Global Processing

International deal agreed for Ukraine gas bills

August 3, 2009
Ukraine has reached a deal with international financial bodies and the EU for payment of Russian gas bills, the European Commission said, allaying fears of another winter cut-off, reported by the Associated Foreign Press. The deal, which will allow Kiev to re-stock its reservoirs, involves the International Monetary Fund releasing a third tranche worth 3.3 billion dollars (2.3 billion euros) from a 16.4-billion-dollar credit line over two years. It also allows for an October influx of funding from the World Bank and the European Bank for Reconstruction and Development, totaling 570 million euros, a Commission spokesman said. One of the conditions for the loans is a recapitalization of Naftogaz to the tune of two billion dollars, the Commission said. And a statement on the EBRD website made it clear that its funding was conditional on Ukraine modernizing its energy sector, in particular Naftogaz. Russia provides about a quarter of the gas consumed in the EU -- and 80 percent of that is piped through Ukraine. January''s dispute between Moscow and Kiev hit homes and businesses in Eastern and Western Europe. Price and pay disputes between Russia and Ukraine have led to serious disruptions to the natural gas supply in recent years across the European Union, which relies on Russia for around a quarter of its gas consumption. Russia has the world''s largest gas reserves and is the biggest exporter.