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Workers maintain trains at the Kyiv Rail depot on Nov. 25, 2022 in Kyiv. The country's national rail system, Ukrzaliznytsia, has helped it withstand Russia's invasion and become a symbol of normalcy amid war. (Photo by Jeff J Mitchell/Getty Images)
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Editor’s Note: This is issue 101 of Ukrainian State-Owned Enterprises Weekly, covering events from Sept. 2-8, 2023. 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. This publication was produced with the financial support of the European Union within the project “Supporting Ukraine in rebuilding and recovery” implemented by the KSE Institute. 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.

Corporate governance of SOEs

SPFU head Umierov resigns to head the Defense Ministry. On Sept. 3, President Volodymyr Zelensky announced that he was replacing Defense Minister Oleksii Reznikov with the head of the State Property Fund of Ukraine (SPFU), Rustem Umierov.

On Sept. 4, Reznikov and Umierov filed their resignation letters to the Verkhovna Rada. The next day, the Rada approved both, and Zelensky put forth Umierov’s formal appointment. It was approved on Sept. 6.

According to Ukrainska Pravda (UP), Umierov’s candidacy came together at the last minute, “literally 10 days before the official announcement." The president called Umierov, who “could not refuse,” Pravda’s source said.

UP wrote that Umierov, who headed the SPFU since Sept. 7, 2022, got the offer thanks to his reputation and good connections abroad. “Obviously, (head of the President's Office) Andriy Yermak introduced Umierov to the (presidential) team, but the decision on the Defense Ministry is the President’s decision. Yermak was quite happy with Umierov at the State Property Fund,” UP’s source said.

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On Sept. 2, UP’s sources reported that Umierov would be replaced at the SPFU by Olha Pishchanska, head of the Anti-Monopoly Committee (AMCU). On Sept. 5, the Verkhovna Rada approved Pishchanska’s resignation from the AMCU and then replaced her by the former Governor of Donetsk Oblast Pavlo Kyrylenko.

According to MP Yaroslav Zhelezniak (Holos faction), Pishchanska neither confirmed nor denied the plans to appoint her as the head of the SPFU.

According to UP’s sources, Pishchanska learned about the reshuffle almost from the media and does not want to work at the SPFU.

On Sept. 5, David Arakhamia, the head of the ruling Servant of the People faction, confirmed that the position of the head of the SPFU remained vacant.

Rustem Umierov interviewed before resigning from the SPFU. Prior to his resignation as the head of the SPFU and appointment as Defense Minister, Rustem Umierov was interviewed by We selected the key points:

On the management of state assets:

  • “During the year, the SPFU consolidated more than 2,300 SOEs under its management, which is more than 65% of all state assets (3,600 in total).”

Apparently, this refers to the number of SOEs, i.e., 65% of all SOEs owned by the state at the central level of government. A lion’s share of this SOE portfolio’s asset value is concentrated in the top 15 SOEs, none of which is under the SPFU.

  • “Previously, SOEs were managed by more than 90 different governing bodies – ministries, agencies, etc.”

Since the Economy Ministry has not published its data on SOEs in wartime, we are not aware how many ministries and agencies oversee them today.

  • “Today, we have become the largest manager of state assets. We are currently working with the Cabinet of Ministers and the Verkhovna Rada on a new state property policy that would establish a single body to manage state assets.”

In SOE Weekly Issue 93, we reported that the SPFU was working out plans to centralize state property management. See Issue 93 for more detail.

On small-scale privatization:

  • “The economic effect of the resumed small-scale privatization (in September 2022 – SOE Weekly) is Hr 5.2 billion ($141 million). This amount includes direct payments from the winners of privatization auctions – Hr 3.8 billion ($103 million) – as well as debts to be paid by the new owners and 20% VAT.”
UK planes guard Ukrainian grain ships in Black Sea
The U.K. has been sending Royal Air Force (RAF) planes to protect Black Sea vessels carrying grain shipments from Ukraine, a Downing Street press release disclosed on Sept. 7.

In SOE Weekly Issue 96, we reported that the SPFU raised Hr 1.82 billion ($49 million) from privatization auctions to the budget in the first half of 2023. The revenue from privatization to the state budget is projected to be Hr 6 billion ($162 million) in 2023.

On large-scale privatization:

  • “We have recently replaced the supervisory board of Centrenergo and appointed a new CEO (Andriy Churkin). He has three tasks: He must get through the autumn and winter period, build protective structures, and prepare Centrenergo for privatization.”
  • “If we leave Centrenergo in the same unmodernized state for another 10 years, the company will simply become uninteresting for investors in the future. The world is moving towards green and nuclear energy. In this regard, we decided together with the government that it would be better to transfer this asset to a private owner.”
  • “In order to start privatization, we first had to take control of the company, which we worked on for eight months, as Centrenergo was only de jure owned by the state.”
  • “The Fund had no de facto control over United Mining and Chemical Company (UMCC) and Odesa Portside Plant (OPZ). This is how the Ukrainian culture of state ownership works. You may control an enterprise de jure, but de facto you may not.”

In SOE Weekly Issue 80, we reported that the National Anti-Corruption Bureau (NABU) and Specialized Anti-Corruption Prosecutor’s Office (SAPO) said that they exposed a criminal group run by former head of the State Property Fund of Ukraine (SPFU) Dmytro Sennychenko.

According to NABU, the criminal group headed by Sennychenko is accused of stealing Hr 500 million ($13.5 million) from UMCC and OPZ. See more about this case in Issue 80.

As we reported in Issue 83, the suspects in this case, including Sennychenko, were placed on the wanted list.

  • “The most important thing now is that, thanks to our cooperation with law enforcement agencies, we have already gained de facto control over UMCC and Centrenergo. We are now working to gain the same control over OPZ.”

In SOE Weekly Issue 93, we reported that the SPFU’s large-scale privatization plans included three state-owned companies: UMCC, OPZ, and Centrenergo. See Issue 93 for more detail.

On the Ukrainian part of the Samara-Western Direction oil pipeline (the so-called “Medvedchuk pipe”):

  • “The state won the case in the court of first instance. The litigation is now at the appeal stage. When we win in the appellate court, we will be ready to take this asset into the Fund’s portfolio. Then the decision will be up to the state. If the government determines that this asset is strategic, we will transfer it to the Sovereign Wealth Fund. If not, we will put it up for privatization.”
FT: Musk gave his biographer confidential messages with Ukraine’s Minister Fedorov without permission
Elon Musk provided his confidential conversation with Ukraine’s Digital Transformation Minister Mykhailo Fedorov to the billionaire’s biographer without permission, the Financial Times reported on Sept. 8.

In SOE Weekly Issue 97, we reported that the court returned the Ukrainian part of the Samara-Western Direction oil pipeline to state ownership. See more in Issue 97.

On the Sovereign Wealth Fund:

  • “The new (state) ownership policy will set out the criteria by which assets will be designated as strategic. It will also define which assets we classify as commercial and which as non-commercial. Which ones belong to banks and which ones to the defense sector. If this strategy is adopted, we estimate that about 100 SOEs should remain in state ownership, of which about 50 would be classified as commercial.”
  • “These 50 enterprises should be included in the Sovereign Wealth Fund. Currently, the capitalization of these enterprises is approximately $40-50 billion. In ten years, a professional management team would be able to increase it to $150-200 billion, generating an annual return of 10 or 20%.”
  • “International experts are helping us to create a sovereign wealth fund. Soon, our team would submit a strategy for the establishment of such a fund to the Cabinet of Ministers. Then, we would propose to the Verkhovna Rada a draft law that would outline the principles of the Sovereign Wealth Fund. Our strategy includes three planning horizons: 1-2 years, 5 and 10 years.”

In SOE Weekly Issue 93, we reported that the SPFU was working out plans to centralize state property management, which include setting up a sovereign wealth fund. Umierov said back then that once the fund is established, all strategic SOEs that are not slated for privatization will be transferred from the Cabinet of Ministers to that fund.

It would serve as a single vehicle for effective long-term management of state firms, include strategic assets that will be developed to generate profits, and increase wealth for future generations. For more detail, see Issue 93.

On the leasing of state agricultural land through Prozorro.Sale:

  • “We conducted an analysis. It has turned out that the state owns between 500,000 and 700,000 hectares of land. The SPFU currently manages only 370,000 hectares. The rest of the land is under the jurisdiction of other ministries, departments, agencies, academies of science, and other state institutions.”
  • “Now we need to accumulate state land that is being used inefficiently into a single fund – the Land Bank. We are already working on this issue with the Cabinet of Ministers. In January 2024, we will be ready to offer the public a new tool – the land will be leased out on a long-term basis through Prozorro auctions. At the same time, it will remain state-owned.”
G20 ‘consensus’ declaration calls for peace, but refuses to condemn Russia’s war in Ukraine
The Group of 20 summit in New Delhi adopted a “consensus” declaration on Sept. 9 that called on countries not to use force to seize territory but fell short of condemning Russia for its war in Ukraine.

In SOE Weekly Issue 93, we reported that the SPFU was working out plans to launch a land bank to centralize all state-owned agricultural land into a single entity for long-term leasing. For more detail, see Issue 93.

As we reported in Issue 100, the Cabinet of Ministers transferred 25 SOEs, previously managed by the National Academy of Agrarian Sciences, to the SPFU.

In Issue 100, we also wrote on the SPFU’s plans to launch the first open auctions for leasing of state agricultural land in 2024.

NABU serves suspicion notice to tycoon Kolomoisky of siphoning Hr 9.2 billion from PrivatBank in 2015. On Sept. 7, the National Anti-Corruption Bureau (NABU) and the Specialized Anti-Corruption Prosecutor’s Office (SAPO) notified the former ultimate beneficial owner of PrivatBank and five members of the organized group that they were suspected of misappropriating of over Hr 9.2 billion ($249 million) from the bank.

The NABU does not name the suspects, but the details revealed by the Bureau point to Ukrainian tycoon Ihor Kolomoisky.

The other suspects are:

  • PrivatBank’s former CEO (according to the Anti-Corruption Action Center (AnTAC), this is Oleksandr Dubilet;
  • PrivatBank’s former deputy CEO and head treasurer (Liudmyla Shmalchenko, according to AnTAC);
  • the bank’s deputy head of the interbank dealing department, who also was the authorised representative of a non-resident company associated with bank (NABU added that he was detained; according to Slovo i Dilo, this is Yaroslav Lugovyi);
  • the head of the interbank operations support department of PrivatBank’s treasury (Nadia Konopkina, according to AnTAC);
  • the deputy head of the department for servicing correspondent accounts of non-resident banks at PrivatBank’s headquarters. (We were not able to identify this person.)
Oligarch Kolomoisky is behind bars. How did he get there and can he find a way out?
Ihor Kolomoisky’s recent arrest is the latest episode in a prolonged, hard-fought slide from grace for one of Ukraine’s most notorious oligarchs. At his height, he governed a region, controlled huge chunks of multiple industries, made good use of his massive TV network, and a cadre of loyal politic…

According to the investigation, in January-March 2015, Kolomoisky (at that time, the head of the Dnipropetrovsk Regional State Administration), devised a plan to appropriate funds from PrivatBank with the aim of financing a controlled offshore company and increasing his own stake in the bank’s statutory capital. To this end, the bank was artificially obligated to pay over Hr 9.2 billion to the said company, under the pretext of buying back its own bonds at inflated prices, NABU said.

According to NABU, subsequently over Hr 446 million ($12 million) was transferred to the accounts of three related legal entities for further legalization, disguised as securities trading operations, and later, to the accounts of another two entities. Eventually, the funds were deposited into Kolomoisky’s personal account, who used them at his discretion and contributed to the bank’s statutory capital in compliance with the National Bank of Ukraine’s (NBU) requirements.

A pre-trial investigation is ongoing. This is the fourth episode in the case of misappropriation of PrivatBank funds. In October 2022, NABU and SAPO disclosed the details of the previous three episodes. On Sept. 6, the indictment was sent to court, NABU said.

On Sept. 2, Kolomoisky was also suspected of fraud and money laundering based on the materials of the Security Service of Ukraine (SBU) and the Economic Security Bureau (BEB).

On the same day, the Shevchenkivskyi District Court of Kyiv ruled that Kolomoisky should be held in custody until Oct. 31 with a bail of almost Hr 510 million ($13.8 million) as an alternative.

On Sept. 6, the Kyiv Court of Appeal adjourned the hearing on Kolomoisky’s appeal against his measure of restraint to Sept. 25.

After this court’s decision was announced, Kolomoisky’s lawyers said that he is likely to remain in his cell until Sept. 25, as he considers the decision of the first instance court unjustified and wants to wait for the appeal to be decided.


Ukrzaliznytsia to receive a 100-million-euro loan from EIB. On Sept. 1, the Cabinet of Ministers approved a resolution that would allow Ukrzaliznytsia to receive 100 million euros in loans from the European Investment Bank (EIB).

According to Ukrzaliznytsia, the funds are for the design, construction, modernization, and repair of railway infrastructure, as well as buying fixed assets to raise freight capacity.

The company explained that, back in 2016, Ukraine and the EIB signed an agreement to modernize the Ukrainian railway. But as Russia destroys the railway infrastructure, production and trade flows are declining, including income-producing freight transportation, resulting in a shortfall in the company’s cash flow, the company said.

That is why the Ministry for Communities, Territories and Infrastructure moved to restructure the project at Ukrzaliznytsia’s behest. In addition, the EIB and Ukraine signed a letter waiving some of the terms of the project’s financial agreement, which now allows allocating 100 million euros to provide a loan to Ukrzaliznytsia to ensure the smooth operation of railway transport.

In SOE Weekly Issue 92, we reported that Ukrzaliznytsia signed a 200-million-euro loan agreement with the European Bank for Reconstruction and Development (EBRD) as part of the Emergency Support to Ukrainian Railways project.

The loan will have a maturity of up to 15 years, including a grace period of up to 3 years.

In Issue 91, we reported that Ukrzaliznytsia would also receive a 6.7-million-euro grant from the European Investment Bank (EIB) to support the company’s operations during Russia’s full-scale war against Ukraine.

In Issue 90, we reported that Ukrzaliznytsia would receive a $25 million grant from the World Bank.

Zelensky: Preparations underway to protect Ukraine’s critical infrastructure through winter
President Volodymyr Zelensky said on Sept. 9 that plans are being implemented to protect Ukraine’s energy and critical infrastructure from Russian missile and drone strikes through the winter.

In Issue 72, we reported that Ukrzaliznytsia took losses of Hr 10.8 billion ($292.5 million) in 2022. The loss from passenger transportation was Hr 13.3 billion (suggesting that the company’s other segments, such as cargo transportation, made a profit of Hr 2.5 billion ($67.7 million).

Ukrzaliznytsia also expected to lose Hr 20.2 billion ($547 million) in 2023 due to the large social burden and restrictions on cargo transportation.

In Issue 68, we reported that after Russia’s full-scale invasion, the Ukrainian government gave Ukrzaliznytsia new responsibilities. We also detailed the financial support that the government, Ukrgasbank, and international partners provided to Ukrzaliznytsia throughout 2022.

Fitch Ratings affirms Ukrzaliznytsia’s credit rating at ‘CC.' On Sept. 7, Fitch Ratings affirmed the company’s credit rating of at ‘CC,' the same as the sovereign credit rating of Ukraine.

According to Fitch, credit rating ‘CC’ reflects the company’s still high credit risk.

“Following last year’s distressed debt exchange (DDE) debt repayment pressure on its cash flow has eased in the short term. It has given (Ukrzaliznytsia) the flexibility to focus on continuing its operations in currently unstable and unpredictable conditions, as well as repairing and maintaining the infrastructure hit by the Russian-Ukrainian war. However, redemption of the notes (apparently, U.S. dollar loan participation notes discussed below) remains uncertain in the medium term pending a decision on its funding, Fitch noted.

At the same time, the agency upgraded the Standalone Credit Profile to “CCC-” from “CC” following the company’s better-than-expected results from the first half of 2023 and its updated forecast for 2023 that assumes an improved net result compared with its initial plan.

This improves Ukrzaliznytsia’s financial position, including easing pressure on liquidity, but in Fitch’s view, a default is still a possibility in the medium term.

Fitch continues to expect a negative net result for the company for 2023 despite its improved interim performance. Operating profit in 2022 included grants from the government of Hr 9.7 billion ($262. 7 million), without which Ukrzaliznytsia would be unable to maintain profitable operations. Liquidity is much better than at the beginning of 2023, but this is mostly due to an increase in direct debt and external support, the agency said.

In SOE Weekly Issue 66, we reported that Fitch 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 U.S. dollar loan participation notes (LPN) maturing in 2024 and 2026.

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

In Issue 73, we reported that Ukrzaliznytsia completed the final formalities for the restructuring of payments for two Eurobond issues totalling $895 million.

Repayments of Eurobonds issued in 2019 ($594.9 million) were deferred from 2024 to 2026; payments for the 2021 issue ($300 million) were deferred from 2026 to 2028. Coupon payments due in 2023-2024 were deferred until January 2025 with possible capitalization.

As we wrote in Issue 82, Ukrzaliznytsia reported that S&P Global Ratings raised its credit score to CCC+ in April 2023.

Ukraine war latest: Ukraine controls most of Klishchiivka south of Bakhmut, commander says
Key development on Sept. 8: * Ukrainian forces take control of more than half of Klishchiivka south of Bakhmut * Military: Russia prepares strike force near Novoiehorivka in Lyman direction * Russian missiles hit 3 Ukrainian cities, killing 1, injuring more than 70 * Musk denied Kyiv’s request…
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