Issue 66
9–16 December 2022

SOE updates


Oschadbank sues the Russian Federation in the European Court of Human Rights. Oschadbank’s 8 December 2022 complaint alleges that as a result of Russia’s armed aggression, Ukrainian companies and citizens suffered significant material losses.

Documenting war crimes has allowed Oschadbank to use internationally recognised legal mechanisms aimed at restoring justice and punishing the aggressor, according to the bank.

Earlier, the Supreme Court of France confirmed the decision of the Paris Court of Arbitration that Oschadbank is entitled to recover $1.1 billion plus interest from Russia, Deputy Minister of Justice Iryna Mudra announced on 7 December 2022. [Earlier, Mudra led Oschadbank’s litigation against Russia as the bank’s Chief Compliance Officer. She became Deputy Minister of Justice in May 2022. – SOE Weekly.]

The ruling stems from Russia’s seizure of assets in occupied Crimea. The litigation was launched in 2015.

In SOE Weekly (Issue 06), we reported that Oschadbank was extremely concerned about the execution of the decision by the Permanent Court of Arbitration in Paris awarding it $1.3 billion at Russia’s expense. [Apparently, the award concerned the same amount of $1.1 billion plus interest, which must have been $0.2 billion at the time, that is, at the end of 2020. – SOE Weekly.]

In SOE Weekly (Issue 21), we reported that on 22 October 2019, the Paris Court of Appeals ruled in favour of the Russian Federation and overturned the $1.3 billion award to Oschadbank.

On 31 March 2021, the NBU expressed concern about the appellate decision and emphasised that it was important to prove that Russia’s actions against Ukraine were unlawful on an international level.

In SOE Weekly (Issue 49), we reported that on 26 October 2021, Oschadbank appealed the March ruling in the Court of Cassation of France, which overturned the appellate decision and ruled that Russia must indeed pay $1.3 billion to the bank.

Energy sector

Crisis in the Ukrainian power system due to constant Russian attacks on Ukrainian critical infrastructure – Ukrenergo reports emergency situation. On December 16, 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.

Previously, on 12 December, Ukrenergo reported a significant power deficit in the national grid. Over a single week, Ukraine’s energy system suffered three Russian attacks. The mass missile barrage took place on 5 December, along with two local attacks by artillery and drones in the south and east of the country over the weekend, Ukrenergo said.

[In total, Russia launched eight mass missile attacks primarily targeting Ukraine’s energy infrastructure: 10 October, 11 October, 15 November, 23 November, 5 December, 14 December, 16 December, and 19 December. – SOE Weekly.]

According to Deputy Prime Minister and Minister of Infrastructure and Regional Development Oleksandr Kubrakov, as of 10 December, about 50% of Ukraine’s critical electric power infrastructure was significantly damaged, while some objects were completely destroyed.

According to Prime Minister Denys Shmyhal, Russia’s missiles and kamikaze drones damaged more than 400 objects in 16 regions of Ukraine, of which dozens were energy assets.

After the Russian attack on 15 November, Ukrenergo’s CEO Volodymyr Kudrytskyi said that there were practically no intact thermal power plants (TPPs) or hydropower plants (HPPs) left in Ukraine. On that day alone, 15 Ukrenergo sites were damaged.

Ukrenergo added that the destruction caused by Russian strikes currently does not allow the full use of the TPPs’ capacity.

Ukrenergo emphasised that the company, together with energy generating companies and regional electricity distribution companies, have been working to eliminate the severe consequences of the Russian attacks on the energy system of Ukraine.

Ukrenergo’s CEO Volodymyr Kudrytskyi wrote on his Facebook page that Russia has been attacking critical infrastructure since 10 October. Kudrytskyi explained that the support of Ukraine’s international partners is an opportunity for the company to give worthy resistance to the enemy on Ukraine’s energy front.

He added that the company has already found the necessary equipment in the European Union, the US, and Asian countries to replace and repair the damaged equipment. Negotiations with manufacturers are ongoing.

The most recent mass missile attack took place on 19 December, after which Ukrenergo announced that the difficult situation in the Ukrainian energy system recurred.

[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.]

Ukrenergo receives hundreds of millions of euros from international partners to restore damaged energy infrastructure. The European Bank for Reconstruction and Development (EBRD) and the Netherlands are to provide Ukrenergo with a € 370 million financing package to support the grid operator, allowing it to make swift emergency repairs and keep the country’s energy system stable as winter sets in.

Heavy missile and drone strikes by Russia have caused severe damage to Ukraine’s energy infrastructure over the past two and a half months and are continuing to do so.

On 13 December, EBRD President Odile Renaud-Basso signed the financing deal at the high-level International Conference “Standing with the Ukrainian People” in Paris, alongside Ukraine’s Prime Minister Denys Shmyhal.

As part of the package, the EBRD is providing a sovereign guaranteed loan of € 300 million with two components. Up to €150 million is allocated for equipment procurement to implement emergency repairs to the Ukrainian power transmission system. A further € 150 million consists of capital structure support.

Separately, the emergency repairs part of the loan is complemented by a grant of up to € 70 million provided by the Netherlands. This will be blended into a single € 370 million package to support the immediate transmission infrastructure restoration needs of Ukrenergo.

Also, according to Prime Minister Denys Shmyhal, Ukrenergo will receive a € 32.5 million loan from the German state bank KfW for the restoration of substations damaged by the Russian shelling on Ukraine’s critical infrastructure.

The Energy Community Secretariat to help Ukrenergo recover damages from Russia. The Energy Community Secretariat will help Ukrenergo to file a lawsuit against Russia, demanding compensation for damage caused to main power grids. Ukrenergo and the Secretariat have signed a corresponding memorandum.

Ukrenergo stated that it has been carefully recording all damage done to the energy networks and the destruction of all company’s facilities in order to hold Russia accountable.

A claim action plan will be developed, and key legal experts and companies will be engaged to provide support in national courts and international tribunals. The Memorandum also establishes a Working Group on Legal Claims to represent Ukrenergo in a special international tribunal against Russia.

Ukrtransgaz is one step closer to entering the EU underground gas storage market. The Verkhovna Rada passed the second reading of draft law No. 8158, which lays the groundwork for Ukrtransgaz’s certification as a gas storage operator compliant with EU regulations, the company announced on 13 December.

On the same day, the National Energy and Utilities Regulatory Commission (NEURC) approved a draft resolution that defines the certification procedure itself.

Certification is necessary to allow the EU countries’ strategic gas reserves to be stored in Ukrainian underground gas storage facilities (UGSs), Ukrtransgaz explained.


Fitch and S&P downgrade Ukrzaliznytsia’s credit ratings. Fitch Ratings downgraded Ukrzaliznytsia’s Long-Term Foreign-Currency Issuer Default Rating (LTFC IDR) to ‘C’ from ‘CC’ following its consent solicitation to defer the debt servicing of its US dollar loan participation notes (LPN) maturing in 2024 and 2026.

Fitch has also downgraded the Long-Term Local-Currency Issuer Default Rating (LTLC IDR) to ‘C’ from ‘CCC-‘ and lowered the Standalone Credit Profile (SCP) to ‘c’ from ‘ccc’.

Fitch views the solicitation as a distressed debt exchange (DDE) as the proposed restructuring involves a material reduction in terms and is being conducted to avoid insolvency.

Fitch added that Ukrzaliznytsia’s liquidity position is currently tight, insufficient to cover interest payments on US dollar LPN due in January 2023 without support from the state. The company’s sole owner, the Cabinet of Ministers, cannot help Ukrzaliznytsia pay interest — it has other priorities for extraordinary support funds that it may potentially provide to the company.

The railway operator may get another € 200 million after the European Bank of Reconstruction and Development (EBRD) reviews its operational and financial performance and needs.

S&P Global Rating also downgraded Ukrzaliznytsia’s rating from ‘CCC-‘ to ‘CC’ because of the company’s solicitation to defer all payments on the above Eurobonds.

These include a bond issue maturing in July 2024, totalling $594.9 million, and an issue maturing in July 2026, totalling $ 300 million. Together, they make up nearly 80% of Ukrzaliznytsia’s total debt. Coupon payments are semi-annual, in July and January, at fixed rates of 8.25% per annum the 2024 bonds and 7.88% per annum on the 2026 bonds.

S&P sees a substantial weakening in Ukrzaliznytsia’s ability to repay its debt and believes that a default is almost inevitable.

The outlook reflects S&P’s view that Ukrzaliznytsia is likely to implement its debt restructuring plans in the next few weeks, which would be tantamount to a default by the agency’s criteria.


State Property Fund plans to hold 54 small-scale privatisation auctions by the end of 2022, according to the Minister of the Cabinet of Ministers, Oleh Nemchynov.

These include the Odesa-based Orion machine-building factory and Ukrspyrt’s distillery in Chortkiv, which will be auctioned on 28 December. Most buyers are interested in distilleries and 

On-line privatisation auctions have been resumed on 19 September 2022. Since then, 107 small-scale privatisation auctions have taken place, worth UAH 1.8 billion. Of this amount, UAH 1 billion has already been paid and transferred into the state budget.

Confiscation of the aggressor state’s assets

Assets of Russian oligarch Yevtushenkov were nationalised. According to the Ministry of Economy, the Cabinet of Ministers transferred the assets of Russian oligarch Vladimir Yevtushenkov to the management of the SPF.

Yevtushenkov’s property was seized in accordance with the updated sanction law aiming to compensate for damage caused by Russian aggression, said Minister of Economy Yuliya Svyrydenko.

The assets included 17 real estate objects and corporate rights in five businesses primarily focused on electrical equipment manufacturing and wholesale.

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, Mariia Kramar, Dmytro Yablonovskyi, and Oleksandr Lysenko.

This publication was produced with the financial support of the European Union within project “Supporting Ukraine in rebuilding and recovery” implemented by the KSE Insititute (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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