Tymoshenko blasts Ukraine-Russia deal

18:30, 30 October 2006
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Warning that it could destroy Ukrainian industry

The leader of a top Ukrainian opposition party criticized Ukraine`s recent energy deal with Russia, warning Monday that it could destroy Ukrainian industry, according to Interactive Investor

      Under the deal signed last week, Ukraine is guaranteed not less than 55 billion cubic meters of Central Asian gas at a price of no more than US$130 (euro103) per 1,000 cubic meters next year.

      "It is a huge loss for Ukraine`s national interests," said former Prime Minister Yulia Tymoshenko, who heads a leading opposition party.

      The deal was signed between intermediary firm RosUkrEnergo and UkrGaz-Energo, the Ukrainian-based company set up by RosUkrEnergo and Ukraine`s gas monopoly Naftogaz.

      Ukraine`s new premier, Viktor Yanukovych, hailed the deal as a victory, warning that the price could have been much higher if Russia had decided to demand market rates.

      Ukraine is currently paying US$95 (euro75), a price reached after a bitter dispute earlier this year that resulted in Russia temporarily cutting off supplies to Ukraine. Last year, Russia had talked about raising the price to as high as US$230 (euro181).

      Tymoshenko`s complaints about last week`s deal were echoed by some industry officials Monday.

      "It will be very difficult for us. I do not know if we will survive next year," said Oleksiy Gydenko, deputy head of Lisichansk Soda plant, one of the largest producers of sodium bicarbonate in the former Soviet Union.

      Tymoshenko also criticized the continued use of RosUkrEnergo, alleging that members of Yanukovych`s government, including Fuel and Energy Minister Yuriy Boyko, were involved in the middleman company.

      "It is the country`s loss for the benefit of the corrupt interests of those who have power in Ukraine now," Tymoshenko told reporters.

      Last week, she claimed that Boyko was a founder of RosUkrEnergo, and made public a document with Boyko`s signature as a member of the coordinating council that took part in creating RosUkrEnergo. At the time, he was head of state-run Naftohaz, the Ukrainian state gas company.

      Boyko admitted that he was a member of the council, but denied that he was one of the founders of RusUkrEnergo or had any links to the company today.

      RosUkrEnergo was created in 2004 to replace another gas provider, Euraltransgas, with the aim of acting as an intermediary between Gazprom and Naftogaz to transit gas from the Central Asian country of Turkmenistan through Russia into Ukraine.

      Gazprom, through its Swiss-registered Arosgas Holding AG, owns 50 percent of RosUkrEnergo. The remaining half is owned by Centragas Holding, an Austrian-registered company owned by two little-known Ukrainian businessman.

      Ukraine is one of the most inefficient energy users in the world, using almost as much natural gas as more advanced economies such as Germany and Britain. For every dollar`s worth of industrial production, Ukraine consumes about 2 1/2 times as much energy as its neighbor Poland.

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