The price increase from current the $95 to $130 per 1,000 cubic meters will likely further negatively affect the financial profile of the company, which seems to have lost its dominant position on the Ukrainian domestic gas market, the agency said in a statement.
RosUkrEnergo, the sole supplier of Russian and Central Asian gas to Ukraine since the start of 2006, signed a deal Tuesday with UkrGazEnergo, the trader's joint venture with Naftogaz, by which at least 55 billion cubic meters of gas from Central Asia will be supplied to the country in 2007 at $130 per 1,000 cubic meters.
Fitch said it has also taken into account the lack of political will in Ukraine for government support of the 100% state-owned company through the possible increase of gas tariffs to economically justifiable levels in 2007, because parliament recently voted to reverse some of the gas price increases for households set in 2006.
The agency has also placed on RWN the senior unsecured B+ (B plus) rating on the company's $500 million Eurobond issue, which matures in 2009, while affirming the issue's recovery rating at RR4.
Fitch does not believe the government will make any direct liquidity injection in the event that Naftogaz is unable to discharge its liabilities as they become due, regardless of the Fuel and Energy Ministry's letter to Naftogaz's syndicated bank lenders, in which it pledges to support any actions of the company aimed at improving its financial position and at the prevention of its bankruptcy, the statement said.
Fitch said it is waiting for information from Naftogaz regarding the exact impact of the new pricing scheme for natural gas deliveries on its business and financial profile to resolve the Rating Watch within the next five business days.
