OREANDA-NEWS. January 11, 2008. The Cabinet of Ministers of Ukraine at its meeting held on Wednesday, January 9, 2008 set up an inter-agency commission to audit the financial and economic activities of the NJSC for the last several years, UFC Capitas's press service reported. According to Yuri Prodan, minister for fuel and energy, the commission includes the representatives of the Principal control and audit administration, Finance Ministry, Ministry of Economy, National Electricity Regulatory Committee and of some other agencies. The well-informed sources say that the decision of Mrs Timoshenko to intervene into the "oil and gas" business was provoked by the letter from 4 leading banks: Bank of New York (BoNY), ABN Amro, Credit Suisse and Deutsche Bank, which are very concerned about the financial position of the NJSC.

Oleg Dubina, chief executive of the NJSC, says that the accounts payable of the company for the first time in several years exceeded its receivables: "In addition to the lack of the gas balance for this year, even last November and December balances were not settled. Everything that has been spent so far in the country for heating season, for household needs, has not been confirmed -- there are no formal documents." According to the preliminary data of Mr Dubina, the NJSC loss in 2007 will amount to UAH 5 bn -- which is twice as much as in 2006. Mr Dubina says that the difficult financial situation in the company is caused by the presence in the domestic market of UkrGas-Energo joint venture, established in 2006 on a parity basis by Naftogas and RosUkrEnergo (Swiss gas trader), which has exclusive rights to supply natural gas to Ukraine: UkrGas-Energo is a monopolist supplier of gas to the solvent consumers – industrial enterprises. All the best consumers that provide a 100% prepayment and some profit are taken by UkrGas-Energo, which earns within the NJSC structure. Meanwhile, Naftogas sells gas only to the population and the largest debtors – heat and electricity utilities companies,” Oleg Dubina specified. However, it looks like that the situation will change soon. According to some information, Yulia Timoshenko authorized Yuriy Prodan, minister for fuel and energy, Oleg Dubina, the NJSC CEO, and Valeriy Kalchenko, NERC CEO, to consider the possibility to cancel the license of UkrGas-Energo for natural gas supply at non-regulated tariff. The first robin became the decision of the National Electricity Regulatory Committee on termination of a decree on canceling the limits for gas supply by UkrGas-Energo at the level of 5.04 bn m3 per year. The decree also specifies that the commission took the decision pursuant to the Presidential decree dated March 14, 1995, #213 On measures to support the NERC activities. It is not excluded that behind all these intentions there is a desire to replace UkrGas-Energo with closer to the Cabinet companies. So, the gas market of Ukraine is on the verge of great changes.

The consolidated loss of Naftogas of Ukraine NJSC under IFRS for 2005 amounted to UAH 1.007 bn, whereas the holding ended the year 2004 with UAH 455 mn profit.Meanwhile, the net non-consolidated profit of the NJSC for January-September 2007 under the Ukrainian national accounting standards amounted to UAH 1.490 bn, whereas in the comparable period of 2006 the NJSC had a loss of UAH 313.044 mn.

The net non-consolidated income of the company from sale of goods, works and services for 9 months of 2007 under the Ukrainian national accounting standards reduced by 17.6% - to UAH 13.89 bn, while its gross profit for the same period increased 13.1 times – to UAH  2.79 bn. The consolidated financial statements of the holding for 2006 prepared under IFRS have not been published so far.