Ukrtransgaz said that is unable to execute a loan agreement with the EBRD and the EIB

Укртрансгаз заявил, что не в состоянии выполнять кредитное соглашение с ЕБРР и ЕИБ

In connection with the critical financial situation the company appealed to the European Bank for reconstruction and development and European investment Bank with a proposal to revise the terms of the existing loan agreements for the modernization project of the gas pipeline “Urengoy-Pomary-Uzhgorod”. This was reported by the press service of “Ukrtransgaz”, reports

“The company appeals to banks to offer to consult with the government to determine responsibility of the parties, the mechanism for use of funds and service credit after the completion of the process of unbundling and not see the possible use of funds under the loan agreement with the EBRD and the EIB in 2019,” said the Company.

As the company explained, first, by establishing NKREKU low tariffs and as a result of the significant deterioration in the financial condition of the company Ukrtransgaz is unable to fulfil the criteria of financial stability, which is defined in the loan agreements with EBRD and the European investment Bank. Back in November 2018 at the meetings of the regulator for the review of new rates, the company’s management warned that lowering rates will not allow the Company to use the loan from European banks.

Reducing the tariffs, the national Commission violated certain provisions of the loan agreements with the EBRD and the EIB, which must guarantee the loan. The regulator pledged to maintain the proper level of tariffs for Ukrtransgaz, which will enable the company to obtain sufficient income to provide criteria for financial stability.

Therefore, in applying to the Bank it is noted that for the effective use of credit resources, the company proposes to revise the criteria of financial stability, and to amend the credit agreement.

Second, in connection with a significant increase in the probability of the Gazprom scenario the “zero transit” after January 1, 2020, the company takes the necessary preparatory and optimization actions, including determining the most effective way to use credit. The scientific and technical Council in October, it was decided that improving the reliability and increasing the efficient use of the pipeline can be implemented due to the significantly smaller volume of funds. Therefore, the company asks the Bank to reduce the loan amount, as to achieve his main goals will be enough to attract the 125 million Euro investment (300 million euros instead of planned amount of loan funds).

Third, adopted by the Cabinet of Ministers of Ukraine amendments to the Decree №496 of the separation of functions of the transportation of natural gas, clearly define the mechanism further use of the installations and equipment of the GTS, as well as legal entities responsible for the use of these tangible assets. At the same time, the updated Ordinance does not directly regulate the relationships of the company with the EBRD and the EIB in the use of credit after the separation of the Operator GTS.

We will remind, joint-stock company “Ukrtransgaz” announced the impossibility to carry out the purchase of gas, which is a prerequisite of an emergency at the state level, and pointed to the accumulation since the launch of the daily balancing market participants gas debt of more than UAH 3 bn, the largest share in regional gas companies.

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