Naftogaz Covers Nearly Sixth of Kiev Budget

State gas company Naftogaz Ukrainy accounted for about 15% of Kiev's budget in 2018, paying in hryvnia 136.5bn ($4.9bn) in the form of taxes, licence fees and dividends, it said January 9. That makes it the biggest contributor to the budget and it was 27% more than it paid the year before, it said. And of the total, hryvnia 55.5bn were spent on gas subsidies for consumers.

Tax on profits was hryvnia 23.9bn, VAT payments were hryvnia 37.4bn, rental payments were hryvnia 28.5bn and dividends another hryvnia 29.5bn.

Despite being owned by the government, the vertically integrated company is struggling with it over public service obligations that entail cross-subsidies; and with the oligarch Dmitry Firtash, who owns gas distribution companies that Naftogaz has accused of predatory billing practices.

Naftogaz wants to be unbundled as a matter of urgency, its transit business forming a new company, Magistralnye Gazoprovody Ukrainy (MGU), that may be sold off; but its loss-making storage business, the biggest in Europe in terms of working gas capacity, to be retained. Foreign investors do not see value in it as part of MGU. Gazprom has said that it lost billions of cubic metres of gas in Ukraine's storage facilities once, since when it has not booked capacity.