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11:40
CABINET'S DECISION TO TRANSFER GAS PIPELINES TO NAFTOGAZ UKRAINY TO UNBALANCE MARKET, SAY EXPERTS

Kyiv, August 4 (Interfax-Ukraine) – A cabinet decision to transfer gas pipelines to the control of National JSC Naftogaz Ukrainy does not contain mechanisms for its realization and could adversely affect the reliability of gas supplies to Ukrainian consumers in the fall and winter period, according to experts polled by Interfax-Ukraine.

The director of the Energobusiness economic information-processing center, Oleksiy Cherniavsky, said that the decision to transfer the gas pipelines to Naftogaz raises more questions than it answers, and in particular, it contains neither mechanisms for the pipeline transfer nor terms for it.

He said that despite the fact that most gas pipelines belong to the state, regional gas supply companies are large service structures with their own services, staff, vehicles and technical documentation for all of the pipelines.

"Do the cabinet or Naftogaz have the resources to set up alternative structures in all of the regions? It's obvious that they don't. Will the owners of regional gas suppliers agree to service the pipelines if the transportation tariff goes to new daughter company of Naftogaz Ukrainy? It's obvious that they won't," the expert said.

He also predicts mass court appeals against the cabinet's decision and activities of the new subsidiary of Naftogaz Ukrainy at the start of the heating season.

The head of the economic programs at the center for system analysis and forecasting, Vyacheslav Butko, said that regional gas supply companies are in a difficult financial state.

"The average tariff for natural gas distribution today is UAH 81.30 per thousand cubic meters, and the average tariff for gas supply is UAH 34.50, which is at least UAH 50 less than required," Butko said, assessing the total level of fund shortfall in the sector at UAH 1 billion in H1, 2009.

The expert said that the transfer of gas pipelines to state control would not lead to an increase in tariffs, as elections would be held soon.

"This means that the operation of regional gas supply companies would remain unprofitable," he said.

The head of the Center for Energy Studies, Kostiantyn Borodin, said that the said cabinet decision is an element of pressure on the private owners of gas distribution companies.

"The groundless tariff policy and now the withdrawal of pipelines are links of the same chain. They're giving the owners of regional gas supply companies to understand that their business should be sold to companies that the cabinet would select," Borodin said.

He said that the cabinet's actions would not improve the state of Naftogaz Ukrainy, the level of payments for gas and accident rates during gas transportation.

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