Page 68 - UKRRptJul19

9.2 Major corporate news 9.2.1 Oil & gas corporate news
Ukraine’s national gas company Naftogaz released its 2018 annual report that reported UAH11.6bn ($443mn) in profits and showed that the company’s tax and dividend payments account for 19% of Ukraine’s government income making it the biggest tax payer in the country, the company said in a press release on June 27. “It is the third year running that Naftogaz group has remained the largest net revenue source for the Ukrainian national budget. In 2018, the companies consolidated within Naftogaz group contributed UAH138.6bn ($5bn) to the state budget, having accounted for nearly 19% of the Ukrainian budget revenues (UAH110.0bn and 15% in 2017, respectively),” the company said in a press release. The payments include UAH29.5bn paid as Naftogaz dividends as a 100% state-owned company, up from the UAH13.3bn the company paid as dividends in 2017. In comments on the results, Naftogaz said the Stockholm arbitration decisions in its fight with Russia’s state-owned gas giant Gazprom had materially influenced results for 2017 and 2018. In 2018, Naftogaz generated revenues of UAH256.3bn ($9.3bn), operating income of UAH26.4bn and net income of UAH11.6bn ($0.4bn). “The group’s net income has decreased by UAH27.9bn compared to 2017, mostly due to the effects of reflecting the Stockholm arbitration decisions in both 2017 and 2018,” Naftogaz said. In 2017, Naftogaz recognized UAH12.6bn of net positive effect of the Stockholm arbitration decisions on the group’s operating income. In March 2018, Naftogaz recognized expenses of UAH4.8bn related to the additional VAT paid by the group in relation to the awards. The transit contract arbitration award resulted in UAH43.9bn inflows (including dividends, profit tax and related VAT) from Naftogaz to the state budget of Ukraine in 2018.
Naftogaz asks Cabinet to allow dividend delay, new borrowings. Ukraine’s leading natural gas company Naftogaz is trying to better prepare for possible troubles with its supply in early 2020, CEO Andriy Kobolyev wrote on his Facebook page on June 6. In particular, the company has accumulated 11.5bcm of natural gas in its storage as of June 1, which is 1.8bcm more y/y. By the start of the heating season (mid-October), the company is going to stockpile 20bcm of natural gas, or about 3.0bcm more y/y. At the same time, Kobolyev warned that Naftogaz has a potential liquidity shortage for the timely accumulation of natural gas stockpiles, and therefore he is asking the Cabinet to help the company to resolve the issue. First, the Cabinet might agree to a delay on Naftogaz dividend payments (90% of its 2018 profit, or about $450mn, should be paid by end-June, according to the Cabinet’s decree). Second, the Cabinet might help the company to attract credit financing. “This requires the permission and active participation of the Cabinet as our sole shareholder,” Kobolyev wrote. Earlier Kobolyev estimated that the total liquidity gap of Naftogaz in 2019 could reach UAH71.3bn ($2.5bn), which could be covered by borrowing from state banks and a new Eurobond.
NJSC Naftogaz Ukrainy has completed repayments under the loan agreements worth $500mn received under the World Bank's guarantees and state guarantees, the press service of the company has reported. According to Naftogaz, within the framework of these loan agreements, which were signed on December 30, 2016, the company managed to purchase about 5bn cubic meters of natural gas from the European direction over two years.
68 UKRAINE Country Report July 2019 www.intellinews.com