Ukraine struggles to pay Russia for natural gas

4-Nov-2009

State-owned utility Naftogaz Ukrainy is scrambling to pay Russian firm Gazprom for natural gas consumed in October, reports say.

The October bill is $460 million.

Naftogaz cited an economy mired in recession and its customers' inability to pay their bills as reasons for its late payment to Russia. As per the contract between the two nations, Ukraine has until the seventh day of the month to pay the previous month's bill. Ukranian Minister of Fuel and Energy Yuri Prodan was confident that the monies would be paid by the deadline.

But, warned Russian Gas Society president Valery Yazev, contract terms may be adjusted on January 1. At present, Ukraine does not buy all the gas its contract provides. Consumers have to pay a fine if they fail to take 80 percent of the contracted amount of gas, said Yazev, and that rule may be applied to Ukraine at the start of 2010.

In January 2009, a disagreement between Russia and Ukraine resulted in gas supply cuts. Because the European Union gets 20 percent of its gas from pipelines that run through Ukraine, much of the continent was affected.

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