Looks like Ukraine won't be buying that gold [5]with IMF loan proceeds after all.
Moments ago, in what has become a monthly tradition, Gazprom reported that Ukraine has once again forgotten to pay its latest monthly, April, gas bill. As a result, the total amount of money now due rises from $2.2 billion which was the invoice through the end of April, to $3.5 billion. As RT reminds us, and as was reported previously, this means that in June Ukraine might receive Russian gas only on the condition of advanced payment.
From RT [6]:
"The deadline has passed, no payment has been received," said Sergey Kupriyanov, the company's representative. Earlier the company said that if the deadline was not met, Gazprom would issue an advance bill for June gas supplies on May 16.
Naftogaz, Ukraine’ state-owned oil and gas company, has a long record of late payments and unpaid bills to Gazprom, a problem which has only gotten worse as Ukraine has slipped into revolution and civil unrest.
The debt as of May 7, 2014 stands at $3.508 billion, Gazprom said Wednesday, which is up from $2.2 at the end of April.
This latest number is notable because as was reported overnight, Ukraine said that it had gotten the first IMF bailout tranche of some $3.2 billion. Naturally, since the Gazprom receivable is greater than this amount, and since Ukraine will further have to prepay future gas deliveries, it means that all of the money funded by US taxpayers among others and then some, will go straight into the pockets of the Kremlin.
Additionally, we also learned what the terms of the indirect US payment to Gazprom will be:
- UKRAINE TO ONLY PAY INTEREST ON IMF LOAN FOR 3 YEARS: MINISTRY
- UKRAINE TO REPAY IMF PRINCIPAL QUARTERLY OVER 2 YRS: MINISTRY
- UKRAINE SAYS GOVT TO PAY 3% INTEREST A YEAR ON IMF BAILOUT
The IMF clarified that out of the $3.2 billion amount, Naftogaz may be eligible to use up just $2.16 billion to pay off its debts to Gazprom, according to documents prepared by the fund. In other words, not nearly enough to cover the due bill.
Furthermore, Ukraine is hoping that it will get another $13.7 billion from the IMF which however is in doubt if indeed this Sunday's referendum is not postponed and if the republic of Donetsk votes to effectively split Ukraine in two.
As for future payments...
Ukraine says it is ready to pay its gas debt to Russia’s Gazprom as long as the company lowers prices from $485 per 1,000 cubic meters down to $268.50, the price the country enjoyed under ousted President Viktor Yanukovich. Moscow ended the discount in April, raising gas prices nearly 50 percent.
The second $100 gas hike came in April when Russia canceled its Black Sea Fleet host agreement with Ukraine after Crimea voted to join Russia. Moscow said Kiev owes $11.4 billion for all the discounts it received since the 2010 deal.
Russian Energy Minister Aleksandr Novak warned over the weekend that the situation with gas transit through Ukraine had reached a “very critical point” as the gas supplies in underground storage facilities have dropped to a point where they can’t guarantee supplies from Russia to Europe.
The implicit threat as always remains that should the Ukraine be unable to fulfill its obligations to Russia, not just Ukraine's gas needs will be compromised: Gazprom supplies Europe with 30 percent of the continent’s natural gas. Half of these Russian supplies are shipped through Ukraine.
Said otherwise if Ukraine uses even a dime from the IMF funding for any other purpose: say to refuel its helicopters and/or tanks currently used to keep the "separatists" at various eastern cities at bay, Europe too will suffer a cut in its deliveries.
And now back to random headlines proclaiming some mythical, imminent "de-escalation" in the Ukraine.