Brussels, July 25: Ukraine is close to negotiating a loan from international and European financiers which would allow it to pay its massive gas bills and forestall another gas supply crisis, the European Union executive said Friday after talks in Kiev. Ukraine and the lenders are “close to agreement regarding the necessary short and medium term commitments by the Ukrainian authorities on reform of the Ukrainian gas sector which would make it possible for (international lenders) to prepare a package of support for Ukraine,” the European Commission said in a statement.
The loan from bodies such as the World Bank and International Monetary Fund would “be designed to address both payment difficulties for the storage of Russian gas in the medium term as well as the reform and modernization of the gas sector,” it said.
The announcement came after commission and Ukrainian officials met with the IMF, World Bank, European Investment Bank and European Bank for Reconstruction and Development for a third round of talks on Ukraine’s financial difficulties.
Ukraine’s gas monopoly, Naftogaz, buys Russian gas in the summer and stores it underground until the winter, when it sells it to Ukrainian and EU consumers.
But Ukraine’s deepening financial crisis means that the country cannot guarantee that it will be able to pay for the gas this summer.
Since there are technical limits on the amount of gas Russia can send West at any one time, any failure by Ukraine to buy storage gas now could mean gas shut-offs in Europe in the winter.
The EU is therefore keen to broker a deal before the next bill falls due at the beginning of August, to avoid the kind of cut-offs which a row between the former-Soviet allies caused in January.
“The parties will continue to work intensively in the coming days,” the statement said. The commission will send a team of experts to Ukraine next week to see how much storage gas is needed.
–Agencies