In January-July 2018, Ukrnafta, one of top 5 tax payers in Ukraine, paid nearly UAH 8.5 bln in taxes, including UAH 784.9 mln of the overdue tax debt.
The company continues to repay the outstanding tax debt on a regular basis along with all current taxes. Ukrnafta’s conservative plan envisages repayment of UAH 1.2 bln in 2018. As of June 30, the outstanding tax debt was UAH 11.05 bln declining since the beginning of the year.
Risks to continued payment of taxes are twofold: Ukrnafta being unable to produce because of the regulator blocking Ukrnafta’s production licenses, and failure to convert production into cash because of the instability of the state-run oil auctions where the company is required to sell its oil and condensate and where the starting prices are set based on the formula approved by the government. Since the beginning of this year, only 7 out of 14 state-run oil auctions were successful.
Meanwhile, Ukrnafta recorded UAH 11.05 bln of outstanding tax debt as of the end of H1, 2018. This includes the debt owed by the company and its structural units. Ukrnafta’s approach to recording and reporting tax debt is consistent with the Ukrainian law and is supported by the independent external auditor. The bulk of the debt accumulated in 2014-2015 before the management change.