Page 17 - bne_newspaper_May_03_2019

Eastern Europe
May 3, 2019 www.intellinews.com I Page 17
Ukraine’s national gas company Naftogaz Ukrainy caves into government pressure, reduces price of gas to population
Ukraine’s national gas company Naftogaz Ukrainy has caved into to pressure from Ukrainian Prime Minister Volodymyr Groysman and says it will reduce gas prices for the population from May 1, 2019 the company said on May 1.
"Under the instruction of the Cabinet of Ministers of Ukraine, Naftogaz Ukrainy, together with the government representatives, has developed a new mechanism for determining the regulated price, which allows not only to avoid increasing the cost of gas for the population and thermal generation plants from May 1, 2019, but also to reduce it to UAH 8,247 per 1,000 cubic meters
(the final retail price)," the statement reads as cited by Interfax Ukraine.
The decision was made at a meeting between Groysman and Naftogaz CEO Andriy Kobolev.
If the market price of gas for industrial consumers is lower than that established by the resolution of the Cabinet of Ministers of Ukraine dated October 19, 2018, the price for the population will fall in accordance with this. If the market price of gas
for industry exceeds the government-determined level, the price for the population will remain at this level.
Ukraine’s largest oil producer Ukrnafta reports 63-fold surge in 2018 profits
Ukraine’s leading oil producer Ukrnafta increased net revenue by 34% year-on-year to UAH36.1bn in 2018, according to the company's annual report published on April 25.
Ukrnafta's Ebitda advanced 5.4-fold y/y to UAH9.5bn and net profit skyrocketed 63-fold y/y to UAH6.4bn.
Despite improved P&L, the company did not reach progress in resolving its debt issue to the state, as payables to the budget increased 7% y/y to UAH12.7bn as of end-2018.
At the company’s April 25 AGM, shareholders failed to approve the company’s 2018 results and dividend distribution. Commenting on that, Yuriy Vitrenko, the top manager of Naftogaz (which holds a 50%+1 stake in Ukrnafta) and head of Ukr- nafta’s supervisory board, said that the company’s 2018 financials were provided to shareholders too
late to become familiar with them.
Vitrenko also listed the conditions for Ukrnafta shareholders to approve dividend distribution. First, the Cabinet must publish its resolution on dividend distribution for state-owned companies. Earlier, Ukrainian media reported that the cabinet decided to order a 50% distribution of 2018 profit.
The Ukrainian government also must approve the decision of Ukrnafta’s EGM that allows Naftogaz to purchase natural gas from Ukrnafta. On March 28, Ukrnafta shareholders decided that Naftogaz will buy 4.06 bcm of natural gas from the company, and Ukrnafta will use the proceeds from the deal to repay its tax debt.
Alexander Paraschiy Kyiv-based brokerage Concorde Capital believes that by postponing dividend distribution from Ukrnafta, Naftogaz is