Ukraine ‘confident’ of gas flow to EU

Ukraine is confident Europe will not see another winter of gas supply disruptions, but there will be a “higher risk” if the International Monetary Fund does not resume lending to its distressed economy, according to Petro Poroshenko, Ukrainian foreign minister.

His comments came as Ukraine made an urgent appeal to the IMF for about $2bn (£1.2bn, €1.4bn) in emergency loans to ease what Hryhoriy Nemyria, deputy prime minister, described as “an extremely difficult situation” in meeting its external obligations. These include monthly payments to Russia, which supplies natural gas to the European Union via Ukraine.

Mr Poroshenko, speaking shortly before meeting IMF officials in Washington on Friday, sought to calm EU fears of another winter of gas cut-offs, which have affected supplies in recent years as a result of Ukraine’s disputes with Russia.

“I am confident that we don’t have a reason to be worried that suddenly we will have any danger of the shortening of stock for supplying gas to Europe,” he told the Financial Times.

However, he said there would be greater certainty if Ukraine succeeded in renewing its co-operation with the IMF, which two months ago suspended a $3.8bn disbursement over the government’s failure to implement key economic reforms.

“If we renew co-operation with the IMF, we will for sure have no reason to be worried for payment for the gas,” Mr Poroshenko said. Without IMF help, “it would be a little bit more higher risk but I’m not expecting that it is a real danger”.

Russia cut off gas supplies to Ukraine last January 1 in the latest of annual disputes over price levels and unpaid debts to Gazprom, the Russian supplier, reducing flows to customers in the EU.

Mr Poroshenko said the two sides had avoided the annual tension involving last-minute bargaining by reaching a deal in the autumn. “Now we have no dispute on the price question,” he said. “We settled everything in October and November. We have a price, we have a formula, we have a transit price.”

He acknowledged that Ukraine was a year behind in instituting reforms demanded by the IMF but blamed the current campaign for presidential elections in January for slowing the pace.

“Of course, we have a shortage of funds,” Mr Poroshenko said. “Because of the upcoming elections it is not the best time for providing reforms, including cutting the budget deficit, which certainly will be done after the election but nobody can decide to do it before.”

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