FX.co ★ Naftogaz to split into three entities

The government of Ukraine, in a scatter-when-serious-problems-begin manner, decided to split Naftogaz into three companies. Ukraine's Ministry of Energy and Coal put forward an initiative to create two joint-stock companies, one of which will manage underground gas storage facilities, while another one will deal with gas pipelines. The new companies will be controlled by Ukrtransgaz. The resolution of the government clearly defines that this corporatization is not a part of privatization with the assets of the new companies to be wholly owned by the state. The decision also involves special decree of the ministry to completely deprive Naftogaz of the status of the operator of Ukraine’s unified gas transportation system. From now on, Ukrtransgaz will be entitled to carry out these functions. It is worth noting that recently media reported it had seen leaked documents confirming that the gas transportation company plans to create joint firms with the U.S. and EU on the basis of Naftogaz. Operators intended to rent the pipeline from the state-run company, leaving only strategic gas storage facilities to the government, while allowing others to be privatized. Now only one question remains: who will take the huge debt of Naftogaz? Ukraine's Prime Minister Arseny Yatsenyuk said the debt is estimated at $8-9 billion.