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    International entities appeal to Kiev over Naftogaz


The EU and four financial institutions are seriously concerned about reform in Ukraine.

by: William Powell

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Natural Gas & LNG News, Europe, Corporate, Political, News By Country, Ukraine

International entities appeal to Kiev over Naftogaz

The EU and four international finance organisations have written to the Ukrainian government following its summary dismissal of the head of Naftogaz Ukrainy on April 28. The following day a new CEO was installed, although the employment contract had not been signed as of April 30, the new incumbent, Yuriy Vitrenko, told journalists.

In an April 30 letter, the EU, the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the World Bank and the International Finance Corporation (IFC) expressed their "serious concern" about  the government's decision to suspend the powers of the supervisory board and to sack the current management.

"We call on the leadership of Ukraine to ensure that critical management decisions in state-owned enterprises are taken in full compliance with the basic principles of recognised corporate governance standards," they said.

"In recent years, Ukraine has made significant progress in implementing corporate governance reform in the public sector aimed at ensuring transparency, accountability and independence.

"There is a critical need to strengthen the progress made in order to improve the investment climate in Ukraine and attract much-needed private sector investment.

"We hope that the Ukrainian authorities will reaffirm their commitment to pursue reforms that will unlock investments that will help the country emerge from the crisis and realise its potential," they concluded.

Vitrenko appeared before journalists to answer questions earlier in the day. His mandate is to transform the company's gas production in order to lower prices and increase security; and to limit Russia's ability to dominate the eastern and central European gas market, among other things. He promised to heighten the transparency at the company. 

The supervisory board expressed its anger at the improper sacking of the former CEO Andriy Kobolev in a letter late April 29, the day after the company announced the immediate departure of Kobolev. The board, chaired by Clare Spottiswoode, said that it was the government's fault that the company made a loss, through the public service obligations. That board is now to be reconstituted.

It is the job of the supervisory board, not the government, to terminate contracts early and Kobolev's still had three more years to run.