Over 40% of heat producers cover their bills in full and nearly 50% maintain indebtedness within the limits allowed by the government. However, this legal leeway results in accumulation of significant debt. This summer, debts to Naftogaz for gas supplied under the PSO reached a huge 69.4 billion hryvnias ($2.5 billion), around half of which is debt of heat producers.
Less than 10% of heat producers across the country have accumulated debts in excess of the allowed limit. These companies face the risk of having their requests for gas declined when the heating season starts unless they manage to find cash and climb above the cut-off limit. This group is causing the greatest concern for the government.
These “bad faith” organizations account for a minority of heat producers – just 108 delinquent companies out of a total of some 1,300 (see chart with the “top 30”) – but they can put tens of thousands of consumers, including schools and hospitals, at risk..
These 108 heat producers have almost 4.5 billion hryvnias in excess debt (over $160 million), with dim prospects to find the missing funds. If they do not manage to cover their dues - to pay over 1.2 billion hryvnas from their debt - local heat producers may be forced to delay the start of the heating season, which typically starts in mid- or end-October.
Smila, a town in Cherkasy oblast, is a similar case in point. In recent years Naftogaz has repeatedly issued warnings, highlighting the responsibility of local authorities and reminding that “most Ukrainian cities do not have problems with the heating season.”
This situation is set to repeat itself this year, as Smila Heating Company has only paid for about 36% of the gas that has been supplied.
Smila will be on time...it will only happen with the help of Naftogaz, central and local government...
“Smila will be on time,” head of the district heating company Oleksandr Golubets told speakers at the EnergyThursday discussions. “I guarantee this,” he added, but warned it will only happen with the help of Naftogaz, central and local government to develop and support a debt payment plan.
...debts to Naftogaz for gas supplied under the PSO reached a huge 69.4 billion hryvnias ($2.5 billion), around half of which is debt of heat producers.