Ukraine to pay off latest Russia gas debt from IMF account

Nov 6, 2009, 11:50 GMT

Kiev - Ukraine will pay off its most recent outstanding gas debt to Russia by drawing on a special use International Monetary Fund (IMF) account, government officials said Friday.

'I hope that by the end of today (Friday), we can inform you of a successful result in our work,' said Valentyn Zemliansky, spokesman for state-owned Naftohaz Ukrainy, according to an Interfax news agency report. 'Ukrnafta fulfills its obligations.'

Naftohaz Ukrainy, Ukraine's natural gas import monopoly, currently owes Russia's Gazprom some 480 million dollars for gas brought into the country during October.

The National Bank of Ukraine (NBU) Friday morning asked the IMF to release money to Kiev from the fund's Special Drawing Rights (SDR) reserves, which once received will be paid to Gazprom to cover Ukraine's October gas bill, Zemliansky said.

In August, the IMF's governing board approved release of some 291 billion dollars in SDR-denominated money to the fund's 186 members to limit the effects of the world financial crisis.

Ukraine's SDR balance with the IMF currently is equivalent to some 1.3 billion dollars.

Ukrainian President Viktor Yushchenko, in a Friday telephone conversation to European Commission President Jose-Manuel Barroso, confirmed Ukraine's intention of drawing on the IMF credit to pay off the Russia gas debt, according to a report on the Korrespondent website.

Ukrainian Prime Minister Yulia Tymoshenko Thursday afternoon said the gas bill to Gazprom had been 'paid in full,' Channel 5 television reported. There was no immediate response from Moscow.

Yushchenko, in a Wednesday statement reported by UT-1 television, called for a renegotiation of the terms of the gas import contract between Naftohaz Ukrainy and Gazprom to reflect reduced demand.

Kremlin officials have said renegotiations on delivery volumes are impossible, and Ukraine must pay for the gas it contracted for.

A gas pricing conflict between Kiev and the Kremlin in January ended in a two-week total blockade of Russian gas deliveries to Ukraine.

   Gas deliveries to Europe, which receives most of its Russian gas via Ukrainian pipelines, were dramatically reduced, causing gas price spikes as far away as France.