The State Fiscal Service of Ukraine conducted searches in Ukraine’s state-owned oil and gas company Naftogaz on June 11. The officials suspect the company of tax evasion.
The Fiscal Service says that Naftogaz hasn’t completed the procedure of custom registration of gas purchased from the Russian state-owned energy giant Gazprom. They say this cost the state budget Hr 2.7 billion ($99.8 million) in value added taxes.
According to the Fiscal Service, thermal energy producers consumed gas in Ukraine’s gas transmission system but that Naftogaz hasn’t drawn up the proper documents in order to supply gas. Naftogaz argues that it does not supply gas, but provides a gas balancing service to Ukraine’s natural gas transmission system.
“During the investigation period, the employees of the State Fiscal Service gathered enough evidence that may point to tax evasion,” reads the statement of the Fiscal Service.
The company, however, paid $5 billion in taxes in 2020, making it by far Ukraine’s biggest taxpayer, supplying 17% of state revenue.
Naftogaz neither confirmed nor denied allegations to the Kyiv Post.
“The company is cooperating with law enforcement authorities,” the Naftogaz press service wrote to the Kyiv Post via email. “The investigative procedure continues, so we will report the details later.”
In April the Ukrainian government fired Andriy Kobolyev after Naftogaz reported losses of $684 million in 2020, replacing him with former acting energy minister Yuriy Vitrenko as the new CEO of Naftogaz.
Vitrenko is credited for taking a lead role in successful litigation against Gazprom that ended up in more than $3 billion in compensation in 2020 for failing to supply transit gas.
In 2019, he also signed an agreement with Russian Gazprom according to which Russia will have to transport no less than 40 billion cubic meters of gas through Ukraine’s transit pipelines until 2024, even if the Russian-German bypass Nord Stream 2 pipeline under construction is completed. It will bring at least $7 billion revenue to the company.
