January 29, 2023
Other people withdraw money from an ATM of the PrivatBank in downtown Kyiv on Dec. 15, 2021. (Volodymyr Petrov)

Editor’s Notice: That is factor 62of Ukrainian State-Owned Enterprises Weekly masking occasions from Jan. 22 – Jan. 28, 2022. The Kyiv Impartial is reposting it with permission.

Company governance in SOEs

The Verkhovna Rada establishes a Brief Fee of Inquiry for State Audit Provider, State Customs Provider, and Naftogaz. On Jan. 27, lawmakers arrange a Brief Fee of Inquiry for the State Audit Provider (SAS), the State Customs Provider (SCS), and Naftogaz.

In line with the Verkhovna Rada’s solution and similar explanatory be aware, the status quo of the Fee used to be led to by way of conceivable corruption at executive companies, together with SAS and SCS, in addition to the result of Naftogaz’s audit performed by way of SAS (it seems that in 2020 – SOE Weekly). That audit had arguably established useless control and dangerous transactions that can have ended in losses of Hr 250.9 billion, together with monetary violations amounting to Hr 150 billion.

The Fee will examine those conceivable corruption circumstances at SAS and SCS.

As well as, the Fee will read about the trade actions of Naftogaz, together with:

  • the potency of use of Naftogaz’s mounted belongings and the situation of gasoline distribution methods;
  • actions of Naftogaz and different firms engaged within the extraction, transportation, garage, distribution, and provide of herbal gasoline, in addition to its international trade;
  • the implementation of the state possession coverage by way of Naftogaz and key targets and priorities in line with which the state owns the corporate;
  • data at the corporate receiving and the use of state support.

The Fee additionally stated it could examine the essential state of affairs with tariff-setting that can have resulted from the movements of Naftogaz’s officers.

The Fee is established for three hundred and sixty five days and is chaired by way of lawmaker Ivan Krulko (Batkivshchyna fraction). The record will have to be heard at Verkhovna Rada’s assembly no later than in six months.

In SOE Weekly (Factor 15), we reported that during February 2021, High Minister Denys Shmyhal advised then performing Minister of Power Yuriy Vitrenko to record at the execution of the Nationwide Safety and Protection Council’s choice similar to making sure the power safety of Ukraine. In his reaction, Vitrenko criticized Naftogaz control and supervisory board regarding the corporate’s falling gasoline manufacturing, failure to enforce the state possession coverage, and the violations that SAS had established in Naftogaz in 2018-2019.

Naftogaz had pushed aside the conclusions within the SAS record in October 2020. In its observation, the Audit and Chance Committee of the supervisory board stated that the corporate’s monetary statements complied with the Ukrainian regulation and World Monetary Reporting Requirements (IFRS).

In SOE Weekly (Factor 12), we reported that the Verkhovna Rada established a Brief Fee of Inquiry for Ukrzaliznytsia. The Fee used to be to evaluate the state of Ukrzaliznytsia and examine conceivable state of no activity and violations of the regulation, which led to a deterioration of the corporate’s efficiency and technical situation.


State-guaranteed debt owed to state-owned banks grows by way of Hr 22.5 billion in 2021. The state-guaranteed debt owed to Ukrainian banks higher from Hr 7.85 billion in 2020 to Hr 32.11 billion in 2021, an build up of Hr 24.26 billion. 

The 4 state-owned banks accounted for Hr 22.5 billion (93%) of this build up:

  • Ukreximbank (Hr 9.34 billion);
  • Oschadbank (Hr 8.65 billion);
  • Ukrgasbank (Hr 3.79 billion);
  • PrivatBank (Hr 0.76 billion).

As of the top of 2021, the state-guaranteed debt owed to state-owned banks used to be Hr 30.4 billion, which made up 94.7% of general debt owed to Ukrainian banks.

(The state can ensure positive loans for the general public just right, correcting for marketplace screw ups. For instance, the state might supply assured loans for the development of roads, bridges, or airports when the collateral isn’t to be had, and the banks don’t seem to be ready to provide such loans in a different way.

Then again, there is not any explanation why to depend only on state-owned banks for such loans. A heavy mortgage focus could also be an indication of particular stipulations, violating the extent enjoying box, or political meddling, which dangers intruding into the banks’ company governance.

The Antimonopoly Committee might get started an investigation to look whether or not the extent enjoying box used to be violated, whether or not such state promises successfully constitute state support, and, if this is the case, whether or not such state support used to be admissible. – SOE Weekly.)

Power sector

MGU tells GTSOU to extend its gasoline industry at the alternate. In line with the Mahistralni Gazoprovody Ukrayiny (Primary Fuel Pipelines of Ukraine or MGU), its supervisory board is operating to extend the participation of the Fuel Transmission Machine Operator of Ukraine (GTSOU) within the Ukrainian Power Alternate, purchasing and promoting gasoline to stability the transmission gadget.

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MGU said that a variety of conferences have been held and paperwork have been evolved and agreed upon to arrange GTSOU to move public and coordinate the actions of GTSOU and the Ukrainian Power Alternate. GTSOU has participated within the buying and selling since Jan. 19.

(MGU is the landlord of GTSOU. It’s unclear why MGU without delay engages in gasoline procurement problems with GTSOU and by means of which mechanisms MGU’s directions are applied. In commonplace company observe, the above problems will have to be handled by way of GTSOU control. – SOE Weekly.)

As well as, MGU’s supervisory board advised GTSOU to promptly suggest an motion plan for the heating season 2021-2022 to verify its liquidity and talent to stability the gasoline transmission gadget.

Ukrenergo expects DTEK to pay off its debt of Hr 1 billion. In line with Ekonomichna Pravda (EP), Ukrenergo requested the Cupboard of Ministers, the Ministry of Power, the Nationwide Power and Utilities Regulatory Fee (NEURC), the Nationwide Safety and Protection Council, the Safety Provider of Ukraine (SBU), and the Ministry of Finance to assist get better the debt from DTEK Buying and selling, an organization belonging to oligarch Rinat Akhmetov.

In line with the EP’s supply, the debt gathered from DTEK Buying and selling’s use of transmission services and products when exporting electrical energy.

DTEK Buying and selling considers the fee mechanism for electrical energy exports to be unlawful, announcing it violates the EU-Ukraine Affiliation Settlement.

In SOE Weekly (Factor 43), we reported that on Sept. 8, the Ultimate Court docket upheld the cassation appeals of NEURC and Ukrenergo in opposition to Zahidenergo, one in all DTEK’s power producing firms, which refused to pay for the use of the state grid when it exported electrical energy. The Ultimate Court docket dominated that Ukrainian exporters of electrical energy will have to pay transmission and dispatch control charges to the grid operator Ukrenergo.

In February 2020, DTEK Zahidenergo went to the Kyiv District Administrative Court docket to check out to get out of the allegedly necessary charge, which NEURC offered on Feb. 7, 2020.

Assured Purchaser repays its debt to Akhmetov. The Assured Purchaser paid its exceptional inexperienced price lists of Hr 2.7 billion to DTEK VDE.

In SOE Weekly (Factor 52), we reported that at an strange assembly on Nov. 13, the Cupboard of Ministers terminated the powers of the Assured Purchaser’s CEO, Kostiantyn Petrykovets. In line with Petrykovets, he used to be fired as a result of he refused to practice executive officers’ unlawful directions to not switch cash to positive inexperienced power manufacturers.

The Ministry of Power said that Petrykovets’ movements have been unprofessional and in all probability led to damages to the corporate of over Hr 500 million. All the way through Petrykovets’ time period, huge volumes of electrical energy have been bought at intentionally low costs to present positive monetary and commercial teams a bonus, in line with the ministry.

Ekonomichna Pravda (EP) clarified that the ministry used to be speaking a few transaction in overdue July, the place Assured Purchaser bought a considerable amount of electrical energy earlier than elevating value caps available on the market. In line with EP, in early November, Ukrenergo positioned state-guaranteed Eurobonds value $825 million at 6.7% according to annum to pay exceptional money owed to inexperienced power manufacturers.

(It’s then unclear from the Ministry’s observation why the dismissal simplest came about 3 months after the ones auctions. – SOE Weekly.)

Ukrenergo paid Hr 19.3 billion to the Assured Purchaser. Petrykovets used to be meant to distribute this sum amongst marketplace avid gamers with the biggest percentage – a few quarter – intended to visit DTEK. Then again, because of deteriorated family members between Akhmetov and the President’s Place of job, the federal government reportedly sought after to withhold DTEK’s fee – and Petrykovets refused to move along side it.

The principle serve as of the Assured Purchaser is to promote electrical energy produced by way of Energoatom and Ukrhydroenergo. Its secondary serve as is to shop for all power constituted of renewable assets at a different feed-in tariff, after which promote it available on the market.


Ukrzaliznytsia spends Hr 300 million on passenger transportation advisory services and products. Ukrzaliznytsia introduced a young for the acquisition of consulting services and products for the modernization of its passenger visitors. The beginning value is up to Hr 304.5 million (about $10.6 million).

The scope of the consulting services and products comprises:

  • growth of operational potency;
  • creation of a gadget for the financing of services and products for socially vital passenger transportation (it seems that, a public provider legal responsibility – SOE Weekly);
  • growth of the passenger visitors high quality;
  • strengthen to the advance of a method for the renovation of passenger visitors belongings;
  • build up of revenues from the passenger transportation trade.
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The services and products are regarded as to were equipped when the important thing efficiency signs (KPIs) were completed. The listing of KPIs is to be agreed upon between the client and the contractor inside 3 months from the date that the settlement is concluded.

(The KPIs seem to be an crucial a part of the phrases of reference of this advisory task. It’s due to this fact unclear why the KPIs are to be agreed upon after the winner of the smooth is chosen, particularly in procurement of this magnitude. Additionally it is unclear what occurs if the winner and Ukrzaliznytsia will have to no longer agree at the KPIs once they signal the contract. – SOE Weekly.)

The advisory services and products will have to be equipped till Dec. 31, 2023. The public sale will happen on March 14.

Different sectors

UMCC wins a $14 million debt assortment lawsuit. The Kyiv Court docket of Attraction upheld 3 choices of the World Industrial Arbitration Court docket (ICAC) on the Chamber of Trade and Trade of Ukraine to get better money owed of $ 13.8 million from Bollwerk Finanzierungs- und Industriemanagement AG in favour of United Chemical and Mining Corporate (UMCC).

In line with UMCC, it signed contracts in 2019 to provide titanium-containing fabrics to the Austrian corporate. Bollwerk used to be meant to pay for the products in 2020 however by no means did.

On the finish of 2020, the UMCC went to ICAC, which determined that $4.9 million, $1.5 million and $7.3 million will have to be accrued from Bollwerk for 3 other contracts.

Former lawmaker Serhiy Leshchenko had stated in 2018 that Bollwerk is allegedly associated with Mykola Martynenko, former chair of the power committee of the Verkhovna Rada.

The state receives Hr 253.5 million in dividends from the UMCC, in line with the corporate. This comprises Hr 184.5 million in dividends for 2020 and every other Hr 68.9 million in surcharges for 2018. Remaining yr, the corporate paid Hr 50.4 million in dividends.

In SOE Weekly (Factor 60), we reported that in line with Marlin, within the first 9 months of 2021, UMCC posted losses of Hr 328 million.

In SOE Weekly (Factor 58), we reported that the UMCC privatization public sale used to be postponed 3 times, with the brand new date unknown.

SFGC presented to restructure Chinese language mortgage. The State Meals and Grain Company (SFGC) presented to restructure its exceptional $900 million debt to the Export-Import Financial institution of China, in line with an October presentation, reported by way of Ekonomichna Pravda.

(We’re unaware to whom the presentation used to be made, if in any respect, and whether or not it has ever been regarded as. There’s no reputable data whether or not SFGC is submitting for chapter. – SOE Weekly.)

The corporate presented a number of movements:

  • extend the present mortgage for 10 years till 2037;
  • pay passion at the mortgage for the length of 2022-2025 in 2037;
  • scale back the mortgage charge to three% and unlink it from Libor (underneath present stipulations, the velocity is 4.5% + six months of Libor);
  • exchange the mortgage settlement to permit elevating finances outdoor of the mortgage settlement.

It used to be additionally proposed to boost further finances within the quantity of $700 million in different tranches: $250 million to verify industry, $150 million to modernise the amenities to extend exports, and $300 million to shape a land financial institution.

(The cause of the SFGC’s failure is that the cash injected into it for trade construction used to be stolen. It’s unclear from the presentation what’s to stop identical robbery at some point. – SOE Weekly.)

In SOE Weekly (Factor 61), we reported that lawmaker Maryan Zablotskyy (Sluha Narodu faction) wrote on his Fb web page that SFGC might cross bankrupt quickly. In line with Zablotskyy, SFGC is not going to pay off its subsequent $95 million mortgage tranche by itself.

Later, Ekonomincha Pravda (EP) revealed an editorial, explaining how the SFGC’s money owed gathered and claiming that on Jan. 21, the SFGC would default on its debt. In line with the EP’s assets, the President’s Place of job helps a “default state of affairs”, which mechanically invokes a state ensure.

In SOE Weekly (Factor 47), we reported that the Cupboard of Ministers arrange an inter-ministerial running team to appear into the State Meals and Grain Company’s (SFGC) money owed and grain provide tasks to Chinese language state-owned firms. SFGC won a $1.5 billion mortgage in 2012 to be repaid by way of 2027. It used to be issued underneath Ukrainian state promises as a way to identify a scientific provide of grain to China.

As we reported in SOE Weekly (Factor 44), from January to September 2021, SFGC’s elevators have been running at 10% in their general capability, and the company has no longer despatched a unmarried grain cargo to the China Nationwide Equipment Import and Export Company. This used to be a file low for the reason that get started in their trade dating.

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In SOE Weekly (Factor 42), we reported that Andriy Vlasenko, who’s suspected of embezzling Hr 71 million and positioned underneath area arrest, used to be “relieved of his tasks as performing CEO” by way of order of the Ministry of Financial system dated Sept. 15, SFGC stated on its Fb web page, and Vasyl Kovalenko, used to be appointed as new performing CEO.

In SOE Weekly (Factor 39), we reported that Nationwide Police investigators established that control of SFGC had squandered the company’s assets by way of promoting grain to offshore firms at diminished costs, with out prepayment. On Aug. 13, the Nationwide Police detained Vlasenko at Kyiv’s Zhulyany airport when he used to be seeking to flee Ukraine. His associate used to be detained along side him.

In SOE Weekly (Factor 30), we reported that SFGC used to be a few of the largest loss-makers amongst all Ukrainian SOEs, with its 2020 loss totalling up to Hr 5.9 billion.


SPF sells Elektronmash for Hr 430 million. The State Assets Fund (SPF) bought Elektronmash on the privatization public sale for Hr 430 million. The beginning value used to be Hr 65.6 million.

5 firms took section within the public sale. The winner is Ukrainian Symbol LLC. The corporate is little recognized, if in any respect. In line with the sign up, it has a certified capital Hr 50,000 and is engaged in prison services and products.

In SOE Weekly (Factor 56), we reported that in line with ProZorro.Sale, the Elektronmash privatization public sale used to be identified as no longer having taken position, because the winner of the public sale did not signal the contract on time.

In SOE Weekly (Factor 51), we reported that the SPF bought Elektronmash at a privatization public sale for Hr 970 million in November.

(In that public sale: 

  • the easiest bid used to be Hr 970 000 000.01 (presented by way of Lorten Workforce);
  • the second one easiest bid used to be Hr 970 000 000.00 (presented by way of Movement Capital);
  • the 3rd easiest bid used to be Hr 560 000 100.00 (presented by way of Diprobudmashyna);
  • the fourth easiest bid used to be Hr 560 000 000.00 (presented by way of Time Name). 

Significantly, Lorten Workforce, Movement Capital, and Time Name didn’t take part within the January public sale. Diprobudmashyna did take part within the January public sale, but it surely simplest presented Hr 300 million, which a few part of the bid that it made within the November public sale.

Diprobudmashyna’s bid used to be the second one easiest within the January public sale. If it had presented Hr 560 million, it will have received the January public sale.

Additionally notable is that Ukrainian Symbol LLC, the winner of the January public sale, had no longer participated within the November public sale.

This in all probability peculiar behaviour of the bidders could also be a just right flooring for the Antimonopoly Committee of Ukraine (AMCU) to investigate into conceivable collusion a few of the bidders. – SOE Weekly.)

The Cupboard of Ministers plans to boost up privatization. The Cupboard of Ministers authorized a call to enhance the process for placing state-owned gadgets at the listing for privatization.

In line with High Minister Denys Shmyhal, the adjustments will have to accelerate the preparation of the essential paperwork by way of the companies. He added that the related government are anticipated to supply an expanded vary of knowledge on state assets, together with possession, availability of assets complexes, court docket choices, and the like.

In SOE Weekly (Factor 54), in line with the state funds for 2022 authorized by way of the Verkhovna Rada of Ukraine on Dec. 2, the state will privatize Hr 8 billion value of belongings in 2022.

The Verkhovna Rada fails to disregard the SPF’s Head. On Jan. 27, the Verkhovna Rada did not disregard the Head of the State Assets Fund (SPF) Dmytro Sennychenko. The verdict used to be supported by way of 223 votes, which is 3 votes not up to required.

First Deputy Chairman of the Verkhovna Rada Oleksandr Kornienko referred to a failure within the Rada balloting gadget.

A brand new software for Sennychenko’s resignation used to be registered within the Verkhovna Rada.

In SOE Weekly (Factor 52), we reported that Dmytro Sennychenko introduced his resignation because the Head of the State Assets Fund (SPF) on Nov. 18.