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Gazprom may introduce advance payment system for gas for Ukraine, Russian citizens

October 30, 2013, 11:55 UTC+3 World Service) ¶ 30/10 Tass ¶ MOSCOW

Prime Minister Medvedev has supported this position of Gazprom

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Gazprom CEO Alexei Miller announced on Tuesday that Russian natural gas would be supplied to Ukraine only on prepayment terms. Russian Prime Minister Dmitry Medvedev supports this position.

It’s time for Gazprom to start technical preparation for the pipe’s shutoff, if the prepayment demand is not an idle threat, Nezavisimaya Gazeta newspaper writes on Wednesday. Because Kiev has not yet paid for the August gas supplies (882 million U.S. dollars). And the Ukrainian budget currently has no billions of extra dollars to pay for Russian gas.

Prime Minister Medvedev has supported this position of Gazprom and noted that if the problem is not settled in the near future, Russia may introduce a prepayment system for gas for Ukraine. “Once Kiev does not see the problem, then it is not going to pay. So we will transfer to a prepayment system,” said the RF government head.

The issue of prepayment arose at this precise point of time when Kiev intends to sign an association agreement with the EU, Novye Izvestia writes. At the same time, the Ukrainian side, which reduced purchases of Russian gas for its own use to 35 billion cubic metres, this year has been actively looking for alternative energy providers in Europe.

Kiev does not hide that it intends in the future to replace Russian gas with European and domestically produced gas, the newspaper said. It also wants to buy the fuel from contracting parties in the EU that are ready to resell gas to it at a price that would be lower than the price of direct gas deliveries from Russia. Novye Izvestianewspaper recalls that on Wednesday Kiev and Brussels agreed on a new route for natural gas supply to Ukraine from Croatia. The gas is expected to pass through Hungary directly to Ukrainian storage facilities. Ukrainian Minister of Energy and Coal Industry Eduard Stavitsky and European Commissioner for Energy Gunther Oettinger have recently agreed in Brussels on the supplies Novye Izvestia writes.

Gazprom may announce the decision to transfer to the prepayment system in the coming days. “The contract allows us to do this immediately,” Deputy Chairman of the Gazprom Management Committee Alexander Medvedev told reporters on Tuesday. Answering a question whether Ukraine’s gas non-payment crisis can affect gas transit to Europe, Alexander Medvedev said that he had not yet received all the information.

Rossiyskaya Gazeta in an article titled “Gazprom proposes a gas prepayment system not only for Ukraine, but also for Russia’s population,” points to the other side of the problem. Gazprom believes that it is time, the same as for Ukraine, to consider an option of introducing advance payments for gas for the population, whose share in the total gas payment debt is 45 billion roubles. This practice, Gazprom CEO Alexei Miller said, exists in a number of countries in Eastern Europe and the Baltic states.

The natural gas monopoly does not place the entire responsibility on ordinary citizens. RF Minister of Internal Affairs Vladimir Kolokoltchev supported Miller, drawing attention to such aspect of the problem as the activities of unscrupulous management companies that collect money from the people and then take it to offshore companies.

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