Naftogaz asks for China Energy Loan Extension
Ukrainian state energy company Naftogaz has asked a Chinese state bank to extend the deadline by which Naftogaz must submit project proposals to qualify for a loan worth $3.5 billion, the chief executive of a Naftogaz subsidiary said on Monday.
It is the latest twist in a long-running saga over a loan agreement that Ukraine, under a previous president, had signed with the China Development Bank (CDB) in 2012. According to previous interviews with officials, squabbles between ministries and Naftogaz have held up the proposals.
Ukraine was supposed to submit plans for how it would use the money by June 25 but has asked for an extension until Aug. 1, said Andriy Suprun, the chief of Uglesintezgaz, a Naftogaz subsidiary involved in the project bid.
Suprun said Naftogaz had prepared one proposal to use some of the money to buy drilling rigs but is still waiting for the Ukrainian energy ministry to give the green light.
"The loan application could not be submitted because the energy ministry has not carried out the project evaluation as required by the process," Suprun told Reuters by phone.
"Because of this, Naftogaz has officially asked the bank to extend the loan application deadline (until Aug. 1). We're waiting for the bank's answer."
The energy ministry, Naftogaz and the Chinese embassy in Kiev did not immediately respond to a request for comment.
Ukrainian Deputy Prime Minister Stepan Kubiv told Reuters last month that Kiev was likely to miss the June deadline. He also said Ukraine and China should review the terms of the loan. The loan terms have not been made public.
The loan agreement was conceived in 2012 under former President Viktor Yanukovich. Many of the projects he had earmarked for the money were in the east of Ukraine, which is now in the grip of a pro-Russian separatist insurgency.
Suprun previously told Reuters the new plans included two new coal-fired power stations to be built in Kiev and the western city of Lviv and an upgrade in drilling capacity at a Naftogaz subsidiary.
They would replace Soviet-era power production facilities, which run on mainly expensively imported gas, with units that run on coal.
In March, the General Prosecutor's office asked the government to explain the reasons for the delays, accusing officials at Naftogaz and its subsidiary Uglesintezgaz of "negligence", according to a document seen by Reuters.
(By Pavel Polityuk, Writing by Matthias Williams)
