For 1H2019, PJSC Ukrnafta paid UAH 6.8 bln in taxes to the budgets of all levels. The taxes, paid for the respective period, are 2.0% up against the same indicator for 2018 (UAH 6.6 bln).
Ukrnafta continues to pay taxes in full, despite absence of a finalized solution to the problem of the outstanding tax debt and continual problems with oil sales at the state-run oil auctions where the company is required to sell its oil and condensate and where the starting price is set based on the formula approved by the government. In particular, only four out of 10 state-run oil auctions were successful for the reported period.
Ukrnafta has been working on solutions to repay the outstanding tax debt for over three years already. The company has sent a number of proposals to the government, but none has been approved. In March 2019, the Extraordinary General Meeting of shareholders approved the decision intended to eliminate the overdue tax debt of Ukrnafta envisaging that NAK Naftogas should buy 2.06 bln m3 of gas which was already transferred by Ukrnafta to the underground gas storage in the past and buy additionally 2 bln m3 of gas to be produced in the future. Ukrnafta is obligated to allocate all proceeds from this transaction to repay the tax debt (including fines and penalties) and other tax obligations arising in connection to the contracts. The elimination of the overdue tax debt will open the way to increasing investments, modernizing assets and achieving sustainable growth in production of hydrocarbons. However, the governmental has not yet passed a decision on this proposal.