The Finance Ministry has drafted a mechanism for the national joint stock company "Naftogaz Ukrainy" to compensate the difference between the purchase and sale prices for imported natural gas for generation of heat energy to the population, “Cabinet press office” reported. The mechanism was to be launched on January 1, 2007.

As the Finance Ministry's press service reported, the 2007 state budget provides for 2.64 bn. UAH (520 M. USD) compensation to the Naftogaz Ukrainy upon a separate budgetary program.

The move by the government is aimed at making the cost of heat and hot water cheaper to the population. Thus, the natural gas price for housing-communal enterprises hasn't changed and remained at 686 UAH (137 USD) for 1,000 cu. m. of natural gas, which is lower than its purchase cost.

The compensation mechanism, drafted by the Finance Ministry envisages that the State Tax Administration and Naftogaz shall cooperate upon a monthly schedule of payment of tax debt in VAT, income tax and rental fee for natural gas transportation in 2007 with due consideration of seasonal fluctuations of natural gas consumption.

Naftogaz is also supposed to conclude separate deals on natural gas supply in 2007 only with economic businesses engaged in heat power generation to the population.


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