June 4, 2014 / 8:51 AM / in 3 years

Ukraine proposes to split debt-laden state gas company

KIEV, June 4 (Reuters) - Ukraine’s government proposed on Wednesday to split the debt-laden state-controlled gas company Naftogaz into three separate businesses to comply with European Union rules regulating competition in the energy sector.

The embattled company owes Russia’s Gazprom more than $5 billion, Moscow says, and has little 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 told a regular government meeting. “A Ukrainian gas transportation system company, which will transport gas, and a company which will store gas underground will be created.”

Such a 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 monopolies over pipeline tariffs by a single energy company. (Reporting by Pavel Polityuk; Writing by Sabina Zawadzki; Editing by David Goodman)

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