Well it has long been muted that the Ukrainian gas transport system is in serious need of an upgrade.
Russia was and possibly still is interested in a large stake in Naftogaz for obvious reasons. The current Ukrainian government have resisted overtures from Russia in this regard and had looked to the EU to become a partner with no success.
It seems partial privitisation is now under consideration.
Ukraine wants to raise $5-6 billion by selling a minority stake in state energy firm Naftogaz on the stock market, Energy Minister Yuri Boiko said on Tuesday.
“We are deciding with our advisers now which stock exchange is best for the placement,” the Energy Ministry quoted him as saying in a statement.
“We plan to receive $5-6 billion as a result that will be used to develop the company, to increase gas production in our country and to upgrade our gas shipping system.”
Unless Naftogaz had become suddenly transparent, there will be several stock exchanges that will be forced to exclude its listing with them.
Unless Naftogaz actually starts to turn a profit, who will buy shares in it? When, historically, was the last time Naftogaz Ukraine made a profit…..or at least a declared profit?
Gaz Ukrainy, a subsidiary of Naftogaz Ukraine only this week stated that it has been paid for an average of only 48% of the gas it supplied to the regions. Debts owing are already at UAH 8.1 billion for this heating season alone.
What return can minority shareholders expect from a majority owned national monopoly that is subjected to political whims with changing governments and artificially low consumer pricing?
Which banks are advising on this placement and what are their fees?
Undoubtedly Naftogaz needs the financial investment and this is a genuine route to achieve it, but, so many questions and as yet so few answers.