Members of the Management Board of Ukrnafta and managers of 18 structural units of the company have called on President of Ukraine Petro Poroshenko to intervene and prevent the destruction of the company through actions of the government agencies that block its business activities.
The State Geological Service has refused unlawfully to extend 9 licenses that expire in 2017 thus impeding production of hydrocarbons. Ukrnafta stands to lose 20% of annual oil production this year and 50% next year due to unlawful actions by the regulator. The fiscal authority has been trying to seize operational assets as tax lien and block any banking transaction of Ukrnafta. Such action will not only fail to repay the multibillion tax debt, but will also force the company to stop operations and pay the current taxes. On the other hand, the proposals of Ukrnafta management to commence urgent financial rehabilitation of the company have not received due consideration.
“It is our duty to warn you that the efforts by the state authorities to block the company’s activities will have disastrous consequences for Ukrnafta forcing the company to stop operations. The state will lose domestic oil production and billions in taxes. Losses will amount to 290 ktonnes of oil and condensate, 128 mln m3 of petroleum gas and 88 mln m3 of natural gas per year. Following the stoppage, a portion of the oil and gas output will be lost permanently. About 1 500 employees in Sumy region may lose stable jobs in the coming months”, says the open letter.
The national budget will miss UAH 1.4 bln per year in rent revenues alone because of the expiration of the licenses. The local budgets will see their revenues decline and thousands of people in Sumy region will be left without supply of natural gas in June as the company is forced to idle its infrastructure equipment. The losses next year will be even greater if the regulator refuses to extend 27 more licenses.
“We believe that such actions run counter to the country’s economic and energy security interests… Ukrnafta has a lawful right to have its licenses extended and the state has the obligation to protect it. We also ask to instruct the Cabinet of Ministers of Ukraine to commence urgent financial rehabilitation of Ukrnafta that will save the company and ensure repayment of the debt to the state budget. There is no time to waste”, emphasizes the letter.
