KIEV: A change in Ukrainian currency law has made it easier for shippers to import natural gas from Europe. This facilitates trade between Ukrainian and European counterparties at a time when the country is liberalising its gas market and tries to become less reliant on Russian gas.
The National Bank of Ukraine last week loosened administrative restrictions on imports of energy resources, including gas. In order to pay foreign suppliers, Ukrainian buyers need to use foreign, rather than domestic currency.
As of 5 March, companies are no longer required to receive a letter of credit from the bank when paying for gas imports. They had been required to do so since 1 January for transactions worth more than €0.45m. To receive the letter companies had to prove that the deal was genuine. Market participants previously told ICIS that this letter was hard to obtain even for transactions with major European traders.
One Ukrainian gas importer, speaking on the condition of anonymity, welcomed the change, but he added other hurdles may still prevent companies from importing gas freely. “The banking system works poorly and there is not enough currency in Ukraine,” he said. “Companies still need to order currency from banks four days ahead of making a transaction, which slows down the process.”
A statement on the bank’s website said that similar changes are applied to all projects financed by international financial institutions. Ukraine expects to receive a number of international loans later this year to buy gas in Europe, reform its energy sector and modernise infrastructure.
