The Cabinet of Ministers of Ukraine has instructed the Ministry of Finance and the Ministry of Energy and Environmental Protection to develop in the coming week a mechanism for channeling the profits, which Naftogaz received in 2019, for the construction of roads and hospitals.
This instruction was given by the Prime Minister of Ukraine Denys Shmyhal.
According to the prime minister, Naftogaz' profits, much of which is $2.9 billion awarded by the Stockholm Arbitration in late 2019, which the Russian gas monopoly Gazprom agreed to pay under agreements to continue gas transit, will be spent on building and repairing transport and health infrastructure.
“It is crucial that a significant part of these funds, at the initiative of the President, will be directed to the program 'Large-Scale Construction"' That is, for roads, schools, kindergartens and the reconstruction of 210 support hospital emergency rooms," Shmyhal said.
According to head of Naftogaz, Andriy Kobolyev, the company currently has 7 billion hryvnias ($260 million), 1.74 billion dollars and 340 million euros ($367 million) in its accounts. In total, at the current exchange rate, it amounts to 64.1 billion hryvnias ($2.38 billion).
"At any time when a decision is made by the shareholder (government – ed.) to pay out funds in the form of dividends or in any other way, these funds may be transferred to the state budget of Ukraine," said Kobolyev.
He noted that Naftogaz had bought $800 million worth of domestic government bonds. They are currently in the company's accounts.
At the 2019 year-end, Naftogaz received a net profit of 63.3 billion hryvnias ($2.35 billion). The government obliged the company to transfer 95% of this profit to the budget in the form of dividends.
Before the coronavirus crisis kicked in, the previous government of Oleksiy Honcharuk also had plans to spend the award from Gazprom on the construction of roads and hospitals. On top of that, the Minister of Infrastructure Vladyslav Krykliy earlier announced that part of the compensation from Gazprom could be spent to finance Ukrzaliznytsia, the state railway company.
Previously, Naftogaz Executive Director Yuriy Vitrenko wanted to distribute the award among the Naftogaz leadership with each receiving up to 1% of the arbitration award ($29,000,000) as a bonus.