Ukrainian state energy company Naftogaz, often at the centre of energy rows with Russia due to its sketchy ability to pay for gas bills, said today it had preliminary agreement to delay payment of $2.8 billion of debt. The company said it expects to finalise the deal by the end of the month with lender, state savings bank Oshchadbank, to delay payment by 10 years of 22 billion hryvnias of debt it incurred in 2008 to 2009. "The realisation of this measure would allow the company to increase the average debt repayment deadline from in a year's time to 10 years and introduce a comfortable timetable for the company for their amortisation," Reuters quoted Naftogaz as saying in a statement. "The company is in the final process of agreeing the main conditions of restructuring and plans to end it by the end of this month," it said.
In order to restructure, Naftogaz wants to issue new hryvnia-denominated debt, which will not be guaranteed by the government. The yield of this issue is not yet known. The finances of Naftogaz have crumbled as it buys increasingly expensive gas from Russia but is then forced to sell it at subsidised prices to consumers. Local utilities also frequently fail to pay their bills to Naftogaz. Last November it managed to restructure its entire foreign debt through the issue of a $1.6 billion 5-year Eurobond with a yield of 9.5%. Naftogaz' poor state has been a sap on state finances and the central bank, both of which have kept the company afloat. The International Monetary Fund, which last year suspended a $16.4 billion bailout programme, has demanded that consumer gas prices be increased drastically to ease the state's load.