February 5, 2023
Electric pylons within the geographical region. (Pexels)

Editor’s Observe: That is factor 64 of Ukrainian State-Owned Enterprises Weekly masking occasions from Feb. 5 – Feb. 12 2022. The Kyiv Impartial is reposting it with permission.

The Ministry of Power needs to modify Ukrhydroenergo’s CEO. 

In a letter to the Cupboard of Ministers of Ukraine observed by means of Ekonomichna Pravda (EP), Power Minister Herman Galushchenko requested the Cupboard to rethink whether or not Ihor Syrota is the proper CEO for Ukrhydroenergo.

The Ministry identified that an interdepartmental workforce that has audited Ukrhydroenergo’s actions in 2019-2021 discovered a large number of violations, such because the sale of electrical energy at a loss-making tariff or 9 procurement contracts that violated Ukrainian legislation, price a mixed Hr 5.8 billion.

(It’s unclear what the formal function and the authority of the interdepartmental workforce is. Additionally it is unclear what the prison penalties of this kind of letter are.

Observe that the Ministry of Power is the landlord of electrical energy TSO, Ukrenergo. The stipulations of unbundling that stem from the EU’s 3rd Power Bundle require that possession purposes of the TSO and producing firms, together with Ukrhydroenergo, will have to be carried out by means of other entities. Lately, the Ministry of Power is the landlord of Ukrenergo, and the Cupboard of Ministers is the landlord of Ukrhydroenergo.

The facility to nominate/push aside the CEO and elect/push aside supervisory board individuals of Ukrhydroenergo is vested with the Cupboard of Ministers because the possession entity of the corporate. Consistent with constitution of Ukrhydroenergo, the supervisory board has the facility to suggest the CEO candidate to the Cupboard of Ministers.

The Ministry of Power has no function in those issues, and its tips on those problems haven’t any prison energy. The Ministry is tasked with policymaking within the power sector. – SOE Weekly.)

Every other violation that the interdepartmental workforce has established is that Ukrhydroenergo didn’t pay Hr 2.2 billion in dividends to the state price range for 2018.

(On 3 Might 2019, the Ministry of Power, which used to be the possession entity of Ukrhydroenergo on the time and acted as the corporate’s common shareholders assembly, determined that Ukrhydroenergo will have to pay 30% of its 2018 earnings, or Hr 1.1 billion, in dividends for 2018.

Consistent with the legislation, SOEs will have to pay dividends to the state price range by means of 1 July of the reporting 12 months.

If an SOE does no longer pay dividends on time, the Ministry of the Financial system will have to impose a penalty (to be paid to the state price range), computed as double the cut price fee of the Nationwide Financial institution of Ukraine multiplied by means of the exceptional dividend arrears for every day late. If Ukrhydroenergo has no longer paid the 2018 dividends but, the overall quantity of such penalty will have to be a minimum of Hr 542 million.

On the similar time, in step with Ukrhydroenergo’s 2020 audited monetary statements, the corporate has paid the 2018 dividends. It’s not transparent when the fee used to be made, whether or not the penalty is appropriate, and, whether it is, what the volume will have to be. – SOE Weekly.)

Halushchenko’s letter says that the violations are these days being investigated in two prison instances. The Ministry of Power concluded that a lot of ongoing prison court cases might point out inefficient control of the corporate.

In SOE Weekly (Factor 27), we reported that the Cupboard of Ministers discovered the paintings of Ukrhydroenergo’s supervisory board and control board in 2020 to be unsatisfactory after reviewing their annual studies. But, the Cupboard didn’t push aside the supervisory board.

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The supervisory board didn’t consider such review in their efficiency and control’s efficiency.

State-owned banks double their profits in 2021 to Hr 42.7 billion. 

The 4 state-owned banks earned over Hr 42.7 billion in 2021. This makes up 55% of the overall profits of all Ukrainian banks (Hr 77.5 billion). In 2020, the state-owned banks made Hr 22.8 billion.

  • PrivatBank made Hr 35.1 billion in 2021. In 2020, the financial institution earned Hr 24.3 billion.
  • Ukrgasbank made Hr 3.8 billion within the 2021. In 2020, the financial institution earned Hr 1.3 billion.
  • Ukreximbank made Hr 2.7 billion within the 2021. In 2020, the financial institution misplaced Hr 5.6 billion.
  • Oschadbank made Hr 1.1 billion within the 2021. In 2020, the financial institution earned Hr 2.8 billion.

State-owned banks considerably cut back non-performing loans, liable for maximum of NPL relief within the banking sector. 

State-owned banks lowered the worth of non-performing loans (NPLs) by means of Hr 56.2 billion, which makes round two-thirds of the full relief within the banking sector.

The percentage of NPLs in state-owned banks reduced by means of 10.3 proportion issues (from 57.4% to 47.1%) over the 12 months. On the similar time, they nonetheless acquire over 70% of the overall NPL portfolio.

The overall quantity of NPLs in Ukrainian banks reduced by means of Hr 85.2 billion in 2021. The percentage of NPLs in Ukrainian banks’ portfolio reduced by means of 11 proportion issues (from 41% to 30%) in a 12 months.

Power sector

Energoatom unearths Hr 13 billion in violations. 

Consistent with Marlin, regarding the letter of the State Audit Carrier (SAS) to the Cupboard of Ministers, the SAS carried out an audit of Energoatom’s actions for 2018-2021 and located monetary violations and shortcomings encompassing Hr 13 billion.

The auditors known the next:

  • procurement violations – Hr 9.3 billion;
  • monetary losses – Hr 2.1 billion;
  • useless control or dangerous operations that resulted in monetary losses – Hr 1.4 billion; and
  • useless control movements or dangerous operations that can result in additional losses – Hr 217.9 million.

The audit fabrics have been submitted to the Nationwide Anti-Corruption Bureau of Ukraine for attention and decision-making, the auditors’ letter reads.

The SAS beneficial that the Ministry of Power will have to take measures to settle money owed to Energoatom for electrical energy bought. It will have to take on place of business requirements for employment of individuals with disabilities at nuclear crops and its garage of radioactive waste.

(It appears, SAS refers back to the Legislation at the Fundamentals of Social Coverage of Individuals with Disabilities in Ukraine, which calls for that 4% of the full-time positions on the corporate are reserved for other people with disabilities. – SOE Weekly.)

Energoatom mentioned that SAS’ conclusions set out within the letter don’t correspond to fact, and the auditors’ calls for don’t seem to be supported by means of their audit record.

In SOE Weekly (Factor 61), we reported that right through a gathering at Energoatom, Mykola Bozhko, the CEO of Atomproektinzhyniryng, a department of Energoatom, allegedly mentioned how to disguise the disruption within the building of a strategic facility on the Chornobyl nuclear energy plant. This follows from audio recordings, won by means of the Sсhemy newshounds.

Naftogaz wins a lawsuit over Firtash’s money owed. 

The Business Courtroom of Lviv area awarded Hr 1.53 billion in arrears to Naftogaz in a lawsuit towards regional gasoline corporate Lvivgaz Zbut, a part of Regional Gasoline Corporate (RGC), related to the oligarch Dmytro Firtash.

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The debt accrued from October 2019 to July 2020. Consistent with Naftogaz, as of five June 2021, the overall debt of all regional gasoline vendors amounted to Hr 23.6 billion.

As we wrote in SOE Weekly (Factor 25), Naftogaz reported that it misplaced Hr 19 billion in 2020. (A lot of the loss used to be because of the provisions for unhealthy debt. A part of this debt is the debt of regional gasoline vendors a lot of that are owned by means of Firtash. – SOE Weekly.)

In SOE Weekly (Factor 38), we reported that in step with the monetary effects for the primary part of 2021, the Gasoline Transmission Gadget Operator of Ukraine (GTSOU) reported Hr 5.6 billion in internet benefit, lower than part of the Hr 13.1 billion it reported over the similar length final 12 months.

GTSOU stated that the money owed of regional and municipal gasoline firms higher by means of 93% in comparison to the primary part of 2020, and their overall debt to GTSOU for gasoline transportation and balancing products and services on this length amounted to nearly Hr 9.8 billion.

The biggest borrowers are regional gasoline vendors running underneath the logo of Regional Gasoline Corporate (RGC), related to Firtash. Their overall debt is Hr 7.97 billion.

Fitch downgrades Naftogaz‘s credit standing outlook.

Fitch Scores revised Naftogaz’s Outlook from Certain to Strong and affirmed the corporate’s Lengthy-Time period Overseas-Foreign money Issuer Default Score (IDR) at “B”.

The Outlook revision follows a identical fresh revision of Ukraine’s sovereign ranking (B/Strong). Fitch equalises Naftogaz’s scores with the ones of the sovereign, reflecting the corporate’s robust hyperlinks with the sovereign and Fitch’s review of the Naftogaz’s Standalone Credit score Profile (SCP) at “b-”.

The “b-” SCP of Naftogaz displays volatility within the corporate’s operations, following a vital building up of gasoline costs, its skill to hide home intake wishes and to gather receivables in a weaker home economic system, and foreign-exchange publicity.

Fitch additionally famous that on the finish of 2021, Naftogaz’s money and money equivalents have been Hr 30.6 billion. At the side of to be had unused credit score amenities of Hr 3 billion, this quantity is enough to quilt temporary maturities of Hr 16.6 billion, together with $335 million of Eurobonds due in July 2022 and financial institution loans.

In SOE Weekly (Factor 39), we reported that Fitch Scores revised Naftogaz’s Lengthy-Time period Overseas-Foreign money Issuer Default Score (IDR) to Certain from Strong and affirmed the IDR at “B”.

Infrastructure

Ukrzaliznytsia’s procurement schemes case is going to courtroom. 

The Specialized Anti-Corruption Prosecutor’s Place of work (SAPO) took the case of an unlawful seizure of over Hr 93 million from Ukrzaliznytsia to the Perfect Anti-Corruption Courtroom.

Consistent with Ekonomichna Pravda (EP), there are 9 suspects, together with MP Yaroslav Dubnevych.

A bunch of officers of Ukrzaliznytsia’s department Manufacturing Enhance Centre, at the side of the MP and regulated middleman firms, allegedly arranged a procurement scheme. In consequence, right through 2015-2017, Ukrzaliznytsia overpaid by means of greater than Hr 93 million.

Ukrzaliznytsia and Alstom signal a memorandum.


On 8 February, Ukrzaliznytsia and the French machine-building corporate Alstom signed a memorandum for the availability of 130 locomotives price € 900 million.

Polygraph Mix “Ukraina” orders provides from a doubtful corporate.

Consistent with Ukrayinska Pravda, Polygraph Mix “Ukraina” (PK Ukraina) ordered fabrics for passport manufacturing from Polly-Carrier price Hr 503.6 million.

Polly-Carrier was a member of the EDAPS affiliation notorious for its corruption schemes.

Global corporate Linxens was PK Ukraina’s supplier till a control alternate on the corporate. Linxens’ proposals and letters to increase cooperation went overlooked by means of new control.

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The brand new CEO of PK Ukraina, Tetyana Bondarenko, reportedly had connections with EDAPS and terminated PK Ukraina’s industry dating with Linxens.

PK Ukraina reportedly overpaid Hr 28 million to the brand new provider, inflicting retail passport costs to upward push by means of Hr 40. The terminated provider is preventing for reimbursement.

The State Audit Carrier to audit SFGC.


Consistent with the Minister of Finance, Serhiy Marchenko, the State Audit Carrier (SAS) will behavior an audit of the State Meals and Grain Company (SFGC).

The Cupboard of Ministers urged the auditors to seem into the usage of allotted finances, timeliness of mortgage repayments, and the legality of SFGC expenditures. The auditors will have to additionally assess SFGC’s skill to settle up with the state for the fulfilment of assured duties.

In SOE Weekly (Factor 63), we reported that the Ministry of Finance transferred Hr 2.5 billion to the Export-Import Financial institution of China as an alternative of the State Meals and Grain Company (SFGC). Consistent with the Ministry, SFGC repays a mortgage instalment each six months. On 21 January, the corporate paid simply $8.8 million of the $96.4 million it used to be meant to. Because of the state ensure, the Ministry of Finance needed to pay the remaining.

In SOE Weekly (Factor 62), we reported that SFGC presented to restructure its remarkable $ 900 million debt to the Export-Import Financial institution of China, in step with an October 2021 presentation.

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

Later, Ekonomincha Pravda (EP) printed an editorial, explaining how SFGC’s money owed gathered and claiming that on 21 January, SFGC would default on its debt. Consistent with the EP’s resources, the President’s Place of work helps a “default situation”, which mechanically invokes a state ensure.

In SOE Weekly (Factor 47), we reported that the Cupboard of Ministers arrange an inter-ministerial operating workforce to seem into SFGC’s money owed and grain provide duties to Chinese language state-owned firms. SFGC won a $ 1.5 billion mortgage in 2012 to be repaid by means of 2027. It used to be issued underneath Ukrainian state promises so as to identify a scientific provide of grain to China.

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.

Ukrainian SOE WeeklyTM is an unbiased weekly digest according to a compilation of crucial information associated with state-owned enterprises (SOEs) and state-owned banks in Ukraine.

Editorial group: Andriy Boytsun, Mariia Kramar, Dmytro Yablonovskyi, and Oleksandr Lysenko.

The SOE Weekly is produced and financed by means of Andriy Boytsun. Communications fortify is equipped and financed by means of CFC Large Concepts. The SOE Weekly isn’t financed or influenced by means of any exterior celebration.

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