NJSC Naftogaz of Ukraine is implementing in Lviv, together with the city council, a project for the construction of a CHP plant on wood chips, which is planned to be put into operation by February 2023.
“I am sure that by February the CHPP will be operational. It will take a few months instead of a year and a half. NAC helps with the implementation of this project both in financing and in development. several months,” Naftogaz head Yuriy Vitrenko said at a briefing during a visit to the Lviv region on Friday.
As the correspondent of “Energoreforma” reports, according to Vitrenko, the NAC, which is implementing a number of similar projects in Ukraine, is ready to support other cities in this direction. ‘We have an interest in investing in such projects in order to import less gas at enormous prices. The implementation of such projects is beneficial both economically and in terms of ecology,” Vitrenko explained.
At the same time, he noted that both the Lviv authorities and the NAC itself also have a number of agreements in order “to then attract funds from IFIs for such projects.”
Lviv Mayor Andriy Sadovoy noted that this would be the city’s first powerful thermal power plant running on alternative fuels, which would cover about a quarter of its heat needs. “We planned such a project with the EBRD for a long time, but according to their classical procedures, we could only start it next year. But the Russian aggression intensified the thought process so much that we came to an agreement with Naftogaz,” Sadovoy explained.
According to him, the participation of the national company, which is the market leader, gives more opportunities and priorities, including in obtaining equipment.
NJSC Naftogaz Ukrainy failed to obtain consent to a two-year deferral of interest payments and redemption on any of its three eurobond issues, the company said on the Irish Stock Exchange.
According to the report, the required quorum (over 2/3) was reached only at a meeting as for eurobonds worth $335 million maturing in July 2022, however, only about 22% of the votes were provided, with the required minimum being 75%.
There was no quorum for the other two issues for EUR600 million maturing in 2024 and for $500 million maturing in 2026, so repeat meetings will be called.
Naftogaz specified that the owners of approximately 49% of the bonds registered for the 2024 eurobond meeting and approximately 74% of the votes were in favor of the Naftogaz proposal.
As for the 2026 eurobonds, which are due in November, about 54% registered for the meeting, and about 43% of the votes were in favor of deferment.
Repeat meetings for 2024 eurobonds and 2026 eurobonds are scheduled for August 31 at 11:00 and 11:15 London time, respectively.
Based on the quorum presented at the initial meetings, it is expected that the adjourned meetings that will be held in respect of the 2024 and 2026 bonds will have a quorum, Naftogaz notes.
NJSC Naftogaz Ukrainy has announced a default on its eurobonds due to the government’s refusal to agree on payments on them.
“The deadline for payments to holders of Naftogaz Eurobonds expired on July 26 without payment taking place,” the company said in a press release published on Tuesday evening.
Naftogaz said that the Ukrainian Cabinet of Ministers had earlier on July 21 issued order No. 625-r obliging Naftogaz officials to seek Cabinet approval before executing any transactions related to the company’s eurobonds.
In its official letter to the government, Naftogaz indicated the availability of the necessary funds in its accounts to cover eurobond payments. Naftogaz officials also detailed the possible negative consequences for the company and for the country in the event of a hard default on eurobond payments.
The company said that in response, the Cabinet of Ministers failed to provide permission for Naftogaz to fulfill its payment obligations to eurobond holders for either the 2022 issue or the 2024 issue.
“The government has therefore defaulted on Naftogaz eurobond payments. As this failure to meet its eurobond obligations effectively deprives Naftogaz of access to international capital markets, the Cabinet of Ministers as the responsible party now assumes full responsibility for raising the funds necessary for the import of natural gas for the 2022-2023 heating season,” the company said in the press release.
In May 2022, NJSC Naftogaz of Ukraine created the company Naftogaz Slovakia s.r.o., according to data from the open registers of the republic,
The authorized capital in the amount of EUR300 thousand is provided by another subsidiary of NJSC – Naftogaz Trading Europe AG (Switzerland). Vladimir Tomash, an Ivano-Frankivsk businessman, is listed as the head of the Slovak enterprise.
The company’s initial activity was the rental of real estate, and since mid-June, administrative services, mediation in the field of trade and production, advertising, marketing and consulting services, as well as market and public opinion research have been added.
Naftogaz of Ukraine unites the largest oil and gas producing enterprises of the country (100% of Ukrgazvydobuvannya and 50% + 1 share of PJSC Ukrnafta). The Group has a monopoly on the storage of natural gas in underground storage facilities (100% Ukrtransgaz) and the transportation of oil by pipeline across the country (100% Ukrtransnafta), and is actively developing the direction of gas supplies to household consumers.
NJSC Naftogaz Ukrainy, through the issuer of its Eurobonds, Kondor Finance plc, has approached the holders of these securities in the amount of almost $1.5 billion with a proposal to defer coupon payments on them for two years, including postponing the repayment of Eurobonds for the same period – 2022 for $335 million.
“In light of the protracted circumstances affecting Ukraine as a result of the ongoing full-scale Russian military intervention and its impact on Ukraine’s energy security, the Issuer, at the request of the Borrower, has initiated this Consent Request in order to obtain the approval of the Noteholders to facilitate the Borrower’s retention of available cash to support strategic priorities. Ukraine,” the stock exchange said.
As reported, there are currently three issues of Naftogaz Eurobonds circulating on the market, all of which were placed in 2019: in July – three-year for $335 million at 7.375% and five-year for EUR600 million at 7.125% (one fifth of the euro bonds were bought by the EBRD ), and in November – 7-year for $500 million with a yield of 7.625%. The maturity date for the $335 million issue is July 18, 2022.
Naftogaz proposes to pay all coupons on 2022 and 2024 Eurobonds on July 19, 2024 and redeem 2022 Eurobonds on the same day. And NAC would like to pay coupons for Eurobonds-2026 on November 8, 2024.
The offer also includes a waiver of any default that occurs as a result of such a deferred payment and compliance with certain covenants for a two-year period (from July 19, 2022 to July 19, 2024 for Eurobonds 2022 and 2024 and until November 8, 2024 for Eurobonds-2026)
Naftogaz, in the argumentation of its request, indicates that the government, by Decree No. 691 of June 17 of this year, obliged the group to ensure the availability of natural gas in storage facilities as of October 1 in an amount sufficient for the stable passage of the autumn-winter period, including to meet the needs household consumers and heat supply organizations.
“Thus, the borrower needs to purchase and import natural gas in the amount of up to 5.6 billion cubic meters of natural gas for a total amount of more than UAH 230 billion (about $7.8 billion). Naftogaz is also obliged to provide natural gas to the most vulnerable consumers ( primarily the population of Ukraine) at fixed prices, which in many cases are many times lower than market prices for natural gas in Ukraine and Europe,” the stock exchange said.
The NAC adds that the Russian invasion of Ukraine has led to a significant economic and business downturn in the country, the inability of many Naftogaz customers to pay for the consumed gas has increased debt on the company’s balance sheet and negatively affected its liquidity, and any continuation of aggression will put additional pressure on NAC balance.
“It is possible that the borrower may not be able to comply with the current provisions of the relevant loan agreements (…) while the invasion continues. Therefore, the borrower considers it necessary and prudent to remove restrictions that may jeopardize its priorities and objectives, in addition to removing the administrative burden on the borrower in these exceptional circumstances,” the company argues for the need to lift covenants.
According to the report, Naftogaz does not plan to pay any premium to holders of its bonds for deferring payments.
In accordance with the document, the deadline for voting on proposals expires in the afternoon on July 21, and the meeting and announcement of the results are scheduled for July 26.
Naftogaz attracted Citigroup Global Markets Limited as an agent for this proposal.
This announcement led to a drop in quotations of NAK Eurobonds maturing in 2024 on the Frankfurt Stock Exchange, according to information on its website, from 29% to 10% of face value, and Eurobonds-2026 – from 24.44% to 20% of face value.
Naftogaz Ukrainy plans to import 15,600 tonnes of petrol and diesel fuel into the country in July, head of the company Yuriy Vitrenko said.
“Naftogaz joined the task of eliminating the shortage that arose in the oil products market at the end of April. For the third month already, we have been increasing the volume of deliveries, on average 2.5 times monthly. In July, we plan to deliver 15,600 tonnes of gasoline and diesel,” he said on Facebook.
According to him, the company is ready to contract dozens of times more, but logistical restrictions prevent the delivery of oil products to the border of Ukraine from major ports in Europe, where there is the resource.
“Despite this, we have a positive trend. And if such rates of increasing imports of fuel continue, then in a few months Naftogaz may become the market leader,” Vitrenko said.
As reported, Ukraine in June 2022 will increase fuel imports by 1.6 times compared to May – up to 600,000 tonnes. In particular, 2/3 of them will be diesel fuel, 1/3 – gasoline and liquefied gas.
