Ukraine Naftogaz says no delay in Russian gas bill

Ukrainian state energy firm Naftogaz will pay Russia`s Gazprom (GAZP.MM) for October gas by the end of the day, a spokesman said after Moscow and Brussels both raised concerns that bills would not be settled, according to Reuters.

Naftogaz must pay about $460 million by Nov. 7. EU Commission President Jose Manuel Barroso urged Ukraine on Thursday to ensure timely payments and avoid rows with Russia that could lead to gas supply cuts to European consumers.

The EU receives about 20 percent of its gas from Russia through Ukrainian pipelines. A pricing dispute led to supply cuts impacting hundreds of thousands Europeans in January.

"We are working on the payments," A Naftogaz spokesman said. "We have no reason not to pay Gazprom."

President Viktor Yushchenko reiterated the stance he has assumed since his bitter rival Prime Minister Yulia Tymoshenko signed gas price deal with Moscow in January -- that Naftogaz will find it difficult to pay for the gas.

"The only source of funds to pay for the October gas...is more borrowing," Yushchenko said in a statement issued late on Thursday.

European leaders have started to become nervous about winter gas supplies after Russian Prime Minister Vladimir Putin said Yushchenko was obstructing the work of the central bank and the government. The central bank denied this.

So far this year Naftogaz has paid all its bills on time but Some of the payments involved several transactions -- the central bank has printed money before to loan to state banks who then lent the money to Naftogaz.

The central bank could help in a similar way by using its reserves which include about $2 billion from the International Monetary Fund as part of its $250 billion cash injection in September, Yushchenko said.

Observers are concerned Ukraine, one of Europe`s worst performing economies, could be destabilised further after the IMF stalled its $16.4 billion bailout programme last week.

The fund was due to release $3.8 billion in funds by the end of the year but has said it would not do so until a minimum wage increase is overturned. The government was against the wage rises, but parliament and Yushchenko both backed them.

Yushchenko said again that Naftogaz could face $7.8 billion in fines from Gazprom by the end of the year for consuming less gas than it promised under the January deal.

Tymoshenko has said -- and so far Russian officials have not disputed this -- that Gazprom will not impose any fines.