Ukraine May Bump Up Lease Payment for Black Sea Fleet

18.11.2011 Ukraine's Cabinet of Ministers recommended Crimean authorities to set lease payment for lands used by Russian Black Sea Fleet (BSF) at 3% of their normative value in 2013, and offered to raise it up to 4% since 2014, says the governmental resolution adopted on Nov 16.

Russia pays Ukraine almost $100 mln a year, that money redeem Kiev's debt for natural gas and oil products.

Also, Ukrainian government tasked State Land Resources Agency, Ministry of Foreign Affairs, Defense Ministry, and State Property Fund to complete till 2013 settling of documents on inventory and money value of land plots used by Black Sea Fleet in Ukraine.

According to Ukraine's State Property Fund, inventory of BSF property in Crimea started on Oct 6 upon agreement with Russia. Only non-military assets are undergoing inventory.

Cabinet of Ministers is about to compensate incomes under-received by local budgets as a result of BSF deployment in Ukrainian territory. Ministry of Finance was offered to include a supplementary grant in the draft budget. The grant will be distributed in accordance with criteria specified by the cabinet's resolution.

"Volume of the supplementary grant is calculated in accordance with criteria adopted by the given resolution after approval of documents on BSF land inventory by authorized representatives of the Russian party", said the resolution posted on Ukrainian government's official website on Thursday.

In Apr 2011 Ukrainian foreign minister Konstantin Grischenko promised that market value of leased objects would be determined after the real property inventory. Russia had been refusing to let Ukrainian functionaries take inventory in BSF bases before.

Russia and Ukraine signed an agreement in Apr 2010 prolonging deployment of Black Sea Fleet in Ukraine for 25 years after 2017 with possible further 5-year extensions upon mutual agreement.

Lease payment for Russia's BSF after May 28, 2017 will consist of Russia's annual $100 mln plus additional funds received from price reduction of gas delivered to Ukraine. If the gas price is higher than $333 for 1,000 cubic meters, Ukraine would have $100 discount; once the gas price is less than $333, discount would be 30%.