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Ukrainian Gas Transmission System Operator's (GTSOU) signboards are seen over the garden fence in Kyiv, Ukraine on May 11, 2022. (Dogukan Keskinkilic/Anadolu Agency via Getty Images) // UEW
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Editor’s Note: This is issue 122 of Ukrainian State-Owned Enterprises Weekly, covering events from March 2-8, 2024. The Kyiv Independent is reposting it with permission.

Corporate governance of SOEs

The long-awaited law on the corporate governance of SOEs comes into effect. On March 5, President Zelensky signed the law aligning the state-owned enterprise (SOE) corporate governance framework with the OECD Guidelines on Corporate Governance of SOEs.

“This is a critical step to ensure that state-owned enterprises operate in line with OECD principles, reducing opportunities for corruption and ensuring accountability of CEOs by supervisory boards selected according to international standards,” G7 ambassadors responded. The IMF added that the law implementation will be crucial for improving the performance of SOEs.

As we wrote in Issue 120, on Feb. 22, the Verkhovna Rada passed the second reading of Draft Law No. 5593-d, aligning the SOE corporate governance framework with the OECD SOE Guidelines.

In particular, SOEs’ financial, strategic, and investment plans for the year 2025 will be approved by supervisory boards, while specific financial indicators included in these documents, as well as SOEs’ letters of expectations, will require approval of the Finance Ministry and, in some cases, the Cabinet of Ministers.

Two and half years ago in Issue 36, we reported that the Verkhovna Rada approved Draft Law No. 5593-d in the first reading on July 15, 2021.

Kyiv to receive $6.5 billion in EU transitional financing under Ukraine Facility
Based on the newly signed agreement, Ukraine’s state budget should receive 4.5 billion euros ($4.9 billion) in transitional financing in March and the remaining 1.5 billion euros ($1.6 billion) in April “after the European Commission evaluates the completed indicators.”

As we reported in Issue 117, according to the updated IMF Memorandum, Draft Law No. 5593-d should be adopted by early 2024.

As we wrote in Issue 118, on Feb. 5, the Verkhovna Rada’s Economic Development Committee recommended adopting Draft Law No. 5593-d.

For detail on the improved legal framework for SOEs introduced by the law, see Issue 120. – SOE Weekly.

Ukrnafta gets a new supervisory board. At a general meeting of shareholders on March 6 Ukrnafta’s new supervisory board was approved.

The newly elected supervisory board includes three independent members and two shareholder representatives appointed by the Defense Ministry and Naftogaz.

Ukrnafta’s new supervisory board members are:

  • Tim Dodson – independent member. He has over 40 years of experience in extraction and geology; chairman, member of the board of a number of British and Norwegian companies – Ennox Technology, New European Offshore, and Sval Energi. Dodson is a senior advisor at McKinsey & Company. From 1985 to 2021, he worked at Equinor (formerly Statoil), rising from a well logger and geologist to vice president of strategy.
  • Ireneusz Fąfara – independent member. He has over 30 years of experience in finance and the oil industry. Fafara was the CEO of Orlen Lietuva, the largest oil refining company in the Baltic States (10 million metric tons of oil per year). Fąfara was part of the successful development of the Orlen Group, Ukrnafta added. Currently, he is the chairman of the Board of 4Cell Therapies S.A., a member of the board of Helix Biopharma Corporation, and a member of the supervisory board of Rockbridge (Poland).
  • Duncan Nightingale – independent member. He has more than 30 years of experience in developing and implementing strategies for oil production, storage and transportation in conditions of high operational complexity. Nightingale is the CEO of Canadian Blacksteel Energy.
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  • Liudmyla Darahan – shareholder representative from the Defense Ministry. From 2022 to 2023, she was the chief of staff of the State Property Fund of Ukraine (SPFU). From June to September 2023, Darahan was the deputy head of the SPFU. The current defense minister, Rustem Umerov, was then the head of the SPFU. Following Umerov’s appointment as defense minister in September 2023, Darahan became the state secretary of the Defense Ministry. Prior to that, in the Verkhovna Rada of the 8th convocation, Darahan was an assistant to lawmaker Oleksiy Poroshenko.
  • Roza Tapanova – shareholder representative from Naftogaz. She is a current member of Oschadbank’s supervisory board. Prior to that, Tapanova worked as the acting head of the Babyn Yar national memorial. Tapanova also worked at the law firm Mizhnarodna Pravnycha Kompaniia, which had been founded and co-owned until 2019 by the head of the President’s Office, Andriy Yermak. Tapanova was a member of Ukrnafta’s previous supervisory board, appointed after company’s seizure in November 2022.

In SOE Weekly 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 Defense Ministry on Sunday, Nov. 6, 2022.

The seizures were made under the law on the transfer, forced alienation, or seizure of property under martial law or state of emergency, which obligates the state to eventually return the seized assets to the owners or give them fair compensation.

[Naftogaz owns 50% + 1 share of Ukrnafta. These shares were not seized. A group of companies informally known as the Privat group, associated with businessmen Ihor Kolomoiskyi and Hennadiy Boholyubov, owned about 42% of the shares.

The remaining shares were held by some 11,000 dispersed shareholders, including the company’s former or current employees, investment funds, and pension funds. All these shares were seized by the state along with those of the Privat group.

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After the seizure, the state replaced the supervisory boards and executive management at most of these companies. On Nov. 7, 2022, the Defense Ministry, as Ukrnafta’s new shareholder, appointed a new supervisory board for the company.

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

GTSOU pays the state Hr 5.4 billion ($140 million) in dividends, the company’s press office reported on March 1.

This is a first half of the payable dividends. In total, based on 2023 performance, the Gas Transmission System Operator of Ukraine (GTSOU) paid to the state budget the largest amount in the entire history of the company since its establishment back in 2019, the company said.

According to GTSOU’s CEO Dmytro Lyppa, the rest of the 2023 dividends would be paid within the period envisaged by Ukrainian law.

In addition to the advance payment of dividends, based on the last year’s performance, GTSOU paid Hr 10.7 billion ($278 million) in taxes. This includes Hr 5.3 billion ($137 million) of VAT, Hr 3.6 billion ($93 million) of income tax, and Hr 1.7 billion ($44 million) of other taxes and fees, the company added.

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 wrote in Issue 121, on Feb. 27, 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 HPP.

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 ($45 million) in dividends in advance. See Issue 121 for detail.

Energy sector

Cabinet approves Ukrnafta’s financial plan for 2024. On March 1, the Cabinet of Ministers approved Ukrnafta’s financial plan for 2024.

According to Ukrnafta’s CEO Sergii Koretskyi, the financial plan includes:

  • Hr 118 billion ($3.1 billion) in net income;
  • Hr 18 billion ($467 million) in net profit;
  • Hr 31 billion ($804 million) in taxes and fees; and
  • Hr 8.7 billion ($226 million) in dividends to the state;

Koretskyi also said that Ukrnafta earned Hr 7 billion ($181 million) in net profit in 2023.

This figure is most likely unaudited. We have not been able to identify any official reporting on profits. We have also not been able to find Ukrnafta’s financial statements for 2023.

As we reported in Issue 121, Ukrnafta paid the state Hr 3.9 billion ($101 million) in dividends for 2023. This is the first half; Ukrnafta is to pay a total of Hr 8 billion ($208 million) in dividends for the full year.

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 ($648 million) in taxes in 2023.

As we reported in Issue 111, Ukrnafta’s CEO Sergii Koretskyi said in November 2023 that the company paid Hr 12.3 billion ($319 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 ($701 million) in taxes for the entire year 2023, including about Hr 5 billion ($129 million) in income tax.

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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 ($366 million). As of November 2023, the net profit exceeded Hr 20 billion ($518 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.

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 billion) in net income from operations, Hr 12 billion ($311 million) in net profit, and Hr 25 billion ($648 million) in tax payments.

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At the same time, an “emergency brake” was added that would impose tariffs if the export of poultry, sugar, and eggs exceeded the level of exports in 2022 and 2023, the press release from the European Parliament said.

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 Defense Ministry on Nov. 6, 2022. See Issue 68 for detail.


The SPFU is offering a majority stake of Rivne Radio Engineering Plant for sale, bids start at Hr 121.5 million ($3.2 million) the State Property Fund’s (SPFU) press office reported on March 6.

SPFU offers a stake of 50 per cent + 1 share in the authorized capital of the plant.

The public joint-stock company Rivne Radio Engineering Plant ceased its business activities in 2013 and has no full-time employees. The company’s balance sheet includes seven buildings and structures with a total area of over 68,000 square meters.

The real estate owned by the company is located on a land plot with a total area of 11.3 hectares, and it is communal ownership, SPFU added.

According to SPFU, Rivne Radio Engineering Plant has debts, including overdue accounts payable of Hr 18.5 million ($480,000).

SPFU plans to put PentoPack Plant, confiscated from the sanctioned Russian-Greek oligarch Ivan Savvidi, up for privatization, SPFU’s press office reported on March 6.

This asset was confiscated by High Anti-Corruption Court (HACC) in February 2024. The state has the right to dispose of 100% of the company’s shares, SPFU explained.

According to SPFU, PentoPack is one of the leaders in the production of packaging for meat and sausage products. It produces multilayer synthetic shrink wrap using modern technologies, including printing with UV, water, and alcohol inks.

PentoPack’s products are used in more than thirty countries around the world. In Ukraine, the company cooperates with such market giants in the food industry as Rud, Globino, Myasna Gildiya, and others, SPFU said.

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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