Gazprom to discontinue natural gas price discount for Ukraine

OAO Gazprom plans to discontinue its natural gas price discount for Ukraine in April.

Dmitry Medvedev, Russia’s prime minister, discussed gas pricing with Alexey Miller, chairman of Gazprom’s management committee, in a Mar. 4 meeting.

According to a transcript of the meeting posted on Gazprom’s web site, Miller said Ukraine has total gas indebtedness of $1.529 billion.

Miller said the discount price had been agreed upon late in 2013, “provided that Ukraine would ultimately clear the debts accumulated over the last year and would pay in full for current supplies.”

Gazprom hasn’t received any payments for gas supplied Ukraine in January “and our Ukrainian partners informed us yesterday that they would not be able to pay in full for the gas supplied in February,” Miller said.

“Given that Ukraine is not fulfilling its obligations or complying with the agreements reached when signing the contractural addendum providing a gas discount, Gazprom resolved to remove the discount starting from this April,” Miller said.

Miller said Ukraine has repaid $1.3 billion of 2013 debt. Medvedev said, “It’s no secret that those 50% they paid came from the sovereign loan we had given them.”

Miller said the “easiest” way to settle indebtedness and payments for current gas supplies would be for Gazprom to provide Ukraine with a loan of $2 billion or $3 billion.

Medvedev told Miller that “your decision to terminate the beneficial terms of supplies looks completely justified.”  He said he will entrust the Ministry of Finance to consider all “possibilities and obstacles.”

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