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Naftogaz Subsidies Bleed Ukraine as President’s Options Wane

Ukrainian President Viktor Yanukovych sees state-run NAK Naftogaz Ukrainy delivering energy independence. International lenders see the company as a money pit that posted losses for six of the past eight years.

Naftogaz, Ukraine’s biggest employer with 175,000 workers, received more than $6 billion of subsidies in domestic bonds from 2009 to 2012 as regulated gas prices and expensive Russian energy imports led to losses. Handouts to the company, whose pipelines carry about 25 percent of Europe’s gas imports, prevented Ukraine from balancing its budget over the past decade in a nation whose graft ranking is on par with Syria, according to data compiled by Berlin-based Transparency International.