* To form new gas transportation and storage companies
* Decree expected later on Wednesday with more details
* Naftogaz reform a condition of IMF help
(Adds comment from energy minister, confirms proposal accepted)
By Pavel Polityuk
KIEV, June 4 Ukraine will to split its
debt-laden state-controlled gas company Naftogaz into three
separate businesses to comply with European Union rules
Reform of Naftogaz has been on the cards for years and could
be one solution to the perpetual wrangling between Kiev and
Moscow over Ukraine's gas debts, which have disrupted supply to
Europe in the past. Taking steps to make Naftogaz profitable
could increase its ability to pay its bills on time.
The company owes Russia's Gazprom more than $5
billion, Moscow says, and has few resources to settle the bill
as it pays more for Russian gas than it sells to Ukrainian
consumers, thanks to state subsidies.
"Naftogaz will deal exclusively with trading gas," Prime
Minister Arseny Yatseniuk said on Wednesday. "A Ukrainian gas
transportation system company, which will transport gas, and a
company that will store gas underground will be created."
The proposal is in line with the EU practice of keeping gas
transportation companies separate from gas buyers and sellers to
avoid any potential domination of pipelines or a monopoly over
pipeline tariffs by a single company.
Energy Minister Yuri Prodan confirmed the decision to create
the two new entities had been taken by the government during
Wednesday's meeting, which was later closed to media.
Interfax cited him as saying that several laws need to be
passed in order to strengthen the independence of the gas
At the moment, the pipeline system and underground storage
are both under the control of Ukrtransgaz, which is 100 percent
owned by Naftogaz.
Ukraine's government, in place since the February ousting of
pro-Russian President Viktor Yanukovich and seeking to move
closer to the EU, has already increased consumer gas prices by
Naftogaz, however, would still be running a deficit of 80
billion hryvnia ($8 billion) this year even after the price
increase, officials say.
The government was expected to issue a decree on Wednesday
that may include more details on how and when the company will
Reforming Naftogaz and cutting its debts have been
conditions of an International Monetary Fund bailout.
The IMF announced at the end of March a $14-18 billion
standby credit that will unlock further aid from the European
Union, the United States and other lenders over two years,
effectively pulling Kiev closer to Europe.
(Reporting by Pavel Polityuk; Writing by Sabina Zawadzki;
Editing by William Hardy)