Issue 72
22–27 January 2023

Corporate governance of SOEs

Naftogaz supervisory board appointed after more than a year of absence. On 24 January 2023, the Cabinet of Ministers appointed six members to Naftogaz’s supervisory board. The new supervisory board includes:

  • Tor Martin Anfinnsen (independent member) – senior advisor, Boston Consulting Group (BCG), former senior vice president of Equinor (a Norwegian oil and gas company, formerly known as Statoil);
  • Anthony Marino (independent member) – former president and CEO of the Canada-based oil and gas producer Vermilion Energy and current president and CEO of Tenaz Energy, a newly established mining company based in Calgary, Canada;
  • Richard Hookway (independent member) – CEO and board member of Centrica Business, a British electricity supplier; he also who has 33 years of experience at BP; and
  • Ludo Van der Heyden (independent member) – INSEAD business school professor; former member of the most recent Naftogaz supervisory board (from 2019 to 2021).

The state representatives include:

  • Rostyslav Shurma – Deputy Head of the President’s Office; and
  • Nataliya Boyko – advisor to Prime Minister Denys Shmyhal on energy issues; former member of Naftogaz’s supervisory board (2019-2021). Since 7 November 2022, Boyko has also served on the newly appointed supervisory board of Ukrnafta.

[Note that Naftogaz’s supervisory board must consist of seven members, including four independent members and three state representatives. This means that another state representative remains to be appointed. The Cabinet has not indicated why no such member has been appointed yet, or who that person will be. – SOE Weekly.]

As we reported in SOE Weekly (Issue 71), according to the memorandum with the International Monetary Fund, Naftogaz’s supervisory board must be appointed by the end of January 2023. The conditions of the EU’s € 18 billion MFA package include an obligation to select Naftogaz’s supervisory board by March 2023.

In Issue 70, we reported that, according to the media, the shortlist of candidates for independent members of Naftogaz’s supervisory board included 20 names, with four independent member positions to fill.

[A competitive selection for Naftogaz’s supervisory board was announced in October 2021, after the remaining members of the previous board were dismissed. The plan was to complete the selection and appoint a new board by the end of November 2021. Naftogaz had been operating without a supervisory board for more than a year.

The shortlist from the 2021 selection leaked to the media in February 2022. The list consisted of 14 candidates. On 4 November 2022, the Cabinet of Ministers decided to launch a new competitive selection. It is unclear why the Cabinet did not use the candidates shortlisted from the 2021 selection. Remarkably, no single candidate from the 2021 shortlist was appointed to the supervisory board.

Note that Ludo Van der Heyden was an independent member of Naftogaz’s supervisory board in 2019-2021. As we reported in SOE Weekly (Issue 25), on 28 April 2021, acting in its capacity as Naftogaz’s general meeting of shareholders, the Cabinet deemed the 2020 performance of that board unsatisfactory, after the company reported a loss of UAH 19 billion in 2020 despite predicting a UAH 11 billion profit in its financial plan.

As we reported in Issue 35, that supervisory board also awarded multi-million bonuses (UAH 610 million) to Naftogaz management in 2020, despite the company’s losses. That remuneration decision also covered, among others, executives’ targets that were only supposed to be achieved in 2021 – but seemed to have already been evaluated and rewarded as part of the 2020 performance evaluation.

As we reported in Issue 37, the board took another remuneration decision (UAH 215 million for the first half of 2021) that was heavily criticised. Specifically, the board set the semi-annual objectives for top management on 25 June 2020 (that is, only five days before the first half of 2021 ended); evaluated the achievement of these objectives in the same board meeting that they were set; and evaluated the achievement of the objectives before the first half of 2021 ended and its corporate results were known.

Van der Heyden was a member of Naftogaz’s Nomination and Remuneration Committee, member of the Ethics and Compliance Committee, chair of the Health, Safety, Environment, and Reserves Committee, and chair of the Strategy Committee. – SOE Weekly.]

For an earlier extended overview of the Naftogaz case and its analysis from a corporate governance perspective, see SOE Weekly’s Issues 25, 26, 27, 28, 29, 30, 32, 33, 34, 35, 36, 37, 41, 42, 43, 44, 45, and 48.

The High Anti-Corruption Court decides not to arrest former Naftogaz CEO Kobolyev on bonus suspicion. On 23 January 2023, the High Anti-Corruption Court (HACC) refused to grant the National Anti-Corruption Bureau of Ukraine (NABU) detective’s request to detain former Naftogaz’s CEO Andriy Kobolyev. The full text of the ruling will be announced on 30 January.

On 19 January, Specialised Anti-Corruption Prosecutor’s Office (SAPO) requested for Kobolyev to be detained on bail of UAH 365 million. The SAPO prosecutor disagrees with the HACC’s decision and considers it unreasonable and illegal. According to SAPO, there are risks that the suspect [Kobolyev – SOE Weekly] may flee from Ukraine or obstruct the investigation.

SAPO also stated that it was going to challenge the HACC’s decision after reviewing the full text of the ruling. The prosecutors will have five days to appeal. According to Kobolyev’s lawyers, he has no plans to hide from the investigation and is willing to co-operate.

In SOE Weekly (Issue 71), we reported that on 18 January 2023, NABU and SAPO notified Kobolyev that he was suspected of misappropriating over UAH 229 million in 2018.

According to NABU, Kobolyev illegally awarded himself UAH 261 million, based on the supervisory board’s decision to give him a bonus for extraordinary achievements. This payment was part of bonuses granted to the company’s management team in May 2018 for Naftogaz’s historic victory against Russia’s Gazprom in Stockholm’s court of arbitration.

[Note that the 2018 bonuses are not the same as the 2020 bonuses, discussed earlier in this issue. The 2020 bonuses included a second part of the Stockholm bonuses. – SOE Weekly.]

NABU stated that the bonuses significantly exceeded the legally established ceilings for such payments (UAH 37.5 million).

For a detailed overview of this case, see SOE Weekly’s Issue 71.

According to a statement by independent members of Naftogaz’s most recent supervisory board, Clare Spottiswoode, Ludo Van der Heyden, and Bruno Lescoeur, the board had decided to award bonuses to the company’s management, including former CEO Kobolyev, for winning the Stockholm arbitration against Russia’s Gazprom in accordance with the best international corporate governance practices.

The former board members referred to allegations of pressure from Kobolyev as “a distortion of facts” and said that they “believed that such an unprecedented success should have an unprecedented bonus in Ukraine”.

Ludo Van der Heyden added that none of the three independent board members had been interviewed by the court or NABU.

[It is unclear why NABU and SAPO posed no questions to supervisory board members who took the primary decision on paying this bonus, including members of the board’s remuneration committee who should examine any decisions related to the remuneration of the CEO and provide a recommendation to the supervisory board regarding the approval of such decisions. Under Ukrainian law, supervisory board members of joint-stock companies (as well as CEOs and company officials) are responsible for losses caused by their actions or inaction.

Moreover, the above statement by the independent board members confirms that the board was fully informed and equipped to take this decision, having obtained a legal opinion from its legal advisor, among other things.

This rejects NABU and SAPO’s claim that Kobolyev deliberately concealed the legal restrictions regarding bonus payments from the supervisory board. Instead, based on the board’s statement, NABU must interview the previous board, who took the decision on bonuses. If NABU believes that this decision broke the law, then SAPO must redirect its suspicion to previous board members. Otherwise, persecuting Kobolyev may appear to be selective. – SOE Weekly.]

New Deputy Minister of Economy in charge of SOEs’ corporate governance and privatisation. On 24 January 2023, the Cabinet of Ministers appointed Oleksiy Sobolev as the Deputy Minister of Economy. Sobolev listed his responsibilities on his Facebook page. They include:

  • SOE corporate governance;
  • privatisation;
  • management of public assets;
  • Prozorro.Sale;
  • support for small and medium-sized businesses; and
  • other various projects.

Prior to that, Sobolev was the CEO of Prozorro.Sale since 2018. In 2015-2016, he was an advisor to the Minister of Infrastructure, coordinating projects to increase transparency, open data, and improve corporate governance of SOEs. Sobolev had also worked as a portfolio manager at Dragon Asset Management and an auditor at E&Y Ukraine.

SOE updates

Energy sector

Naftogaz allowed to attract €189 million EBRD grant to import additional gas for the heating season. On 23 January 2023, the Cabinet of Ministers resolved that Naftogaz can attract a grant from the European Bank for Reconstruction and Development (EBRD) worth almost €189 million.

According to Prime Minister Denys Shmyhal, Naftogaz will be able to import additional gas volumes with these funds. [No further details have been released yet. – SOE Weekly.]

Shmyhal also assured that Ukraine had enough resources to go through the heating season. About 11 billion cubic meters of gas are stored in gas storage facilities, and almost 1.2 million tons of coal are stored in warehouses, he said.

In SOE Weekly (Issue 71) we reported that during the World Economic Forum in Davos, Naftogaz reached several agreements needed for financing and reserving additional volumes of gas for the 2022-2023 heating season. These include agreements with:

  • the EBRD – on financing mechanisms for the purchase of additional gas volumes for Ukraine;
  • the EBRD, Norway, the USA, Germany, France, Canada, and Great Britain – on financing the purchase of gas;
  • leading oil and gas companies – on reserving the necessary volumes.

Earlier, on 23 December 2022, Naftogaz CEO Oleksiy Chernyshov said that Naftogaz attracted almost half a billion cubic meters of gas that week, with the help of partners. According to him, about 350 million cubic meters will come from the Norwegian energy company Equinor, and another 100 million cubic meters of gas will be purchased with EBRD funds from authorised sellers.

Ukrenergo faces another Russian missile and drone attack on its energy facilities. On 26 January 2023, Ukrenergo’s CEO Volodymyr Kudrytskyi reported on his Facebook page that Russia launched another missile and drone attack on Ukraine’s energy infrastructure.

According to Kudrytskyi, this time, just like before, Russia did not achieve its goal of causing a collapse in the Ukrainian power system. Nevertheless, there were hits and damage to equipment in the southern, central, and southwestern regions. In Dnipro region, the main high-voltage equipment at one of the power facilities was destroyed. The extent of the damage is being assessed, and repair teams will start restoring it.

According to Ukrenergo, the system is in a significant deficit. The Russian attack caused emergency power outages, but most regions outside the south began to return to their outage schedules.

Kudrytskyi said that this was Russia’s 13th wave of missile attacks and the 15th wave of drone attacks.

In SOE Weekly (Issue 66) we reported about the constant Russian attacks on Ukrainian critical infrastructure.

On 16 December 2022, Ukrenergo reported an emergency situation as Ukraine’s united energy system suffered a 50% consumption loss due to the Russian Federation’s missile attacks. [Apparently, consumption dropped because of the attacks on the transmission system. – SOE Weekly.]

Later, the company explained that the emergency situation was announced only for participants in the electricity market and applied solely to market operations.

Earlier, on 12 December, Ukrenergo reported a significant power deficit in the national grid.

[After every Russian mass missile attack on Ukraine’s critical infrastructure, emergency outages take place, lasting for days due to the ongoing repair works. During such outages, people in Ukraine are left without electricity, heating, water supply, or access to mobile phone networks. – SOE Weekly.]


Ukrzaliznytsia suffers UAH 11 billion in losses in 2022 and expects twice as much in 2023. On 26 January 2023, Ukrzaliznytsia reported its 2022 financial results and 2023 forecasts.

In 2022, the company made a net loss of UAH 10.8 billion. The loss from passenger transportation amounted to UAH 13.3 billion [suggesting that the company’s other segments, such as cargo transportation, made a profit of 2.5 billion – SOE Weekly].

Ukrzaliznytsia expects losses of UAH 20.2 billion in 2023 due to the large social burden and restrictions on cargo transportation. Based on this, Ukrzaliznytsia expects the following financial indicators:

  • revenues – UAH 83.9 billion;
  • expenses – UAH 107.9 billion;
  • EBITDA – UAH 8.4 billion;
  • payments from the state budget [apparently, compensations or subsidies – SOE Weekly] – UAH 1.7 billion;
  • payments to the state [apparently, taxes to be paid – SOE Weekly] – UAH 22.8 billion; and
  • capital expenditures – UAH 50 billion, which is four times as much as in 2022 [apparently, largely caused by the need to restore the infrastructure ruined by Russian aggression – SOE Weekly].

The company’s 2023 financial plan assumes that the tariffs for both cargo and passenger transportation will stay the same as they are today.

In SOE Weekly (Issue 70), we reported that on 30 December 2022, the Cabinet of Ministers approved Ukrzaliznytsia’s consolidated financial plan for 2023.

In SOE Weekly (Issue 68), we reported that in June 2022, the Cabinet of Ministers increased tariffs for all types of cargo by 70%, so as to allow Ukrzaliznytsia to perform its humanitarian and defence functions. In 2022, the company got UAH 10 billion in subsidies. After Russia’s invasion, the Ukrainian government effectively gave Ukrzaliznytsia new tasks, including:

  • free evacuation of millions of Ukrainian citizens caught in war zones (the company evacuated 3.7 million passengers from active war zones);
  • delivery of critical supplies and equipment to war zones;
  • transport of Ukrposhta’s parcels by train, as private logistics companies were not prepared to provide services when this was dangerous or unprofitable – Ukrzaliznytsia and Ukrposhta took on the responsibility to deliver these services; and
  • purchase of petroleum products from abroad for the needs of the state after the Cabinet granted Ukrzaliznytsia the right to do so.

As we reported in Issue 67, Ukrzaliznytsia successfully completed the restructuring of payments for two Eurobond issues totalling $ 895 million. Interest and principal payments on Ukrzaliznytsia bonds were deferred for two years.

Repayments of Eurobonds issued in 2019 ($ 594.9 million) were deferred from 2024 to 2026; payments for the 2021 issue ($ 300 million) were deferred from 2026 to 2028. Coupon payments due in 2023-2024 were deferred until January 2025 with possible capitalisation.


The SPF sells a hotel in Lviv for UAH 115 million. On 23 January 2023, the State Property Fund (SPF) sold Vlasta hotel in Lviv for UAH 115 million. The starting price increased 16 times (from UAH 7 million). 23 investors took part in the auction.

According to Prozzoro.Sale, the winner is Magnus Trading Ukraine LLC. The company will become the owner of the hotel after signing an agreement with the SPF and transferring funds.

According to the SPF, Vlasta Hotel’s performance has hovered around a break-even point in the past few years. It saw net losses of UAH 251,000 in 2020, UAH 78,000 in 2021, and UAH 421,000 in January-September 2022.

Confiscation of the aggressor state’s assets, nationalisation, and asset seizure

The High Anti-Corruption Court seizes a minor part of Russian oligarch Mikhail Shelkov’s Ukrainian assets – Ministry of Justice seeks confiscation of all assets. On 23 January 2023, the High Anti-Corruption Court (HACC) partially satisfied the claim filed by the Ministry of Justice of Ukraine against a Russian billionaire Mikhail Shelkov, the major beneficiary and member of the board of directors of the Russian VSMPO-Avisma Corporation PJSC, the world’s largest titanium producer.

The HACC said that it seized the company VSMPO TITAN Ukraine LLC and a number of petty assets, such as a tractor, a trailer, or two mid-sized apartments.

However, Inna Bogatykh, the Head of the Sanctions Policy Department at the Ministry of Justice, wrote on her Facebook page that the Ministry has been preparing to challenge HACC’s decision. According to Bogatykh, the court dismissed the claim to seize the Demurinsky Mining and Processing Plant and other companies controlled by Shelkov. The HACC did not find sufficient evidence that Shelkov controlled the plant, she said.

Bogatykh added that the court was not satisfied with the Ministry’s arguments that 75% of the shares of the Cypriot company that owns 100% of the Demurinsky Mining and Processing Plant were sold for only €3,750 a few days before the start of Russian invasion.

At the time of the sale, Ukraine had already imposed sanctions on the seller and the Cypriot company. Meanwhile, part of management that worked for Shelkov continued to work for that Cypriot company and the plant after the sale of 75% of the shares, Bogatykh explained.

She also wrote that the Demurinsky Plant, through its Cypriot owner, owes a debt to the Russian VSMPO Avisma, which allows Shelkov to foreclose on the assets of the Cypriot company, including 100% of the plant’s corporate rights, in case of default.

Procurement Notices – powered by ProZorro

Together with ProZorro, we selected procurement notices announced by top 15 Ukrainian SOEs and four state-owned banks from 19 to 25 January with an expected value of more than UAH 1,000,000. State Food and Grain Corporation, Automobile Roads of Ukraine, and PrivatBank are not subject to the requirement to use ProZorro by law and have not used it in the past two years.

Organiser Expected value, UAH CPV Classification
Boryspil IA 71,536,486 09000000-3 Petroleum products, fuel, electricity and other sources of energy
Ukrhydroenergo 1,055,203 50000000-5 Repair and maintenance services
Energoatom 2,659,054 42000000-6 Industrial machinery
Energoatom 5,827,530 42000000-6 Industrial machinery
Energoatom 2,263,413 72000000-5 IT services: consulting, software development, Internet and support
Energoatom 3,428,822 42000000-6 Industrial machinery
Energoatom 4,000,000 24000000-4 Chemical products
Energoatom 46,555,526 32000000-3 Radio, television, communication, telecommunication and related equipment
Ukrenergo 2,256,317 44000000-0 Construction structures and materials; auxiliary products to construction (except electric apparatus)
Ukrenergo 36,947,789 09000000-3 Petroleum products, fuel, electricity and other sources of energy
Ukrenergo 3,410,000 44000000-0 Construction structures and materials; auxiliary products to construction (except electric apparatus)
Ukrenergo 1,035,500 44000000-0 Construction structures and materials; auxiliary products to construction (except electric apparatus)
Ukrenergo 37,165,500 34000000-7 Transport equipment and auxiliary products to transportation
Ukrposhta 1,251,749 38000000-5 Laboratory, optical and precision equipments (excl. glasses)
Ukrposhta 27,285,000 09000000-3 Petroleum products, fuel, electricity and other sources of energy
Ukrposhta 4,237,200 09000000-3 Petroleum products, fuel, electricity and other sources of energy
Ukrposhta 1,500,000 18000000-9 Clothing, footwear, luggage articles and accessories
Ukrposhta 2,169,804 30000000-9 Office and computing machinery, equipment and supplies except furniture and software packages
Ukrposhta 1,659,960 30000000-9 Office and computing machinery, equipment and supplies except furniture and software packages
Ukrainian Sea Ports Authority 41,515,887 09000000-3 Petroleum products, fuel, electricity and other sources of energy

Ukrainian SOE WeeklyTM is an independent weekly digest based on a compilation of the most important news related to state-owned enterprises (SOEs) and state-owned banks in Ukraine.

Editorial team: Andriy Boytsun, Dmytro Yablonovskyi, Oleksandr Lysenko, Oleksii Pavlysh, and Mariia Kramar.

This publication was produced with the financial support of the European Union within the project “Supporting Ukraine in rebuilding and recovery” implemented by the KSE Institute (Contract NI/2022/424-502 dated 14 November 2022). The contents of this publication are the sole responsibility of the editorial team of the Ukrainian SOE Weekly and do not necessarily reflect the views of the European Union.

© 2020–2022 Andriy Boytsun, all rights reserved.


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