas destined for the EU) have been pursued.  Perhaps it’s another sign of the political paralysis.  But it’s not clear that the IMF will be amused by this nine zeroes debt juggle.

UPDATE: It seems that reports that the payment would resolve the latest Russia-Ukraine dispute are premature.  Naftogaz appears to have made a transfer to Gazprom that did not include “late fees” and deducted $100 million.

2 thoughts on “Ukraine kicks to touch on gas crisis

  1. There is a mirror transit fee agreement in effect. Raising the transit fees for gas destined for the EU would be offset by higher transit fees for central Asian gas destined for Ukraine’s own consumption. Smart, isn’t it?

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