The new contract, which can be signed with the management of NJSC Naftogaz of Ukraine, contains clear objectives, clear requirements, and eliminates any overhead payments that were possible under the terms of the previous contract. This was stated by Prime Minister of Ukraine Volodymyr Groysman during A Question Time for the Government at the Verkhovna Rada of Ukraine.

The Head of Government explained that the foregoing contract, which allowed for sky-high payments, had been inked before the appointment of the acting government, and the terms of this document had not allow for any changes. However, on March 22, 2019, the term of this contract expired, and two months before that date the Government had submitted to the NJSC Supervisory Board its proposals for a new contract. These proposals contained very clear objectives, first of all, to increase the production of Ukrainian gas.

"We had submitted our proposal to the Supervisory Board. They provided the response that they were ready to take into account our conditions in the new contract and offered to conclude a new deal, which would eliminate bonuses, but comprise streamlined requirements", said Volodymyr Groysman.

Background

On March 20, the Cabinet of Ministers of Ukraine expressed readiness to conclude a new contract with the incumbent CEO of Naftogaz for a period of one year, without bonuses, with a reduction in wages and with clear tasks aimed to establish a separate operator of the Ukrainian GTS certified by European legislation by January 1, 2020, to increase gas production to specified parameters of not less than 18 billion cubic meters per year, as well as to provide gas transit through the territory of Ukraine after January 1, 2020.

The Head of Government stressed the term of contract is one year, and failure to fulfill the tasks encapsulated in the new contract will be the reason for tearing up the contract. "We have clearly set a number of tasks. The first task is we must eventually deliver a real reform of Naftogaz which will allow us to establish a separate GTS operator certified in accordance with EU principles and legislation. The second one is to increase gas production. Unfortunately, over the past 5 years, management of the company has not taken necessary measures in order to achieve these goals. We have commissioned the Supervisory Board to fulfill the requirements. The objectives are as follows: to ensure the functioning of the GTS and the continuation of transit, to achieve the goals of extraction of 18 billion cubes each year. And the third - we will not pay the eye-watering salaries", the PM said.

The Head of Government informed that on Friday, March 15, he had held talks with the Supervisory Board and heard sound thoughts that all tasks defined by the Government should be enshrined in the contract.

"The Naftogaz Supervisory Board agreed on these proposals, and suggested that the salary of the Naftogaz CEO will be cut twice and no bonuses will be served", the Prime Minister said.

Volodymyr Groysman drew attention to the fact that under the new contract the Naftogaz management will report on the achievement of the goals on a monthly and quarterly basis. "If the goals are not achieved, this will be the basis for the tearing up the contract. Supervisory Board will be further accountable for the achievement of the goals encapsulated in the Government decision and in the contract as well. I call on the state representatives within the Supervisory Board to monitor the implementation of the decision", the Head of Government claimed.