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. Last Updated: 07/27/2016

Ukraine Plans to Auction Gas To Meet Terms of IMF Loan

KIEV -- Ukraine will try to sell 300 million cubic meters of gas May 13 at an auction planned to help the nation to meet a sale target under its $2.2 billion IMF loan program, an official in charge of gas auctions said.

First Deputy Economy Minister Anatoly Vrublevsky also said Thursday that he was dissatisfied with auction volumes so far and wanted to discuss adjusting the focus of the sales with the International Monetary Fund.

Vrublevsky spoke after an auction, at which 19.9 million cubic meters out of 600 million cubic meters of domestic gas on offer was sold for a total 2.2 million hryvna ($560,000).

The gas sold at starting prices, averaging 112.54 hryvna per 1,000 cubic meters, not including transportation costs and value-added taxes, compared with about $80 per 1,000 cubic meters, which Vrublevsky said traders charge for imported gas.

Vrublevsky said 708 million cubic meters of gas for delivery in 1999 had been sold since auctions began last October with a view to injecting cash into the sector, choked by a web of nonpayments and barter, and providing transparent gas pricing. "In the IMF memorandum, there is an article requiring the sale of around 1 billion cubic meters of gas by May 15," Vrublevsky said, adding that the auction committee intended to sell 20 bcm by the end of the year, 5 bcm of it for delivery in the first quarter of 2000.

"We are trying to attract big gas consumers, those who use more than 50 million cubic meters a month. We are trying to fulfill our promises and are holding the auction May 13 so as to be able to sell no less than 300 million cubic meters."

An IMF mission on Wednesday started a key review of its loan program, which debt-laden Ukraine badly needs to stay on track. The gas sold at the auctions must be paid for in cash, while many cash-strapped gas consumers can afford to pay for at most only a part of the gas they use, and that mostly in kind.

With few real sanctions implemented against those who do not pay, many consumers prefer to continue under the old system rather than pay in cash, even at a lower price, and buyers at the auctions are few.

"Many companies don't have the working capital even to be present at the auction ? That's the main problem," Vrublevsky said. "I am not pleased with the indicators, of course ? and I am actively following a policy of attracting buyers."