Saprykin says these contracts are fraught with substantial threats for Ukraine. “True, part of the contract items should be changed, and here Pres Yushchenko has a point. They contain some mistakes inadmissible for professionals to make,” Saprykin noted.

The main problem is the asymmetric nature of the contracts. “If Ukraine does not buy all contracted amount of gas, it will be subject to penalties. Vladimir Putin had earlier promised not to impose this kind of sanctions, but there is no document to this effect. If the Russians impose sanctions, it will lead to Naftohaz bankruptcy. On the other hand, Gazprom has no similar obligations to pump the full contracted amount or pay up.

“Mistakes were made in estimating the required amount of gas for 2009. The cabinet could have bought less gas, asking for additional supplies in a separate contract,” Saprykin added.

Commenting on a clashing estimates of Naftohaz financial condition given by Pres Yushchenko and Premier Tymoshenko, Saprykin said: “As usual, the truth is somewhere in between. True, Naftohaz financial position is, to put it softly, very bad. However, it’s too early to say that Ukraine’s pipelines will change hands and go private, and the government won’t let this happen. However, there are many problems, and borrowing from Peter to pay Paul won’t solve Naftohaz because the existing pattern of the gas market has become obsolete. As a result, it cannot continue without government subsidies, something which has been happening in the past months. When the pattern breaks up, it will cause serious consequences. We should not let this happen.”

Saprykin offered his recipe to stabilize Naftohaz: “Raising gas prices for individual consumers is out of the question. The prices should have been raised much earlier. Now, with the presidential election coming soon, no one will take the fall for gas price hikes. There is a way out – to work on deadbeats, something the cabinet has failed to do. There are many deadbeats and their debts are huge. Here are heat producers, oblast and city gas utility companies and big Ukrainian corporations.”