February 9, 2023
Andriy Kobolyev, former CEO of Naftogaz, Ukraine’s state-owned oil and gasoline corporate. (Naftogaz press carrier)

Editor’s Notice: That is factor 65 of Ukrainian State-Owned Enterprises Weekly masking occasions from Feb. 12-18, 2022. The Kyiv Impartial is reposting it with permission.

Company governance in SOEs

Ex-CEO Kobolyev says he didn’t obtain complete remuneration from Naftogaz – Naftogaz refutes, refers to Hr 600 million paid as Stockholm bonus. Former Naftogaz’s CEO Andriy Kobolyev advised Forbes that he best were given a part of his remuneration from Naftogaz.

“I used to be paid a big a part of the cash, however now not all. Subsequently, some court cases are relatively conceivable. This won’t essentially be litigation, for a get started, I can attempt to negotiate,” Kobolyev stated. He additionally added that he was once now not ready to remark at the particular figures of the remuneration he gained from Naftogaz.

Naftogaz answered that Kobolyev gained the entire bills that he was once meant to get in line with his contract and Ukrainian regulation.

Kobolyev gained an advantage of Hr 600 million for Naftogaz’s victory over Gazprom within the Stockholm courtroom of arbitration. In 2018, he was once paid the primary a part of the bonus, Hr 261 million. A prison case was once initiated into this pay-out, which allegedly exceeded the government-set remuneration cap for a state-owned corporate’s CEO.

In step with Naftogaz, Kobolyev gained the second one a part of the bonus (Hr 339 million – SOE Weekly) in 2021 after he was once disregarded. He did so routinely, with out the enter of the corporate’s new control: The remuneration was once paid in keeping with a financial institution ensure below a amendment to his CEO contract signed via Kobolyev and Naftogaz’s former board chair, Claire Spottiswoode, in March 2020. The phrases of this financial institution ensure have been licensed via the supervisory board in April 2020.

Naftogaz added that this extremely extraordinary cost mechanism was once used as a result of Kobolyev sought after to guarantee himself of having the entire cash paid. Then again, he didn’t pay the bonuses to the contributors of the arbitration workforce, which he didn’t even lead, even supposing they have been at once concerned within the arbitration and ensured the Stockholm victory that made Gazprom pay $5 billion to Naftogaz.

The corporate expects Kobolyev to publicly refute his remark.

In SOE Weekly (Factor 35), we reported that in keeping with the Kyiv Publish, Naftogaz’s best control gained multi-million greenback bonuses in 2020. It’s the supervisory board that comes to a decision how a lot control is paid.

The corporate’s 2020 annual document best disclosed the overall pay-out of just about $25 million to the control workforce (17 best officers), together with 5 govt board contributors, with out offering a breakdown of ways a lot each and every govt were given.

In step with the remuneration document noticed via the Kyiv Publish and later printed via Ukrainska Pravda, ex-CEO Andriy Kobolyev were given the biggest proportion, a complete of Hr 347 million ($ 12.7 million), damaged down as follows:

  • Hr 6.3 million – base pay;
  • Hr 338.6 million – bonus when it comes to CEO’s efficiency in earlier years and against the top of his time period (de facto, an advantage for the Stockholm arbitration which was once paid by means of financial institution ensure – SOE Weekly);
  • Hr 2.1 million – different advantages.

Kobolyev later claimed that he had now not gained any “actual financial repayment for the duration after the extension of (his) contract in March 2020” and promised to present an interview in this matter quickly. Naftogaz denied this and stated that Kobolyev did receives a commission.

In SOE Weekly (Factor 36), we reported that during his interview with Liga.web, Kobolyev commented: “My contract was once renewed via the Cupboard of Ministers in March 2020. First, I used to be assured that upon final touch of my contract – in March 2024 – I’d obtain the second one a part of the Stockholm bonus. This was once the explanation why in 2020 I didn’t obtain my cash along with different workers of Naftogaz.”

“Subsequently, I agreed to simply accept the prolong of cost in trade for a financial institution be sure that I can obtain this cash in March 2024. This ensure was once fulfilled. However there have been a number of stipulations. For instance, if I depart Naftogaz earlier than the top of the contract of my very own loose will, I can obtain the second one a part of the bonus in March 2024; and if via the verdict of the shareholder, on the time of dismissal. As well as, the contract supplied for severance pay if I have been disregarded on the initiative of the employer, if the cause of dismissal was once now not a contravention of Ukrainian regulation or a freelance.”

In the similar interview, Kobolyev stated that the financial institution ensure was once invoked. He additionally stated that he gained a six-month (severance) pay.

(In keeping with the above statements, one can conclude that Kobolyev gained Hr 600 million for Naftogaz’s victory over Gazprom within the Stockholm courtroom of arbitration, in addition to severance pay. It’s unclear which a part of the remuneration, together with the sort and quantity of such remuneration, he has now not gained but. Kobolyev declined to touch upon the main points to Forbes. – SOE Weekly.)

Ukrnafta’s cut up behind schedule. Ukrnafta held an abnormal common shareholders assembly on Feb. 17. In step with the assembly’s schedule, problems associated with the cut up of the corporate’s belongings between the bulk shareholder Naftogaz and big minority shareholders was once to be thought to be.

A part of Ukrnafta’s belongings has been deliberate for switch to the newly established Nafta-Aktyv, with Ukrnafta to stay the one shareholder of this corporate. The Cyprus-based firms associated with Ihor Kolomoyskyi, Ihor Palytsia, and Hennadiy Boholyubov would then purchase out Nafta-Aktyv, Ekonomichna Pravda (EP) stated.

Then again, Interfax Ukraine reported that shareholders have now not made any selections at the cut up of belongings and disputed gasoline. A number of the necessary pieces at the schedule, the shareholders renewed the supervisory board, in keeping with Interfax’s assets.

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In SOE Weekly (Factor 61), we reported that Ukrnafta’s abnormal common shareholders assembly was once to happen on Feb. 17. The 2 earlier conferences on Nov. 30 and Dec. 23 didn’t happen because of the loss of a quorum.

In SOE Weekly (Factor 54), we reported that President Volodymyr Zelenskyy stated at a press convention that the cut up of Ukrnafta’s belongings amongst its main shareholders has now not but been licensed, however it might be some way out of the tricky scenario with Naftogaz’s ancient debt to Ukrnafta.

(Naftogaz owns 50% + 1 proportion of Ukrnafta. A bunch of businesses informally referred to as the Privat crew, related to oligarchs Ihor Kolomoiskyi and Hennadiy Boholyubov, personal about 42% of the stocks. – SOE Weekly.)

The president stated that with out dividing Ukrnafta, there’s a top likelihood that the corporations that personal Ukrnafta’s stocks (Privat crew) may win their lawsuit towards the state over those money owed.

Excellent Court docket confirms the legality of NACP’s order to terminate Naftogaz CEO’s contract. On Feb. 9, the Excellent Court docket of Ukraine showed the legality of the order issued via the Nationwide Company on Corruption Prevention (NACP) to (ex-chair of Naftogaz’s supervisory board Claire Spottiswoode) to terminate the contract of CEO Yuriy Vitrenko. Vitrenko had up to now served as appearing Power Minister, and the NACP stated that his position within the corporate led to a warfare of passion.

Vitrenko challenged his termination and gained within the first and 2d example courts, which dominated that there was once no warfare since Vitrenko had best been the appearing Power Minister for 4 months.

The Excellent Court docket didn’t agree, arguing that via regulation, an actual warfare of pursuits method a warfare between an individual’s non-public passion and their legitimate powers. The courtroom stated that violations in anti-corruption regulation are resolved via the NAPC’s orders, and execution of such orders is obligatory.

The courtroom additionally famous that Naftogaz’s supervisory board is a frame endowed with the important powers to get rid of violations. Naftogaz is recently running with out a supervisory board, whose position then falls to Naftogaz’s shareholder – the Cupboard of Ministers.

Naftogaz answered that during its resolution, the Excellent Court docket best put aside the judgements of the primary example and the appellate courtroom at the suspension of the order towards ex-chair of Naftogaz’s supervisory board, Claire Spottiswoode, till a listening to at the deserves of the case is done. Since Spottiswoode resigned in September, this NACP’s order has transform inappropriate. Accordingly, injunctions similar to suspension of that order have additionally transform inappropriate, the corporate stated.

Naftogaz stated that in keeping with the anti-corruption regulation, NACP will have to report a lawsuit at the termination of the employment contract, which the NACP had already performed, however the courtroom has now not but assessed the deserves of this example.

The corporate added that in keeping with the hard work regulation, till a listening to at the deserves is done, the above ruling of the Excellent Court docket does now not imply and would possibly not reason automated termination of the employment contract.

In SOE Weekly (Factor 32), we reported that the NACP ordered the Cupboard of Ministers to cancel Vitrenko’s appointment because the CEO of Naftogaz. The company stated that the appointment broke Ukraine’s anti-corruption regulation.

Head of the NACP Oleksandr Novikov, in his interview with Ukrainska Pravda, commented on that order as follows: “Now we have now not established any warfare of passion in Yuriy Vitrenko’s actions. Then again, sadly, the regulation forbids the one who made selections in regards to the corporate (Naftogaz) to regulate it inside a yr after stepping down (as appearing Power Minister).”

Vitrenko referred to as the order illegal in a remark on Naftogaz’s web site, calling it a textbook instance of “selective justice.”

Vitrenko argued that as appearing Power Minister, he had no authority to make selections about Naftogaz, subsequently his appointment as CEO didn’t violate the Regulation at the Prevention of Corruption.

He added that the Ministry of Power was once now not the corporate’s governing frame; the Cupboard of Ministers was once. As an appearing minister, he was once now not a part of the Cupboard of Ministers. Subsequently, he may now not vote when the govt. made selections with admire to Naftogaz. As well as, Vitrenko was once neither the chair nor a member of the power regulator, the Nationwide Power and Utilities Regulatory Fee (NEURC).

We additionally reported in SOE Weekly (Factor 32) that on June 17, the Kyiv District Administrative Court docket’s press carrier stated that Top Minister Denys Shmyhal sued the NACP, asking the courtroom to cancel the NACP’s order.

In SOE Weekly (Factor 34), we reported that on July 1, the NACP ordered Clare Spottiswoode, the supervisory board chair of Naftogaz, to terminate Vitrenko’s contract as unlawful.

In SOE Weekly (Factor 35), we reported that Vitrenko requested the Kyiv District Administrative Court docket to droop the NACP’s order.

On July 5, the courtroom suspended the NACP’s order till it considers the deserves of the case.


The Bureau of Financial Safety sees a risk within the EBRD’s mortgage to Oschadbank. The Bureau of Financial Safety (BEB) sees no use for Oschadbank to draw loans from the Eu Financial institution for Reconstruction and Construction (EBRD). BEB stated this in a letter to the govt. and the financial institution’s supervisory board.

On Oct. 25, Oschadbank and the EBRD signed a mandate letter in regards to the EBRD’s conceivable subordinated mortgage of as much as 100 million euros, convertible into Oschadbank’s stocks.

BEB states that there are dangers of harmful Ukraine’s financial safety within the technique of Oschadbank’s privatization in keeping with the State-Owned Banks Reform Technique. Those come with the next:

  • The price of the mortgage will likely be 7% in step with annum originally of the settlement, with conceivable fluctuations from 5% to 19%.
  • The finances supplied via the EBRD inside 24 months must be absolutely used for lending to small and medium-sized companies. Then again, recently, foreign exchange lending charges are decrease or on the similar stage as the price of the EBRD’s mortgage.
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In step with BEB’s fabrics, Oschadbank has sufficient money to protected its core industry. The EBRD might not be obliged to transform the invested finances into Oschadbank’s capital, even though the entire phrases of the settlement are met. Because of this, this mortgage won’t deliver any benefit to Oshadbank, BEB’s letter reads.

(In step with the State-Owned Banks Reform Technique, the govt. expects that capital participation of global monetary establishments in Oschadbank will result in a majority proportion or complete privatization of the financial institution via the top of 2025.

Notice that capital injections aren’t the one explanation why the privatization of state-owned banks is recommended for Ukraine. The dangers of state possession for the banks come with inefficiency because of corruption, political meddling, and opposed have an effect on at the stage enjoying box. Such inefficiency is roofed via capital injections from the state the use of taxpayers’ cash.

Two contributors of the SOE Weekly workforce, Andriy Boytsun and Dmytro Yablonovskyi, printed a coverage paper titled “What Will have to the State Do with its Banks” in 2017. They concluded that the dangers of state possession of banks in Ukraine outweighed the advantages, suggesting that every one state-owned banks must be privatized. The state can download the similar services and products from non-public banks or global building finance establishments. – SOE Weekly.)

Power sector

Assured Purchaser sells electrical energy for Hr 444 million to Rinat Akhmetov and Ihor Kolomoyskyi’s firms at a reduced fee. In step with Ekonomichna Pravda (EP), on Feb. 14, the Assured Purchaser offered 204,768 MWh of electrical energy on the Ukrainian Power Change for Hr 444.3 million (except VAT) below bilateral agreements, this is, at Hr 2,170 in step with MWh.

The electrical energy was once purchased via Akhmetov’s and Kolomoiskyi’s firms, the media stated. In step with the media, the buying and selling so much for the public sale have been enlarged, which bring to a halt small buyers and thus lowered festival.

In step with the Ukrainian Power Change, reasonable costs for electrical energy offered below bilateral agreements in February have been Hr 2,636 in step with MWh.

In different phrases, the Assured Purchaser offered the electrical energy within the Feb. 14 public sale at a value Hr 466 in step with MWh (or 18%) less expensive than reasonable. In keeping with that, the media estimated the losses from this deal at Hr 95 million.


Fitch downgrades Ukrzaliznytsia’s credit standing. Fitch Rankings revised the Outlook on Ukrzaliznytsia’s Lengthy-Time period Issuer Default Rankings (IDRs) to strong from sure, and affirmed the IDRs at “B” stage.

The score movements apply the revision of Ukraine’s Outlook to strong from sure. This has an instantaneous have an effect on on Ukrzaliznytsia’s Outlook as Fitch considers it a government-related entity (GRE) of Ukraine in accordance with Fitch’s GRE Ranking Standards.

The confirmation displays Fitch’s unchanged review of the power of the linkage with the Ukrainian authorities and the govt.’s incentive to fortify Ukrzaliznytsia for the reason that closing assessment on Dec. 20.

Fitch assesses Ukrzaliznytsia’s Standalone Credit score Profile (SCP) at “b-” below its public sector, revenue-supported entities score standards, which components within the corporate’s weaker review for profit defensibility, blended with a mid-range review for running chance and weaker review for monetary profile.

The federal government approves Antonov’s monetary plan for 2022. In step with Antonov’s monetary plan for 2022 licensed via the Cupboard of Ministers on Feb. 16, the corporate expects a web benefit of roughly Hr 926 million.

Ekonomichna Pravda reported that Antonov’s web source of revenue from sale of products and services and products is projected at Hr 8.4 billion in 2022. The corporate can pay Hr 546 million to the state (it appears, as taxes and dividends – SOE Weekly), whilst capital investments are anticipated to be Hr 750 million.


Privatization of President-Lodge – beginning value introduced. Cohesion Consulting from Ihor Mazepa’s Concorde Capital Workforce set the beginning value of the President-Lodge at Hr 390 million (round $13.8 million).

Concorde Capital valued the asset in partnership with Marcus Bureau, Creston GCG, BDO Consulting, Redcliffe Companions, and Cushman & Wakefield.

Mazepa stated that the minimal funding to care for the lodge’s operating situation must be about Hr 500 million.

Makes an attempt to denationalise the lodge have been made in 2014, 2015, and 2017. Then again, they all have failed for more than a few causes. The closing try to promote the lodge at an public sale with a beginning value of Hr 323 million in 2017 failed because of the loss of bidders.

The President-Lodge is stressed with a leasing contract. In April 2009, the construction was once leased to Kvadr Building Corporate LLC for 25 years till 2034. In step with the media, Kvadr’s final beneficiary is Odesa businessman Borys Kaufman.

The State Belongings Fund (SPF) and the President-Lodge are looking to terminate the rent contract in courtroom, arguing that the lessee had violated the duty to pay hire from June to December, in addition to violated the insurance coverage phrases. Kvadr answered that during 2020, because of the quarantine restrictions, the lodge was once by no means greater than 22% occupied.

(If the rent contract isn’t terminated earlier than privatization, it will transform a “poison tablet” lowering the good looks of the asset for potential traders. On this situation, a long run purchaser’s best income could also be rent bills up till 2034. Another possibility is to put off the public sale, by which case the asset could also be stripped off. – SOE Weekly.)

SOE Weekly workforce member Andriy Boytsun commented that the state does now not want this asset. If the state owns a definite endeavor or asset, it must give an explanation for why it owns it. If the state is not able to take action, because of this there’s no want for such an endeavor. If the marketplace can deal with a definite serve as, the state must now not do it. He added that there are lots of non-public resorts available on the market competing effectively with each and every different, so there’s no level for the state to have interaction on this industry.

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DBR established that the Bilshovyk may were undervalued via Hr 3 billion. The State Bureau of Investigation (DBR) believes that the actual price of the First Kyiv Device-Development Plant (usually referred to as the Bilshovyk) is roughly Hr 4.5 billion, regarding the ruling of the Kyiv Pechersk District Court docket. The plant was once offered for Hr 1.5 billion at an public sale closing October.

DBR stated that the beginning value of the public sale was once in accordance with Asset Experience’s valuation document commissioned via KPMG Ukraine. KPMG Ukraine acted as an adviser at the privatization of the Bilshovyk below the settlement with the State Belongings Fund.

In step with the result of the forensic exam made via the Kyiv Analysis Institute of Forensic Science of the Ministry of Justice of Ukraine, Asset Experience’s valuation does now not meet the laws on asset valuation and has important shortcomings that affected the reliability of the valuation, courtroom ruling reads.

(In step with the privatization regulation, the beginning value of large-scale belongings is about via the privatization marketing consultant. The privatization regulation does now not require a valuation for that goal, because the regulation did earlier than 2018. It’s subsequently unclear why KPMG commissioned a valuation, and why DBR is wondering the validity of the valuation process within the first position. – SOE Weekly.)

DBR states that the actual price of the Bilshovyk stocks is roughly Hr 4.5 billion as a result of, but even so the manufacturing unit structures, the winner of the public sale additionally “successfully” (time period as utilized by DBR – SOE Weekly) receives 35 hectares of the land on the subject of the centre of Kyiv.

(It’s unclear how the DBR or the Kyiv Pechersk District Court docket arrived at an estimate of Hr 4.5 billion. It’s also unclear if the patron of the Bilshovyk additionally obtains the identify to the land and, if this is the case, below which stipulations. – SOE Weekly.)

On Jan. 26, the investigative pass judgement on Serhiy Vovk arrested 44 actual property items of the Bilshovyk, since they have been known as subject material proof within the prison court cases.

Additionally, in keeping with the fabrics of the court cases, SPF officers abused their powers for the good thing about 3rd events all the way through previous privatizations of positive Bilshovyk’s structures.

In SOE Weekly (Factor 49), we reported that on Oct. 27, the SPF offered the Bilshovyk plant at a privatization public sale for Hr 1.429 billion. The SPF stated that 15 doable consumers have been within the asset. Then again, best 3 firms took phase within the public sale, and best two of them made bids. Quite a lot of media have steered that the formal public sale members will have colluded within the bidding (see articles via Kyiv Publish, NV Trade, and Ekonomichna Pravda).

In SOE Weekly (Factor 50), we reported that the AMCU started an inquiry into the public sale.

As we wrote in SOE Weekly (Factor 52), later, the AMCU declined to believe the appliance of Normal Trade LLC, the patron of the Bilshovyk, to pay attention stocks of the Bilshovyk. The AMCU stated that this software didn’t agree to the procedures for submission and attention of such packages. In the similar unencumber, the AMCU stated that an investigation into conceivable collusion all the way through the privatisation public sale was once ongoing.

In SOE Weekly (Factor 55), we reported that Normal Trade LLC paid the Hr 1.4 billion that it had bid on the privatisation public sale. The cash went into the funds on Dec. 7, Dmytro Sennychenko, Head of the State Belongings Fund stated on Fb.

As we wrote in SOE Weekly (Factor 58), Normal Trade LLC re-applied for the focus allow, and the deal was once finished after the Antimonopoly Committee of Ukraine (AMCU) granted its permission for the acquisition of the asset on Dec. 29.

Notice that AMCU stated that it was once a focus allow best – this is, when granting that let, AMCU best thought to be the possible unfavourable have an effect on of the purchase on marketplace festival. AMCU additionally stated that it persevered its inquiry into the conceivable anticompetitive habits of the public sale members.

(This signifies that the deal may also be reversed if AMCU establishes that collusion happened. No additional knowledge at the growth or standing of the inquiry has been publicly to be had because it was once introduced nearly 4 months in the past.

The speediness, high quality, and result of the AMCU’s inquiry might have an effect on festival at long run privatization auctions, as it will lower or building up incentives for collusion, in addition to traders’ willingness to take part in those auctions within the first position.

If the AMCU establishes that collusion happened, it will have to obviously be in contact the way it was once performed and take suitable motion to forestall collusion at some point. If the AMCU establishes that no collusion happened, it must additionally obviously be in contact how this conclusion was once reached. – SOE Weekly.)

Head of the State Belongings Fund disregarded. The Verkhovna Rada disregarded Dmytro Sennychenko with 318 votes, in the second one try. An previous vote was once scrapped because of technical issues on Jan. 27.