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Editor’s Note: This is issue 121 of Ukrainian State-Owned Enterprises Weekly, covering events from Feb. 24 – March 1, 2024. The Kyiv Independent is reposting it with permission.

Corporate governance of SOEs

Former Ukrzaliznytsia CEO charged with embezzling Hr 11 million. On Feb. 26, the National Anti-Corruption Bureau of Ukraine (NABU) detectives and the Specialized Anti-Corruption Prosecutor’s Office (SAPO) said they had exposed an organized criminal group of Ukrzaliznytsia officials and entrepreneurs who had embezzled Hr 11.4 million ($298,000) from the company.

According to NABU, the group’s leader, an entrepreneur, in 2018 decided to gain control over the commercial and financial flows of Ukrzaliznytsia to misappropriate its funds. With the help of old government acquaintances, he got members of his group elected to key positions at Ukrzaliznytsia.

From 2018 to 2021, the officials, following the instructions of the entrepreneur, allegedly made sure that a tainted LLC won a pneumatic tools acquisition tender. This company supplied the goods at inflated rates, with a surplus of Hr 11.4 million going to the suspects, NABU said.

According to NABU, there are nine suspects so far:

  • two leaders of the organized group;
  • six former Ukrzaliznytsia officials; and
  • the LLC’s beneficiary. (This should be the entrepreneur mentioned above. – SOE Weekly.)

One of the two leaders has been detained, NABU added.

The NABU and SAPO did not name the suspects, but according to Ekonomichna Pravda (EP), Yevhen Kravtsov, the former CEO, has been served a notice of suspicion.

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Yevhen Kravtsov was the acting CEO of Ukrzaliznytsia from March-May 2016 and from August 2017-January 2019. Kravtsov was a full CEO from January-December 2019.

On Dec. 30, 2019 Kravtsov announced the termination of his contract with the company in order to start working in the public sector. He was dismissed on Jan. 29, 2020 without being transferred to another position.

According to Slovo i Dilo, former executive board member Oleksandr Skrypinskyi and businessman Stanislav Lesnikov were also notified of suspicion.

On Feb. 27, SAPO reported that the High Anti-Corruption Court (HACC) ruled to detain Lesnikov with an alternative of Hr 11.8 million ($308,000) bail. According to the media, Lesnikov was released on bail the following day. He was imposed a number of obligations, including surrendering his international passports and wearing an electronic bracelet.

Six SOEs had to pay half their dividends to the state budget by the end of last month. On Feb. 27, 2024, the Cabinet of Ministers issued an order for six SOEs to remit at least 50% of their 2023 dividends by Feb. 29.

The companies are: Naftogaz, Ukrzaliznytsia, Ukrainian Defense Industry (UDI), Ukrhydroenergo, Ukrainian Power Machines (formerly, Turboatom), and Nizhniodnistrovska hydroelectric power plant.

“The Cabinet, as a shareholder, has decided to transfer part of the dividends of the companies for which it is the governing body to the state budget. This is due to the need to replenish the state budget in the context of a full-scale war to finance state expenditures,” Oleksii Sobolev, Deputy Economy Minister, said.

According to the Finance Ministry, this would allow the state budget to raise Hr 3 billion in February 2024.

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Data from the Finance Ministry, as of 4:00 p.m. local time on Feb. 29, showed the general fund of the state budget receiving Hr 184.8 billion ($4.8 billion) in taxes, fees, and mandatory payments.

Hr 3 billion ($78 million) would constitute only 1.6% of the above revenues. Requesting funds ahead of schedule may be tied to delays with expected international aid.

As we reported in Issue 118, on Feb. 5, the Cabinet of Ministers set the minimum dividend pay-out ratio for most SOEs and state-owned banks at 80%.

As we also wrote in  ssue 118, the Cabinet also set custom mandatory pay-out ratios for the following:

  • 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.

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.

  • 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. 

Following the Cabinet’s order, Ukrzaliznytsia reported that it transferred Hr 1.3 billion ($34 million) of the dividend advance payment to the state budget pursuant to the order.

Ukrhydroenergo also announced that it paid Hr 1.75 billion ($46 million) in dividends in advance.

Energoatom issues Hr 306 billion in stock. On Feb. 21, Energoatom reported that it received a certificate of registration of the issue of shares. The state will own 100%.

Note that according YouControl, the registered capital of Energoatom as of Sept. 1, 2023, was Hr 165 billion ($4.3 billion). The increase of capital is the corporatization effect.

Similar increases were observed after Ukrposhta and Ukrenergo were corporatized.

In case of Ukrposhta, an independent appraiser conducted the valuation of the fair value of assets and liabilities of the company in accordance with the share valuation guidance developed by the State Property Fund of Ukraine. The value of the share capital was estimated as the fair value of assets less fair value of liabilities as at the valuation date.

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The fair valuation was required by the rules of corporatization to enable the government to determine the value of the share capital of the new business entity. The effect of establishment of the new entity’s share capital was presented as a separate reserve in equity.

According to Ukrenergo’s CEO Volodymyr Kudrytskyi, the “corporatization effect” on the balance sheet of the company was included in the list of violations identified by the State Audit Service during its audit for some unclear reason.

According to the Economy Ministry, this process finalizes Energoatom’s transformation into a joint-stock company.

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.

In Issue 118, we reported that the Cabinet of Ministers announced the search for independent members for Energoatom’s supervisory board. The application deadline was 4 March 2024.

For a detailed account on the corporatisation of Energoatom, see SOE Weekly’s Issues 40, 41, 53, 58, 69, 74, 79, 80, 86, 113, 115, and 118.


Oschadbank pays the state Hr 700 million in dividends, the bank’s press office reported on Feb. 29.

This is the first half of the 2023 dividends, with the amount based on projected financial results, Oschadbank said.

As we reported in Issue 118, on Feb. 9, the Cabinet of Ministers set the minimal dividend pay-out ratio for SOEs and state-owned banks at 80% with some major exceptions.

In accordance with the Cabinet’s decision, Oschadbank would pay 30% of its net profit for 2023 in dividends. The bank reported a net profit of Hr 4.75 billion ($124 million) in 2023. The dividend pay-out ratio for Oschadbank did not change compared to 2022. See SOE Weekly’s Issue 85.

Energy sector

Ukrnafta pays the state Hr 3.9 billion in dividends, the company’s press office reported on Feb. 29.

According to Ukrnafta, this is the first half; it owes a total of Hr 8 billion ($209 million) for the full year. This is twice as much as the total for the previous 10 years, the company said.

In accordance with the Cabinet’s decision, Ukrnafta must allocate 30% of its net profit for 2023 in dividends, provided that 50% of the profit is used for capital investments approved by the Cabinet in the company’s 2024 financial plan.

As we wrote in Issue 115, Ukrnafta paid over Hr 25 billion ($655 million) in taxes in 2023.

As we reported in Issue 111, Ukrnafta’s CEO Serhii Koretskyi said in November 2023 that the company paid Hr 12.3 billion ($321 million) in taxes in the first half of 2023, including Hr 3.3 billion ($86 million) in income tax. According to him, Ukrnafta planned to pay Hr 27 billion ($706 million) in taxes for the entire year 2023, including about Hr 5 billion ($131 million) in income tax.

Koretskyi also said back then that Ukrnafta projected Hr 95 billion ($2.5 billion) in revenue in the first year after the company was seized by the state. This would double the average annual figure over the past decade, he added.

According to Koretskyi, Ukrnafta’s net profit for the first half of 2023 was Hr 14.1 billion ($368 million). As of November 2023, the net profit exceeded Hr 20 billion ($523 million).

We have not been able to find Ukrnafta’s audited or unaudited financial statements for 2021, 2022, or the first half of 2023 in the public domain to verify the above information.

According to Ukrainian law, joint-stock companies, particularly those publicly traded, are obligated to publicly disclose various types of information, such as their financial statements.

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However, after the beginning of Russia’s full-scale invasion, the National Security and Stock Market Commission (NSSMC) allowed companies to withhold such disclosure.

In June 2023, the NSSMC decided that this exemption would be effective until Jan. 1, 2024. After that date, joint-stock companies must resume public disclosure of the above information, including information that was not disclosed during the exemption period.

As we wrote in SOE Weekly’s Issue 90, Ukrnafta’s financial plan for 2023, approved by the Cabinet of Ministers, expected Hr 74 billion ($1.9 million) in net income from operations, Hr 12 billion ($313 million) in net profit, and Hr 25 billion ($653 million) in tax payments.

As we wrote in Issue 100, in his analysis for Forbes Ukraine, CASE Ukraine’s economist Vasyl Povoroznyk contested Koretskyi’s statements on the company’s quarterly profits, lower costs, higher production, and transparency.

He concluded that Ukrnafta’s financial performance was driven by two factors: higher market prices for petrol and diesel (45% and 54%, respectively) and Ukrnafta’s sale of gas which the company received as repayment of part of Naftogaz’s historical debt to Ukrnafta.

Povoroznyk also said that the financial reporting disclosed by Naftogaz – Ukrnafta’s majority shareholder who includes Ukrnafta’s reporting in its consolidated reporting – did not square with numbers named by Koretskyi.

In Issue 68, we reported that the shares of Ukrnafta, Ukrtatnafta, Motor Sich, AvtoKrAZ, and Zaporizhzhiatransformator (ZTR) were seized “for the needs of the state” and transferred to the Ministry of Defence on Sunday, Nov. 6, 2022.

Former CEO of the WOG chain of petrol stations, Serhii Koretskyi, became the CEO of both Ukrnafta and Ukrtatnafta on Nov. 8 & 10, 2022, respectively. See Issue 68 for detail.


UDI to assemble NATO standard firearms under license agreement with Ceska zbrojovka. On Feb. 23, Ukrainian Defense Industry (UDI) reported that it partnered with Ceska zbrojovka a.s., a subsidiary of Colt CZ Group SE, and signed an agreement of intent for the license transfer.

According to UDI, this agreement green lights the assembly of NATO standard rifles, specifically the CZ BREN 2 model, in Ukraine.

The CZ BREN 2 rifle is renowned for its deployment by various military and law enforcement customers worldwide, including the Army of the Czech Republic, Ukrainian Armed Forces, French National Gendarmerie Intervention Group (GIGN), Portuguese Army, Polish Border Guard, Romanian Gendarmerie, and other professional customers. The project’s goal is to equip the Ukrainian Armed Forces with a proven, high-quality standard NATO firearm, enhancing their operational capabilities, UDI added.

In SOE Weekly’s Issue 120, we reported that UDI would cooperate with two German defense companies, Dynamit Nobel Defense GmbH and MBD Deutschland. See Issue 120 for more detail.

As we reported in Issue 115, UDI announced a partnership with four Lithuanian defense companies: NT Service, Brolis Semiconductors, RSI Europe, and DMEXS.

As we wrote in Issue 114, during 2023, Ukrainian state-owned defense companies reported that they started manufacturing new weapons and signed cooperation and joint production contracts with various counterparts in NATO member states.

See Issues 74, 79, 88, 91, 97, 105, 108, and 111 for more detail.

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.

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