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    Naftogaz Ukrainy Accuses Firtash Companies of Theft

Summary

The wealthy businessman's companies are passing on surcharges to customers, but Naftogaz says these are predatory.

by: William Powell

Posted in:

Natural Gas and LNG News, Europe, Corporate, Political, News By Country, Ukraine

Naftogaz Ukrainy Accuses Firtash Companies of Theft

The continual struggle between Ukraine's gas wholesaler Naftogaz Ukrainy and its regional retail suppliers owned by Dmitry Firtash has resurfaced, with the latter accused of stealing from its customers under the pretext of following instructions from Naftogaz.

In a December 6 statement, Naftogaz said that most of Ukraine's domestic consumers had received bills with additional charges for October and a warning about additional charges for the previous three years, which "added up to significant amounts". These charges were made necessary, the retailers said, by Naftogaz' request for deliveries to meet gas measurement specifications.

Naftogaz said this was untrue as these differences had already been accounted for: "Additional charges lead to double payment of the same volumes of gas and create virtual debts, which in the future will impede the transition of consumers to other gas suppliers."

It said it suspected that Firtash wanted to "create artificial inconveniences for consumers, discredit the reform of the Ukrainian gas market and protect the illegal monopoly of gas sales". It said it was in no way involved in the decision of the retailers to demand additional amounts from consumers and that it condemned such actions.

The World Bank and the Energy Community Secretariat have both condemned Ukraine's opaque retail market, where individuals such as Firtash are still able to make a lot of money through flaws that the government could correct. This suggests that it suits the government to allow these abuses to continue.

According to a recent paper by Simon Pirani published by the Oxford Institute of Energy Studies, Ukraine's heat suppliers and distribution companies are deeply indebted to the government, in addition to being a prime site of corrupt misappropriation of gas. The World Bank’s estimate of the economic cost to the Ukrainian state is $1.7bn/year; the Energy Community secretariat’s is in the same range, he says.