Friday, February 27, 2009

Seven legal ways of stealing from budget

1. "Make an order".
Speed limiters, for instance. Do you know why they appeared recently? And why they are being mounted three or even four in a row? The answer is very simple: capital authorities pay Uah 50000 for mounting the single one, while wholesale cost of it is Uah 300. They earn 100 times including installations maintenance. Sudden replacement of old traffic lights that took place all over Kiev hardly could be explained by sudden care of pedestrians ‘cause no "zebra" markings were refreshed .

2. "Guarantees".
In the state budget of 2007 Uah 4,7 billions expenses had been claimed. Those money had been guaranteed to one large state company that should repair roads. What was possible to take had been taken. We are speaking about $1 billions credit that should be secured by state guarantees - ostensibly roads lining and improving. Credits been taken, roads "repaired". The head of Counting Chamber has told in this occasion: "The audit of financing of building Kiev-Odessa highway taken by us has shown, that the total sum of inefficiently used money has exceeded Uah 1 billions. The price of kilometre of a highway multiplied nine times". Speaking of roads - if in Kiev, not mentioning other cities of Ukraine, you will see a straight piece of road - go round. Such memory should be honoured.

3. "Layer".
Nobody writes and talks about it, but such things happen. Some big state company ordered the equipment abroad. It was bought not at the manufacturer, but at a foreign firm that purchases the necessary equipment, and resells it gaining 10-20 %. But if you would call there you would hear Russian voice. And as the equipment - boring, costs over $1 billions you would tell, who the customer is. By the way, RosUkrEnergo is a kind of such pattern.

4. "The fictitious order".
In 2007 one state company has paid to the lawyer firm for Uah 49 million. They had their own law department, by the way. Plus maintaining of charter flights, wheels for Uah 1 million, bonuses and awards to top management. The budget relates directly here because losses of such companies are to be covered by its means.

5. "VAT compensation".
Company "A" buys from company "B" some goods for sum Х + the VAT. Then "A" provides tax inspection the statement (with tax waybills from “B” attached) about compensation of the sum of the VAT. Then “B”, declares itself bankrupt the next day (“firm for a day"). At good mutual understanding of all connected people this scheme works like clock-work. Until it is not found, that for the accounting period there had been received less, than paid.

6. "Grants".
Grants is a real piece of cake. Grants in Ukraine go basically for the coal-mining and agrarian industry. For agrarian - Uah 10 billions is proovided. It is not necessary to investigate any schemes - simply visit any Ukrainian village. If direct manufacturers of agricultural production would just have seen at least a half of that money - they would be carried by personal drivers to their fields and farms. And , apparently, in 2009 the servants of people will simply give to the enterprises from the budget so much, how many it is necessary for them, and will name it "the state support of real sector of domestic economy".

7. However the biggest robbery took place recently. Astonishing sum of money was stolen. Incomes of the budget in 2008 - $46 billions (Uah 231 billions. At the rate of 5,05 hryvnas for a dollar); incomes of the budget in 2009 - $30 billions (Uah 239 billions. At the rate of 8,0 hryvnas for a dollar). The difference is $16 billions...

Thursday, February 12, 2009

Global crisis as Russians see it

The corridors in office buildings have either pluses or minuses. Let’s not speak about minuses but about pluses. Everybody knows each other; you can hear helloes, greetings, goodmornings.

But the last few months silence dominates here.

Crowds of clients just disappeared, nobody enters and asks:”Sorry, where can I find?..” , there are no more strangers smoking in common rest rooms, girls from nearby offices don’t rush in asking to change money for a change. The director of real estate office drooped off, you can’t hear scissors and hairdryers from a hairdressing salon, and women from the office you never could spell its name frequently hang “Closed for today” card. People drink a lot in the offices and it’s impossible to breathe in smoking areas. Visits of Santa and parties had been cancelled this year.

But the worst thing is to see batches of papers dumped on the floor in the corridor near wide opened doors. And movers that bring the furniture out make you to shiver. Another one is shut down…

The horror invisibly creeps on street, crawls into apartments, scatters its wings over factories, lasts on market counters, invisibly, but persistently sweaps supermarket shelves. It horror eliminated glance colours from local newspapers, and has hanged out papers on columns and fences that read: « Will sell! Will sell!! Will sell!!!»

The silent horror cut out words "normally and"perfectly" from our everyday conversations and pasted cautious
"while" and “so far” instead.

The former schoolmate whom I hadn’t seen for 15 years asked me not about my family and our pals but shouted the foolish request to write about “this son of a bitch, my boss, who stopped paying four months ago”. He thought that would matter. Sorry, lad, I will not write, that doesn’t makes sence. And he told me in a back – “fat bustard”. I ran away with no offence, and not being insulted, but ashamed. For what, for whom?

The silent horror has crept in hospitals, the horror laps in the eyes of people near the drugstore; the horrorible article about reduction of salaries for state employees has pulled off a habitual smile from the face of the familiar doctor and “Crap...” rushed out from his mouth. The horror flies over factory checkpoints like some disgusting swallow causing workers either to grab and punch their director or turn around and just go away. The horror flows from the eyes of crowd that stands near the Employment Centre boards as they see vacancies constantly disappearing. And disgusting faces from the capital government – they know what they are doing, but still keep going on.

Friday, January 30, 2009

Shvonders struggle with crisis

Shvonders struggle with crisis

The former Soviet territory always had two troubles: roads and fools. But life goes on, and the list of troubles gets certain national colour. It seems, that in Ukraine now it is necessary to be afraid not only of "fools" and "roads", but “ crisis struggle” and “Euro 2012 preparation”.

Kharkov is going to host Euro-2012 games. The city will accept ten thousand fans from Europe. And none of them knows, that during 2007 year 10423 tuberculosis infected persons have died in Ukraine. Many of them have forgotten, that illness. Germany, Finland, Austria, Italy do not inoculate their citizenzs against this lethal disease.

Unfortunately, funds became insufficient and the Kharkov authorities made an original decision. Keeping within the limits of Euro-2012 preparation Kharkov reduces the number of tubercular departments. So, by March, 15th 345 places of 545 available will be reduced in the first Kharkov’s antitubercular clinic №1. But do not worry, it is a temporary situation: liquidation of last two hundred places and complete liquidation of the whole clinic will occur till the end of this year.

Ministry of Health sounds alarmed, but the city authorities assure, that patients will be cared. By the state, probably. It lacks money for these purposes,but will surely find some place for five more hundreds carriers of socially dangerous disease. And I have no doubt, in the streets there will be no patients from the seventh department where in specially equipped chambers under reliable protection contained sick prisoners contained. It seems,they will continue their treatment in imprisonment places. Two hundreds reduced phthisiatricians will surely find another place to work. Probably. Forty of them have already found "alternative" job and, henceforth won’t be bothered with tuberculosis patients any more. And there are plenty of them:for January, 1st 4728 persons were registered, and approximately 1500 allocate bacteria and should be kept in a hospital.

Picturesque, isn’t it?
Also keeping within the limits of preparation for Euro-2012 Kharkov railway station has been reconstructed. Recently Cabinet of Ministers of Ukraine issued the commission № 1283/0/1-09,in order to reduce tariffs for grain transportation. Railwaymen thought it up and suggested to cancel sanitary processing of cars that transport the foodstuffs. If this offer would be supported, expenses for transportation of each kilogram of grain will be reduced approximately to 0,3 copeck.

Obligatory disinfection of transport which carries a foodstuff, exists in Europe for a long time. In Russia they skip desinfection. By the way, in some areas of Stavropol Territory there is emergency state because of the African plague of pigs. They shoot wild boars, and the animals who have appeared in the epicentre of epidemy are to be eliminated together with constructions where they were, and stocks of fodder being in them, , according to the instruction of 1980.

All over the world the African pig plaguecarries a local character: there is a strongly pronounced centre (for example, a cattle-breeding farm) and the cases of infection are observed.And in Stavropol Territory that dangerous infection proves absolutely differently: disease is revealed in five various areas of Territory on vast distances. Experts tend to say, that illness has extended by means of meat and fodder transportation.

The African pig plague carries no danger to a human. But for example, brucellosis,that leads to disability, could also be spread by railway. Brucellosis had been locally revealed in the Odessa area last summer. At the same time sudden brucellosis flash from Kazakhstan had come to Altai that was considered safe region within thirty years. As a result, dozens of persons had been infected. Let us not forget, that in some CIS countries, Kirghizia for instance, brucellosis is widespread. It can be found nearby Ukraine, for example, in the Rostov area. Let us not forget about another disease - anthrax. This lethal disease is transferred by animals. People suffered it either in distant Kirghizia, Buryatiya and Irkutsk, or in neighbouring Kalmykia and the Astrakhan area last year.

Since 2003 sanitary processing of transport during transportation food cargoes is obligatory in Ukraine. And we are not talking about the fact, that desinfection prevented incoming a number of serious diseases while Ukranian cars had been rolling through CIS from Kazakhstan to Baltic. The matter is that, the controlling sanitary processing is an essential source of financing Desinfection Service on a railway transportation. Those DS supervise a sanitary condition of passenger trains, railway stations, stations and nearby territories. I will remind you, medic’s salary is cut down now, and they earn about 800 hryvna in a month.

What should I say?

Welcome to the Euro-2012, dear Europeans!


'What do you
mean by ruin? An old woman with a broomstick? A witch who smashes all the
windows and puts out all the lights? No such thing. What do you mean by that
word?' Philip Philipovich angrily enquired of an unfortunate cardboard duck
hanging upside down by the sideboard, then answered the question himself.
'I'll tell you what it is: if instead of operating every evening I were to
start a glee club in my apartment, that would mean that I was on the road to
ruin. If when I go to the lavatory I don't pee, if you'll excuse the
expression, into the bowl but on to the floor instead and if Zina and Darya
Petrovna were to do the same thing, the lavatory would be ruined. Ruin,
therefore, is not caused by lavatories but it's something that starts in
people's heads. So when these clowns start shouting "Stop the ruin!" - I
laugh!' (Philip Philipovich's face became so distorted that the doctor's
mouth fell open.) 'I swear to you, I find it laughable! Every one of them
needs to hit himself on the back of the head and then when he has knocked
all the hallucinations out of himself and gets on with sweeping out
backyards - which is his real job - all this "ruin" will automatically
disappear. You can't serve two gods! You can't sweep the dirt out of the
tram tracks and settle the fate of the Spanish beggars at the same time! No
one can ever manage it, doctor - and above all it can't be done by people
who are two hundred years behind the rest of Europe and who so far can't
even manage to do up their own fly-buttons properly!'

Michael Bulgakov. «The dog heart»
Copyright 1968 in the English translation by Michael Glenny
Collins and Harvill Press
London, and Harcourt, Brace & World Inc, New York.
Sergey Dibrov

Sunday, January 25, 2009

A new price on Russian gas

20.01.2009 News review

A new price on Russian gas for Ukraine is about $230 for thousand cubic meters. Nobody will say more precisely today. A word «about» is a new know-how of the Ukrainian government, that hides the unwillingness of Julia Volodimirivna to acknowledge that she handed us to Russia.

During the first four months we will pay $360 for gas. And that is exactly twice as high, than paid until now. And Timoshenko’s «about» means a kind of an average annual price. Such a convinient gap : nobody knows its size, so no one will notice, someone will grab a piece of pie from there.

Interestingly, that Timoshenko enmeshed a little in Putin patterns. «A price which will be firm throughout the year, will make $228,8 for thousand cubic meters», - she declared in the morning. And later she told about a «quater year» pattern.

«We don’t need much gas in the first four months, when a gas price is on its highest level, because we have gas in depositories at last year price. That is why we will minimize the gas purchase in this period for the necessities of Ukraine», - declared Timoshenko. She is very proud, that Ukraine had accumulated an extra gas in its vaults. Its eems that Timoshenko is cunning,however. Or objects herself having told that Ukraine would purchase Russian gas that was in our vaults, at special price. And was going to use part of it on technical maintenance of exporting of Russian gas through our tubes.

Frankly speaking, even $228,8 is a suspicious price. Suppose if $360 is the highest price, and $179 (as it was last year) – the lowest, the average price should be about $270. Not counting technical gas which Ukraine is obliged to buy at its cost, but will probably cover these expences re-exporting it.

Plus we should remember two important facts. At first, Ukraine will suffer losses because the price for using Ukranian gas pipe didn’t grow proportionally to the Rusiian gas price. Let’s make a simple calculation. Russia pays Ukraine $1,7 for transporting 1000 cubic meters of gas on 100 km. Average distance which is passed by Russian gas by our pipe aproximately 1100 km. Russia transports to Europe at least 110 milliards cubic meters of gas annually. So Ukraine gains about $2 milliards anually. And the lowest European price is $4 per 100 kilometers, so we could gain about $4,7 milliards. Accordingly we can say that Timoshenko complimented Putin about $2,7 milliards.

How much gas could be purchased by these? 10-12 milliards of cubic meters at least. Timoshenko grants Putin more than the 50% of annual gas necessity of Ukraine. Receiving the increasing of prices and Ukraine’s obligation to buy technical gas by own cost, though at favourable prices.

And even more. Timoshenko also presented to “Gazprom” 25% of Ukrainian domestic gas market. No doubts, that Russians will get the segment of market on which participants pay in time for the used «blue fuel», and unprofitable domestic users will be given to «Naftogaz». Timoshenko, in essence, not only geared Ukrainian industry to the Kremlin whims but also signed a sentence for dying «Naftogaz» by that.

And pessimistic prognoses that «Naftogaz» is going to heave up a gas cost for domestic users more than twice – already does not seem such unbelievable.

Monday, January 19, 2009

Gazprom’s ‘cat-and-mouse’ transit games

“The technical state of Ukraine’s gas transmission system is now in such a condition that it cannot circulate. In such a case it needs to be frankly told about. One must figure out… whether Ukraine’s gas-supply system is capable of circulating gas at all”
V.Putin, January, 13th
One should pay a tribute to Messrs. Medvedev and Putin – unlike our politicians, they do not grudge the time for the detailed conversations with the technical specialists of Gazprom, entering into all the details of gas transportation. That’s why they have prepared a sabin card to beat in advance – the export gas feeding procedure into Ukrainian gas transmission network under which the Ukrainians THEMSELVES would refuse to pump this fuel, in such a way once again proving their transit insecurity to Europeans. The ‘Pseudotransit’ operation was put across masterfully and with impunity by Kremlin on January, 13th . And when some of the Europeans took Ukraine’s side, they had their mouth stopped with gas ‘carrot’, so that they would not have a loose tongue.
Technical mousetrap
Thus, on January 13th at 01:00 a.m. Gazprom demanded from Neftegaz to deliver 76.6 mln cubic meters of gas to the Balkans and Macedonia as a test pump. The route was from ‘Sudzha’ gas pumping station to ‘Orlovka’ gas pumping station (see the table), where the European watch committee were waiting ready to monitor the transit process. Moscow was opening its gas shut-off at 09:00 a.m.
Since early morning the whole Europe with bated breath was watching the blue-sky fuel entering the Ukrainian gas pipeline system. The time passed, and there stayed the same chilling ‘zero’ at the output.
They were tushing and getting unholy nervous in Brussels. Unlike in Brussels, Gazprom was not surprised at all. Why? Everything was quite simple – in Kremlin they knew from the very beginning that Ukraine will not be able to let the gas pass through the pipe. Making sure by the afternoon that the aim had been achieved, Moscow told Europe - do you still want to have this ambilevous carrier as a partner?
Transit trick of Gazprom turned out to be successful by the following reasons.
Firstly, Moscow chose almost unreal technical route, threatening the whole gas-supply system of Ukraine.
Traditionally the export gas (see the scheme) was moving from east to west by two main channels - ‘Urengoy – Uzhgorod’ main line (‘Sudzha’ gas pumping station) and ‘Soyuz’ (‘Valuiki’ gas pumping station), some part of the gas being used by industry in the south-east and than compensated on the way from underground storages of Western Ukraine and Ukrainian gas wells in the regions.

After the gas flows for Ukraine had been stopped, we kept on taking Russian gas off for our suppliers on the main lines, compensating the difference (200-250 mln cubic meters) at the output. And one had to pump gas from underground gas storage in reverse – from west to east, center, and south, when the whole process of gas transit had stopped. To meet those needs the work of the compressor stations was changed. Besides, the eastern parts began using the reserves from storages in Kharkov, Poltava, and Lugansk regions.
The route suggested by Moscow violated the traditional gas supply pattern, as far as gas has always been transported to the Balkans through ‘Soyuz’ main line. To tell the truth, to pump gas from ‘Urengoy – Uzhgorod’ main line into ‘Soyuz’ through the binding pipelines of smaller diameter, is rather difficult.
Even if imagine that Neftegaz would do a heroic deed and reset the compressor stations, one would have to stop supplying gas to the eastern parts automatically. The thing Gazprom has chosen a rather interesting route, the one, crossing the entire gas pipeline system diagonally, that means that all the compressor stations would have to work to supply gas stream into Odessa region only. Thus one would have to hamper the gas supplies from our western underground storages for the half of the country.
Surely, in Gazprom they hit back: well, do not redirect gas stream from one main pipeline into another. Just compensate the volume needed for ‘Soyuz’ from your eastern underground storages. But this time this would have left the whole south-east without gas. Moreover, the storages are not capacious enough and are almost empty there. For instance, in Kharkov region only there has been left no more than 20 per cent of fuel. Even pumping out the whole storage for export it would not be enough for more than a couple of days. In goes without saying that the next day Gazprom would request not for 76, but, let’s say, 100-120 mln cubic meters.
Secondly, Ukraine would have to compensate technological gas pumping on its own cost, emptying the country’s storages along the way and leaving the southern parts of the country without fuel.
It is known, that the gas in the pipe goes through pressure, which is gradually declining. It is maintained with the help of gas-compressor units, which they have on the compressor stations. In its turn, gas-compressor units use part of its export gas from the pipe for their work. This gas is considered to be technological, as far as it combusts in turbine. In its turn, to restore the initial volumes that enter our gas pipeline system for Europe, Ukraine adds the lacking millions of cubic meters from its storages at the output, instead of the gas used for pumping.
When it goes about the traditional route through Western Ukraine, there are no problems here -here are situated underground storages. But taking into consideration the route chosen by Gazprom, which means obtaining Gazprom’s 76 mln cubic meters from our gas transportation system at the output, Neftegaz had to find the reserve of approximately 5-6 mln cubic meters somewhere in Odessa region. It is for January 13th only. On one hand, there are no underground storages there. To pump from the east means to put Kharkov or Donetsk region on short rations. On the other hand, on the 14th of January the governor of Odessa region Mr. Serdyuk marked: the fuel does not go at all to the main pipeline, the one supporting the whole region. In other words, the national joint stock company has big problems with pumping gas from Western Ukraine to the south.
Thirdly, the route “ideally” passed through the territory of Moldova (see the scheme), where there is no European watch committee at the gas measuring units and in underground storages.
In Gazprom they understood pretty well what it will end in on practice. From the 76 mln cubic meters declared 13.9 are meant for Moldova. Anyway, there is no guarantee that Moldova, which has been staying without gas for several days already, will not take more it can take. On one hand, according to the protocol, there are no European supervisors on Moldavian ‘Kaushany’ pumping station. On the other hand, nothing prevents Moldova from playing along with Russia, as far as half of ‘Moldovagaz’ JV belongs to Gazprom. Even if Ukraine tries to press Moldova to bring back the undue gas, Kishinyov will answer: we have utilized the whole stock, and there is no gas to compensate as far as there are no underground storages.
As a result the monitoring committee at our Ukrainian ‘Orlovka’ gas pumping station would register not 62.7 mln, but, let’s say, 50 mln cubic meters of fuel running in the Balkans’ direction. And Europe would eventually and vividly make sure that Ukrainians do steal the gas.
Informational collapse and Gazprom’s profit
As a matter of fact, Ukraine has stalemated itself on its own by failing its informational defense.
First, it is Yuschenko, Timoshenko, and Dubina, the Head of the national joint stock company, that were crying bravely at the Europeans the whole Monday: in any situation we will be able secure no-stop transit tomorrow. Let just Russia give gas first. Though Dubina would time from time say robustly that we need 36 hours for technical restoration of the obverse gas pipeline system. But the guys on Bankovaya and Grushevskogo were too in a hurry in their desire to blandish Brussels to be able to pay attention to the following ‘trifles’: which way to let gas go and where Ukraine will take technological gas from. That was the very purely Ukrainian goof that they had been waiting for in Moscow, where the unreal transition route had been made up beforehand.
It was only on January 14th that Dubina started vaticinating actively and publicly about the commemorable 36 hours and prepared the technical protocol on principles of restoring the transit which makes it impossible for NJSC to fulfill its obligations if not signed.
Secondly, when it became known what kind of “surprise” Gazprom has prepared, Ukrainian politicians preferred to cry about malicious Russia instead of demonstrating Europe the technical details of IMPOSSIBILITY of transit under such conditions.
Instead of telling in word that Gazprom wanted to sabotage the internal gas-supply system of Ukraine, like Yuschenko and Dubina did, one shoud have demonstrated it in the central control room of ‘Ukrtransgaz’. In the very same way as it did Putin on January, 13th , him and Miller making the whole show for the Europeans in the central control room of Gazprom. Hey, ladies and gentlemen, here the lamp shows that they refuse to accept the transit. Ivan Ivanych will show you all the details. Those shots have traveled the whole world. And, according to the Europeans’ feedback, almost nobody discounted Putin’s story. That allowed Gazprom to continue the whole farce not only by requesting for the transit by same route, but also adding 22 mln cubic meters to the previous volume for Slovakia.
Well, some Europeans (they are not all stupid there as they might think in the Kremlin) did slightly tried to object to Moscow telling that Ukraine’s furnished the proof of impossibility of pumping gas by the same route. Thus, the prime-minister of Slovakia Mr.Fitzo marked this on January, 14th. Putin frankly answered in return, “Whoever submits any papers I am ready to throw all these papers into the fire”. And immediately decided to stop the Slovak’s mouth with gas: well, Gazprom can negotiate that Neftegaz will pump directly to Slovakia 20 mln cubic meters of gas daily from Western Ukrainian underground gas storages. It was the broad hint: nobody can in return object publicly to official position of Russia that “khokhols” sabotage the transit.

Which bonuses the wise transit maneuver has brought to Gazprom?
1. Russia began handling one more figure of Ukraine’s gas debt which we will have to pay at the price of 450-470 USD/per cubic meter. One has added to the 86 mln cubic meters “stolen” by January 7th , 140 mln cubic meters more. According to the Kremlin version, the lack of this volume led to the situation that Ukraine could not assure the pressure needed to resume gas transit.
Actually, there is a grain of truth in it. The Neftegaz’s supply being cut, the pressure inside gas transport system declined: the consumers had taken away the access of gas. So even if Russia had asked for direct transit through ‘Urengoy-Uzhgorod’, we would have had not only to compensate technological gas but to add some to stabilize the total pressure in the pipe. It is very difficult to do it from the technical point of view. That’s why Dubina is talking about resuming daily shipments of not less than 300 mln cubic meters, on a long view filling the main line from underground storage at the output. It is quite another matter, whether we can say that we have stolen the Russian gas by pumping it out from the underground storage…
2. The Kremlin once again demonstrated that the technical state of Ukrainian gas-supply system leaves much to be desired. Here we make the following conclusions: one must develop alternative routes (“Severnyi Potok”, “Yuzhnyi Potok”) and create a consortium on management and modernization.
3. The transition war somehow suppresses the fact that Ukraine has been living at the cost of its own storages for two weeks already. And they are gradually coming to the end. Nevertheless Gazprom has a specious excuse to table the negotiations, appealing to the overriding need to restore shipments to Europe. Meanwhile the opposition, business, and the society suffering of the diminishing gas feeding must put pressure on Timoshenko and Yuschenko making them more cooperative. Nice example is the application of the newly-created Parliament Gas Commission headed by Bogoslovskaya: Timoshenko-Putin memorandum dissolved. There’s worse to come.
In Moscow they keep on waiting for a good moment, realizing that the capitulation of Kiev is around the corner. And soon Ukraine will be ready to contract on hard terms. And, as the last days showed, the Kremlin has a lot of aces left “to impel to peace” yet.
Dmitriy Korneychuk