Naftogaz not to write off debts, but to accrue reserves to cover troubled debts

National joint-stock company Naftogaz Ukrainy does not plan to write off debts of companies to Naftogaz, but it would accrue the reserves to cover troubled debts, Deputy Board Chairman Serhiy Konovets has told Interfax-Ukraine.

"There was no debt relief in Q4 2015. According to international financial reporting standards we are obliged to reflect our assets in a conservative way. If we have doubts that the debtor would pay in due time we are to accrue the reserves to cover the doubtful debts," he said.

Konovets said that according to the company’s accounting policies if the debt is not paid during one year – the reserve is created.

"This does not mean that the debts will be written off or we will stop using all ways to return the debt under Ukrainian law," he said.

He said that the unconsolidated financial report of Naftogaz Ukrainy for 2015 is being drawn up, and it is early to name concrete figures.

"According to tentative assessments, the effect from the increase of the reserve to cover doubtful debts in 2015 would not exceed UAH 5 billion. If the debts are paid in the future, the financial result will be revised," he said.

Konovets took the situation with Ostchem's enterprises as an example.

"There are examples in 2015. For example with debts of Ostchem Group's enterprises. Taking into account settling of old debts for which the reserve was created, net increase of reserves to cover doubtful debts in 2015 will be less than UAH 1 billion," he said.

Earlier, the Economic Development and Trade Ministry of Ukraine reported that Naftogaz Ukrainy wrote off troubled debts in Q4 2015, which would affect the financial indicators of the company.