Ukrainian President suggests using $2.9 billion from Gazprom on roads and medicine

Ukrainian President Volodymyr Zelensky has suggested that the $2.9 billion which Naftogaz received from Gazprom as the result of an arbitration dispute be used for infrastructural and medical projects, the president’s press service reported.

“We are further planning to direct funds towards the construction of roads – that’s our infrastructural priority, towards other infrastructural projects, towards the medical field and towards energy efficiency. One of the plans is to build more than 200 medical assistance reception centers throughout Ukraine,” he said during a meeting with Ukrainian ministers and MPs.

On February 28, 2018, the Stockholm Arbitration Institute ruled in favor of Naftogaz on the majority of issues in its dispute with Gazprom.

The court confirmed that Gazprom had failed to meet the required transit volumes, and awarded Naftogaz $4.63 billion in compensation. This meant that Gazprom had to pay Naftogaz around $2.56 billion, taking into account the final amounts owed for gas supplied in 2014 and 2015.

The first part of the compensation, $2.1 billion of the awarded $4.63 billion (45%), Naftogaz received as gas delivered in 2014.

On December 20 in Minsk, Ukraine and Russia signed a package of agreements, according to which Gazprom would pay the $2.9 billion from the arbitration ruling, both parties would renounce all other reciprocal claims, including a $7.4 billion fine from Ukraine’s Antimonopoly Committee, and sign a five-year transit agreement (65 billion cubic meters in 2020; 40 billion per year in 2021-2024), with the option of extension to 10 years. However, Naftogaz “takes on the risks of tariff-setting for the Ukrainian gas transit operator’s gas transit”.

Ukrainian Presidential Aide Andriy Yermak also said that during the negotiations on December 20, Russia agreed to pay Ukraine $3 billion in accordance with the Arbitration Institute’s ruling. He also specified that the payment would be made as a monetary transfer. There had previously been talk of accepting payment in the form of gas, or through the Gazprom assets that were seized in Europe at Naftogaz’s request.

  Gazprom, Naftogarz, Zelensky