EU eyes gas loan as Ukraine pledges reforms

EU eyes gas loan as Ukraine pledges reforms Brussels - Ukraine is on the edge of clinching a loan which would allow it to buy gas over the summer and prevent a European Union supply crisis, EU officials said Thursday after the former- Soviet state pledged to reform its gas sector.

Ukraine's Prime Minister Yulia Tymoshenko "provided both the international financial institutions and the European Commission with a series of commitments (which) will now be discussed today with the international financial institutions," commission spokesman Mark Gray told journalists in Brussels.

"We are edging closer towards an agreement, and subject to those discussions, we hope we can announce something shortly," Gray said.

Ukraine has been hard hit by the economic crisis, and Tymoshenko has warned that the country will not be able to buy all the gas it needs in the summer without international help.

That has sparked fears of a new gas crisis in the EU, because Ukraine's gas monopoly, Naftogaz, usually buys Russian gas in the summer and stores it underground until the winter, when it sells it to Ukrainian and EU consumers.

Since there are technical limits on the amount of gas Russia can send West at any one time, any failure by Naftogaz to buy storage gas now could mean gas shut-offs in Europe in the winter.

On Friday, representatives of international lenders such as the International Monetary Fund (IMF) and European Investment Bank (EIB) said that they would only help Ukraine pay its gas bills if it was willing to reform its gas market, which is widely seen as being inefficient, outdated and corrupt.

On Tuesday, the IMF approved a 3.3-billion-dollar loan to Ukraine which for the first time allowed the former-Soviet state to buy gas with international money. EU officials say that that should be enough to cover Ukraine's next gas bill, due in August.

The receipt of Tymoshenko's letter should clear the way for other lenders, such as the EIB, to offer funding for the autumn and winter. (dpa)