"Naftogaz Ukrainy finished 2005 with losses amounting to 1.842 billion hryvnia," the company said in a news release, citing audit results by the Ernst &Young financial services company.
"As of December 31, 2005, the company's current liabilities exceeded current assets by 9.014 billion hryvnia ($1.8 billion), including tax arrears totaling 5.168 billion hryvnia ($1 billion)."
Naftogaz said it had taken a total of about $1 billion in loans from foreign banks to finance its activities and make investments, as well as to pay off some of its short-term debt. The company said its long-term loans last year nearly doubled, to 7.862 billion hryvnia ($1.37 billion).
Ex-President Oleksiy Ivchenko said in late April the losses of the company, which accounts for 10% of the state budget's revenues, hit $500 million in the first quarter of 2006 alone, whereas the Fuel and Energy Ministry said losses stood at $600 million.
Ivchenko clashed with the Finance Ministry, which rejected Naftogaz's proposal to raise gas prices for households by 60% starting in July. The ministry demanded instead that Naftogaz scale back spending on a number of foreign projects and cut investment in production in Ukraine.
Fitch Ratings said in late April the company expected losses could be as high as $1.5 billion in fiscal year 2006.
It also cited press reports that Naftogaz has accumulated debts of around $700 million for natural gas supplied by Rosukrenergo in February and March, after Naftogaz was forced to sell gas on the domestic market at prices lower than its acquisition price.
Rosukrenergo is a gas transportation company 50% owned by a subsidiary of Russian energy giant Gazprom, with the other 50% being held by Austria's Raiffeisen Bank.
Naftogaz placed the blame for any potential disruptions to gas imports on the government.