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The logo of Naftogaz, state-owned national oil and Gas Company of Ukraine, is seen on a plate at the entrance to the main office in Kyiv on Nov. 27, 2019. (Pavlo Gonchar/SOPA Images/LightRocket via Getty Images) // UEW
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Editor’s Note: This is issue 118 of Ukrainian State-Owned Enterprises Weekly, covering events from Feb. 2-Feb. 9, 2024. The Kyiv Independent is reposting it with permission.

Ukrainian SOE Weekly 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. The contents of this publication are the sole responsibility of the editorial team of the Ukrainian SOE Weekly. The SOE Weekly is produced and financed by Andriy Boytsun. Communications support is provided and financed by CFC Big Ideas. The SOE Weekly is not financed or influenced by any external party. Editorial team: Andriy Boytsun, Oleksiy Pavlysh, Dmytro Yablonovskyi, Oleksandr Lysenko, and Mariia Kramar.

Corporate governance of SOEs

Cabinet increases basic dividend pay-out ratio to 80% for SOEs for 2023. On Feb. 5, the Cabinet of Ministers set the basic dividend pay-out ratio for SOEs at 80%, but SOEs can choose to pay higher dividends.

According to Oleksii Sobolev, Deputy Economy Minister, the 2024 state budget expects total dividends from SOEs to be more than Hr 66 billion ($1.7 billion).

This amount would represent 4% of planned Hr 1.768 billion ($46.5 million) state budget revenues for 2024.

However, the Cabinet also set individual dividend pay-out ratios for the following SOEs:

  • Naftogaz – 95%.

In October 2023, Naftogaz Group reported Hr 6.6 billion ($173 million) in profit for the first half of 2023. As we wrote in Issue 115, Naftogaz Group paid over Hr 90 billion ($2.4 billion) in taxes in 2023. There is no public report on Naftogaz’s profit yet for the whole of 2023.

NBU Governor: Ukraine’s victory should be part of central banks’ mandates
The following is a speech by National Bank of Ukraine (NBU) Governor Andriy Pyshnyy at the conference “Central Bank Independence in a Changing World.” The conference was organized for the governors of the International Monetary Fund (IMF) constituency by the National Bank of Belgium (NBB) in Brussel…

As we reported in Issue 85, the individual dividend pay-out ratio for Naftogaz for 2022 was 30%, and the rest of the profit had to be used to purchase natural gas produced in Ukraine.

  • Oschadbank must allocate 30% of its net profit for 2022 for dividends.

According to Oschadbank’s release, its net profit in 2023 amounted to Hr 4.75 billion ($125 million). The dividend pay-out ratio for Oschadbank did not change compared to 2022. See Issue 85.

  • Ukrainian Financial Housing Corporation – 30%.

The dividend pay-out ratio for 2022 was 30%, subject to allocation of 50% of the profits for affordable mortgage lending.

  • Ukrnafta – 30%, provided that 50% of the profit is used for capital investments approved by the Cabinet in the company’s 2024 financial plan.
  • Ukrainian Danube Shipping Company – 30%, provided that 50% of the profit is used to upgrade the fleet and develop the production capacity of the Kilia Shipyard.
  • Ukrzaliznytsia – 50%, provided that 30% of the profit is used to finance capital investments approved in the consolidated financial plan for 2024, reconstruction of critical railway infrastructure, and renewal of rolling stock.

Ukrzaliznytsia’s dividend pay-out ratio for 2022 was also 50%, and 30% of the profit was to be used to restore the damaged assets and counter Russian aggression.

As we reported last year Issue 85, on April 18, 2023, the Cabinet established how much SOEs had to pay in dividends for 2022. Most SOEs had to contribute 50% of their profits as dividends if 30% of the profit is used to restore the damaged assets and counter Russian aggression. See Issue 85 for more detail.

Cabinet announces search for independent members for Energoatom’s supervisory board. On Feb. 5, the Economy Ministry reported that the competitive selection for three supervisory board members for Energoatom has been approved and announced. The application deadline is March 4. The board will also have two state representatives.

In our Issue 74, we reported that the Verkhovna Rada passed Draft Law No. 8067 on the corporatisation of Energoatom on Feb. 6, 2023.

According to the Rada’s Energy Committee, establishing good corporate governance of SOEs is one of Ukraine’s obligations under the Association Agreement between Ukraine and the EU.

EU agrees on new measures to isolate frozen Russian funds
The European Council said on Feb. 12 that central securities depositaries (CSDs) holding more than 1 million euros ($1.07 million) in assets from the Russian Central Bank must separate any profits generated from the primary accounts.

Energoatom is 100% owned by the state; its shares cannot be privatized or alienated in a different manner.

As we wrote two and half years ago (Issue 40), decisions to launch Energoatom’s corporatization had been in the works for a decade, starting at least with the National Action Plan for 2012 on the Implementation of the Program of Economic Reforms in Ukraine for 2010-2014.

One year ago (Issue 79), we reported that corporate governance reform of Energoatom was among the government’s top priorities for 2023. According to the Cabinet of Ministers’ Priority Action Plan, Energoatom was to be converted into a joint-stock company by May 2023. The nuclear power operator was also slated to receive a competitively selected supervisory board with an independent majority. The deadline was November 2023.

In Issue 80, we reported that President Volodymyr Zelenskyy signed a law on the corporatization of Energoatom on March 17, 2023.

As we wrote in Issue 86, the Cabinet approved the conversion of Energoatom into a joint-stock company to comply with the law. The Cabinet established a commission for this purpose. It was chaired by Oleksii Sobolev, Deputy Economy Minister, and included Petro Kotin, Energoatom’s CEO, Farid Safarov, Deputy Energy Minister, and another eight members.

As we reported in Issue 113, on Dec. 1, 2023, the Energy Ministry announced an agreement with the head-hunter firm hired to find Energoatom a supervisory board – Executive Search Ukraine LLC [doing business as Amrop – SOE Weekly]. See Issue 113 for more detail.

Agriculture Ministry ‘strongly condemns deliberate destruction of Ukrainian grain by Polish protesters’
“We understand when Polish farmers defend their interests in a civilized way. But this case of destruction of Ukrainian wheat has nothing to do with peaceful protests either from a legal or a moral point of view,” the Agriculture Ministry said.

As we wrote in Issue 115, on Dec. 29, 2023 the Cabinet of Ministers approved the long-awaited transformation of Energoatom into a joint-stock company. According to YouControl, Joint-Stock Company Energoatom was registered on Jan. 11.

In addition, acting executive board members have been appointed until a permanent executive board can take their place. Petro Kotin, the CEO of SE NNEGC Energoatom, was appointed as the acting CEO of the newly established Joint-Stock Company Energoatom. See Issue 115 for more detail.

For a detailed account on the corporatisation of Energoatom, see SOE Weekly’s Issues 40, 41, 53, 58, 69, 74, 79, 80, 86, 113, and 115.

Cabinet approves Guaranteed Buyer’s corporatization. On Feb. 2, the Cabinet of Ministers issued an order to convert State Enterprise Guaranteed Buyer into a joint-stock company, 100% owned by the state and not subject to privatization.

The Cabinet established a commission for this purpose. It includes Oleksii Sobolev, Deputy Economy Minister, Farid Safarov, Deputy Energy Minister, and another nine members.

In the meantime, the Cabinet dismissed Safarov as Deputy Minister on Feb. 9. No public information is available on the reasons for the dismissal.

According to Sobolev, the corporatization of Guaranteed Buyer would increase the transparency of the company’s operations. The company would become more understandable for international counterparts, which would facilitate its potential integration into the European market, he said.

Opinion: Ukraine’s Partial Credit Guarantee Fund is a win-win for farmers and banks
In the wake of land reform and the relentless challenges posed by Russia’s invasion of Ukraine, Ukraine’s agricultural sector faces a pivotal moment. Small farmers, the backbone of this vital industry, grapple with the dual challenges of securing financing and overcoming the aftermath of destruction…

Parliament committee recommends adopting the SOE corporate governance bill. On Feb. 5, the Verkhovna Rada Committee on Economic Development recommended to pass Draft Law No. 5593-d to bring the SOE corporate governance framework in line with OECD Guidelines on Corporate Governance of SOEs.

As we reported in April 2023 (Issue 82), in accordance with the current IMF program, the Ukrainian authorities committed to strengthen the corporate governance of SOEs.

Ukraine’s IMF deadline to have a law in place was October 2023.

In Issue 117, we reported that according to updated IMF Memorandum, such a draft law (No. 5593-d) should be adopted by early 2024.

More than two years ago (Issue 36), we reported that on July 15, 2021, the Verkhovna Rada approved Draft Law No. 5593-d in the first reading.

Then we wrote that the current wording of Draft Law No. 5593-d was not yet in full compliance with OECD Guidelines on Corporate Governance of SOEs and needed improvement.

The version of the bill as recommended by the Rada’s Economic Committee addresses most of the issues that required solving after the first reading.

SOE Weekly will offer an analysis of Draft Law No. 5593-d after it is definitively adopted by the Verkhovna Rada.


J.P. Morgan withdraws challenge to the bail-in of PrivatBank Eurobonds. On Feb. 2, PrivatBank reported that the Kyiv City Court of Appeal granted J.P. Morgan Securities’ motion to withdraw its claim against PrivatBank for bailing in depositors’ Eurobonds during the bank’s nationalization.

“J.P. Morgan is no longer a party to the case. There is one less plaintiff,” PrivatBank’s lawyer Oleg Samsonovych said.

Earlier, on March 8, 2023, UBS also dropped a similar lawsuit.

This leaves the initiator of the case standing alone, PrivatBank said. According to the bank, the initiator is an obscure British company called Shakoor Capital Limited, Pala Assets Holdings Limited run by Russian businessman Yevgeny Yorikh, a Ukrainian named Dmytro Sazonov, and Concorde Bermuda Limited.

Media: Hungary’s OTP Bank Group, which still works in Russia, interested in buying Ukrainian state-owned bank
Hungarian banking group OTP Bank, which was once added to Kyiv’s international sponsors of war list, expressed interest in buying Ukraine’s state-owned Sense Bank, Ukrainska Pravda media outlet reported on Feb. 12, citing unnamed sources familiar with acquisition talks.

U.S. Securities and Exchanges Commission’s alleged the Ukrainian-based Concorde Bermuda Limited of stock trading fraud in 2015-2016. Back then, Concorde agreed to settle the case for $4.2 million without admitting or denying the Commission’s allegations. According to the media, Concorde Bermuda Limited is associated with Concorde Capital, an investment bank controlled by Ukrainian businessman Igor Mazepa.

The hearings in the Shakoor case have been going on for more than two years.

The bail-in procedure during the nationalisation process increased PrivatBank’s share capital by Hr 29.4 billion ($774 million). The Bank of England recognized this procedure in 2021, and the London Court of Arbitration confirmed its legality in 2022.

Confiscation of Russian assets, nationalization, and asset seizure

HACC seizes Ukrainian oil assets of sanctioned Russian oligarch Eduard Khudaynatov for Hr 500 million. On Feb. 6, the Security Service of Ukraine (SBU) reported that, based on its materials, the High Anti-Corruption Court (HACC) satisfied the claim of the Justice Ministry to seize Khudaynatov’s 100% stake in the authorized capital of Alliance-Ukraine Oil Company LLC, valued at Hr 500 million ($13 million).

According to the SBU, Khudaynatov controlled Alliance-Ukraine Oil Company LLC through offshore companies to make money and avoid asset seizure.

Khudaynatov is one of Russian President Putin’s confidants, heads the Russian oil and gas company NNK-GROUP, and sat on the board of directors of Rosneft.

NNK-GROUP and Rosneft are among the largest “sponsors” of the full-scale war against Ukraine. They regularly supply fuels and lubricants to the military-industrial complex and occupation groups of Russia, the SBU added.

Ukraine wants to make reconstruction transparent. Will it work?
Inside a bare apartment littered with concrete blocks and slabs of plywood, construction site manager Serhiy Yerokhin points to a large balcony overlooking the treetops of Irpin, a suburb outside of Kyiv occupied and heavily damaged during the first month of Russia’s full-scale invasion. Almost two…
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