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An employee leaves Ukrainian state bank Ukreximbank on Oct. 6, 2021, in Kyiv. (Photo by Sergei Supinsky/AFP via Getty Images)
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Editor’s Note: This is issue 90 of Ukrainian State-Owned Enterprises Weekly, covering events from May 20-June 2, 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

The Cabinet appoints Ukreximbank’s new supervisory board. According to the Cabinet of Ministers’ decision, the new independent members of the supervisory board, appointed on May 30, are:

  • Sylvia Yumi Gansser-Potts – a member of the board and the audit and risk committee at the European Fund for Southeastern Europe (EFSE), also a board member at the Latvian Citadele Banka and advisor at BlackPick Capital, former managing director at the EBRD;
  • Razvan Munteanu – former member of the executive board at PrivatBank, former CEO at the Austrian Addiko Bank, and former managing director of consumer banking at the Austrian Raiffeisen Bank International;
  • Robert Kossmann – independent director at Crystal Microfinance Organization and former executive board member at the Ukrainian Raiffeisen Bank Aval (from 2006 to 2020);
  • Engin AkçakocaEBRD advisor in Ukraine, IMF and World Bank advisor in Europe and Asia, board member at the Turkish holding company Anadolu Grubu, and board member at the Turkish supermarket chain Migros Ticaret A.Ş;
  • Rostyslav Futalo – digitalization consultant at the Slovakian bank ČSOB Finančná skupina, a former expert at the European Commission, and former managing director of Raiffeisen Leasing at Raiffeisen Bank International.

The five new members will replace Dimitri Chichlo, Laszlo Urban, Olyana Gordienko, Sergiy Konovets, and Vladyslav Vynarsky.

Dominique Menu, who served as an independent member on the previous board, will continue in that role, according to the Cabinet’s decision.

According to Ukreximbank’s website, Viktoriya Strakhova, Yuriy Butsa, and Yuriy Terenetyev continue to serve as state representatives on the bank’s supervisory board.

In SOE Weekly (Issue 85), we reported that the Cabinet approved Oschadbank’s new supervisory board.

In Issue 80, we reported that, according to Ekonomichna Pravda (EP), Ukraine must finish forming supervisory boards at state-owned banks to comply with the new IMF programme.

Previously, the government appointed new boards at PrivatBank (see SOE Weekly’s Issue 69 for detail) and Ukrgasbank (see our Issues 73 and 75 for detail).

The competitive selections for PrivatBank, Oschadbank, and Ukreximbank started simultaneously on Oct. 11.

The selection for PrivatBank took about two and a half months (completed on Dec. 27); for Oschadbank, more than six months (completed on April 21); and for Ukreximbank, more than seven months (completed on May 30). The reasons for this variance have not been communicated publicly.

In addition, the SOE Weekly has identified a consistent pattern in the board selection processes for PrivatBank, Oschadbank, and Ukreximbank. Specifically, at all three banks:

  • Nearly all independent members (a total of six on each supervisory board) were replaced, with only one independent member re-appointed at PrivatBank; one, at Ukreximbank; and two, at Oschadbank.
  • Each board includes exactly one Ukrainian independent member; all others are foreigners. All previous Ukrainian independent members were dismissed.
  • All the state representatives (a total of three Ukrainians on each supervisory board) were re-appointed.
  • The supervisory board chairs were replaced.

None of the previous supervisory boards has been evaluated by the shareholder in terms of their performance. The Cabinet of Ministers or the Ministry of Finance have never voiced complaints about their performance publicly, including the respective banks’ financial performance, although it varied significantly across the three banks. If the Cabinet as the shareholder was dissatisfied with the boards’ performance, it is unclear why all state representatives were kept, while nearly all independent members were replaced.

It is not yet clear how the essentially new supervisory boards will ensure cohesion as a team, given the security concerns related to Russian missile attacks which may affect the willingness of foreign members to meet in Ukraine and lead to a preference for online meetings only.

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State Property Fund replaces 142 CEOs and supervisory board members at its SOEs. On May 29, the State Property Fund of Ukraine (SPFU) reported that, since September 2022, it had replaced 89 CEOs and 53 supervisory board members at enterprises managed by the SPFU. The fund is awaiting appointment approvals at another 26 enterprises.

The SPFU instituted these changes after the companies failed to meet financial targets and incurred losses.

In SOE Weekly (Issue 79), we reported that the SPFU announced that it planned to replace chief executives at 65 SOEs. The decision was based on the analysis of those enterprises’ financial indicators.

In Issue 75, we reported that the SPFU announced that it began dismissing SOE managers found to be lacking integrity.

As we also reported in Issue 75, the SPFU announced the dismissal of the acting CEO of UMCC, Vladyslav Itkin. 100% of the UMCC’s shares are held by the SPFU, and the company is slated for privatization. According to the SPFU, this dismissal decision was based on a thorough internal financial and economic audit of the company.


Naftogaz reaches an agreement to restructure defaulted Eurobonds with holders. On May 31, Naftogaz reported that it had reached agreements with investors on ways to restructure Eurobonds maturing in July 2022 and November 2026.

According to Naftogaz, the detailed restructuring proposals were approved by the company’s executive and supervisory boards. The restructuring of both the 2022 and 2026 bonds is expected to be completed by the end of July 2023.

The decision is subject to final approval by the Cabinet of Ministers as Naftogaz’s shareholder, the company explained.

According to Naftogaz, the consent solicitation concerning $500 million in Eurobonds that mature in 2026 includes the following provisions:

  • a consent fee of 0.5% of the principal amount of the notes to holders that vote in favor of the consent solicitation;
  • the deposit in a dedicated segregated reserve account of Naftogaz of (i) the equivalent of one interest payment on the 2026 notes prior to the launch of the consent solicitation; and (ii) the equivalent of one interest payment on the 2026 notes in three installments commencing on Jan. 15, 2024, and ending on March 31, 2024. Amounts in the reserve account are to be used solely for the payment of interest on the 2026 notes that will resume in November 2024; and
  • the extension of the maturity date for the 2026 notes so that 50% of the principal amount outstanding is redeemed in November 2027 and the remaining 50% in November 2028.

As for the $335 million in bonds due in 2022, the solicitation is to include a 5% payment of the principal, payment of accrued past due interest, the coupon payment due July 2023, and additional interest.

The maturity date of the balance of the principal will be extended, with amortization of 50% of the remaining principal amount in July 2024 and 50% in July 2025. The interest due in January 2024 will be deferred to July 2024, with the option to capitalize such interest. Going forward, the coupon on the 2022 notes will rise to 7.65% (from 7.375%), the company explained.

In SOE Weekly (Issue 75), we reported that Naftogaz was trying to restructure its 2022 and 2026 Eurobond liabilities with financial advisor Lazard and legal advisor Freshfields Bruckhaus Deringer.

In Issue 68, we reported that on July 26, Naftogaz defaulted on its Eurobonds due to the Cabinet of Ministers’ refusal to approve payments on them.

Earlier, on July 21, acting in the capacity of Naftogaz’s general meeting, the Cabinet issued an order formally instructing Naftogaz to seek Cabinet’s approval before executing any transactions related to the company’s Eurobonds.

Under previous CEO Yuriy Vitrenko, Naftogaz then reached an agreement with bondholders on the restructuring of the Eurobond issues maturing in 2024 (600 million euros), while restructuring of Eurobond issues maturing in 2022 ($350 million) and in 2026 ($500 million) was still being negotiated.

Naftogaz’s new CEO Oleksiy Chernyshov, who was appointed on Nov. 3, expected that the company would reach an agreement on the restructuring with the holders of these Eurobonds in early 2023.

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Cabinet approves Ukrnafta’s financial plan for 2023. On May 26, the Cabinet of Ministers approved Ukrnafta’s financial plan for 2023.

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

  • Hr 74 billion ($2 billion) in net income from operations;
  • Hr 12 billion ($328 million) in net profit;
  • Hr 25 billion ($684 million) in tax payments to the state (rent, income tax, VAT, payroll tax, etc.); and
  • Hr 9 billion ($246 million) of investments, including a record Hr 5.5 billion ($150 million) of investments in production.

Koretskyi also said that Ukrnafta earned about Hr 7 billion ($191 million) in net profit in January-April 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 2022.

According to Koretsky, the company’s total annual profit in 2020 and 2021 was Hr 4.3 billion ($117 million) and Hr 2.1 billion ($57 million), respectively. Koretsky did not report the 2022 profits.

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 Ministry of Defense on Nov. 6.

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.

After the seizure, the state replaced the supervisory boards and executive management at most of these companies. On Nov. 7, the Ministry of Defense, 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 and 10, respectively.


Ukrzaliznytsia to receive a $25 million grant from the World Bank, the company reported on May 26. To get this grant, Ukrzaliznytsia will start cooperating with the UN Office for Project Services (UNOPS).

UNOPS will help Ukrzaliznytsia to procure equipment to restore critical railway infrastructure that has been damaged, as well as buy more fitting platforms that can carry cargo containers of humanitarian aid and agricultural exports.

In SOE Weekly (Issue 88), we reported that the European Bank for Reconstruction and Development (EBRD) would provide 200 million euros (apparently, as a loan) to rebuild Ukraine’s railways.

In Issue 72, we reported that Ukrzaliznytsia took losses of Hr 10.8 billion ($295 million) in 2022. The loss from passenger transportation was Hr 13.3 billion ($364 million), suggesting that the company’s other segments, such as cargo transportation, made a profit of Hr 2.5 billion ($68 million).

Ukrzaliznytsia is also expected to lose Hr 20.2 billion ($552 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.

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The Verkhovna Rada unblocks large-scale privatization and changes the SPFU structure. On May 30, the Verkhovna Rada adopted draft law No. 8250 in the second reading.

The bill is supposed to improve the SPFU’s management structure, allow the government to resume large-scale privatization, and improve the efficiency of working with sanctioned property, the SPFU explained.

In SOE Weekly’s Issue 76, we reported that the Cabinet of Ministers approved an electronic auction procedure for the privatization of large-scale objects with more than Hr 250 million ($6.8 million) in assets.

Previously, large-scale privatization objects were only sold at offline auctions, unlike small-scale ones.

Under the new law, the head of the SPFU will have the right to independently appoint and dismiss his/her deputies. The fund’s 12 regional offices will transform from separate legal entities into the SPFU’s units, which should clarify their responsibilities and establish clear KPIs and market salaries for employees.

The new law also changes how sanctioned property is handled:

  • such property will be transferred to the SPFU by the decision of the High Anti-Corruption Court (HACC);
  • the SPFU will independently decide what to do with the sanctioned property (that is, whether to privatize, lease, or manage it);
  • all proceeds will be directed to finance the recovery needs of Ukraine via a dedicated fund.

In addition, the new law:

  • prohibits sanctioned individuals and citizens of aggressor countries from serving as CEOs and board members at SOEs;
  • cancels the need for СEOs of SOEs managed by the SPFU to be approved by local authorities; and
  • for the period of martial law, removes restrictions on how long state property lease agreements can be valid.

The Verkhovna Rada also supported the SPFU’s initiative to extend the lease of state property to five years. On April 1, the Rada limited the possible lease term to the duration of martial law + 12 months, but these terms do not appear to be appealing to prospective lessees any longer, the SPFU explained.

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SPFU sells Elektronmash for Hr 120 million ($3.3 million). On May 29, the SPFU reported that it held a successful online auction for the sale of the Kyiv-based Elektronmash computer factory. This is the SPFU’s third attempt to privatize this asset.

Note that this selling price of Hr 120 million ($3.3 million) only equals 12% of the winning bid of Hr 970 million ($26.5 miliion) in the first attempt to sell Elektronmash, and only 28% of the winning bid of Hr 430 million ($11.7 million) in the second attempt, as we discuss below.

Six bidders took part in the auction. According to Prozorro.Sale, the winner is Incom Rent LLC, a real estate management company. Its ultimate beneficial owners are Liudmyla Yakovlieva and Oleh Magalyas.

According to, Magalyas is a long-standing business partner of Ihor Balenko, a member of the Kyiv City Council from the European Solidarity party and former owner of the Furshet chain of food stores. Among other things, they are connected via Group Centre LLC, which Magalyas and Balenko co-founded in 1999, the media added.

The auction winner has 20 working days to pay the lot price.

According to the SPFU, besides the reported price, the winner must pay 20% VAT (Hr 24.2 million, or $662,000) on the purchase, as well as take over Elektronmash’s payables of Hr 23.1 million, or $632,000.

According to Liga, the lot’s true value comes from the 13.76 hectares of land that it sits on rather than the electronics factory itself.

This land, located in the Sviatoshynskyi district of Kyiv and Petropavlivska Borshchahivka, is currently zoned for industrial use only, but the Kyiv City Council can change the zoning.

According to the media, Balenko is a member of the Kyiv City Council’s Standing Committee on Urban Development, Architecture, and Land Use, and it is this committee that forms proposals to the session hall for voting on land issues in Kyiv.

Also, according to, Balenko and his partners own commercial land next to Elektronmash, including Balenko’s Promenada Park shopping center.

The new property would expand the area of contiguous land that Balenko and his partners own, allowing them to build a series of shopping malls, Liga reported.

In SOE Weekly (Issue 86), we reported that the SPFU announced a third attempt to auction off Elektronmash.

According to the SPFU, Elektronmash was one of the most powerful computer manufacturing companies in the former Soviet Union, employing around 10,000 people. During Ukraine’s transition to a market economy, the factory was unable to adapt to competition and slowly decayed into ruin.

At the beginning of May, the company had overdue accounts payable of Hr 21.4 million ($585,000). In 2022, Elektronmash posted losses of Hr 8.2 million ($224,000). In 2021, it lost Hr 24 million ($656,000), and in 2020, it lost Hr 10.9 million ($298,000).

The company has also been cutting its workforce: In 2020, Elektronmash employed 175 people, in 2021 it had 149, and in 2022, just 127.

According to the SPFU, the previous two auctions for the sale of Elektronmash could have brought Hr 970 million ($26.5 million), and Hr 430 million ($11.7 million) to the budget, but unscrupulous investors failed to complete the purchases on time.

See more in SOE Weekly’s Issues 51, 56, 62, and 86.

Confiscation of the aggressor state’s assets, nationalization, and asset seizure

Ukrnaftoburinnya transferred to Ukrnafta. On May 23, the Cabinet of Ministers approved the proposal of the Asset Recovery and Management Agency (ARMA) and the Ministry of Defence to transfer the corporate rights of Ukrnaftoburinnya to Ukrnafta. The state previously took these corporate rights away from the company’s owners.

According to the registry, Ukrnaftoburinnya’s ownership is split between Ares Systems Ltd (22.49%), Deripon Commercial Ltd (22.49%), JKX Ukraine B.V. (10%), and Ariana Business Limited (22.49%). According to the media, the company is associated with businessmen Ihor Kolomoisky, Pavlo Fuks, and Vitaliy Khomutynnik.

Ukrnaftoburinnya is one of the largest private gas producers in Ukraine, extracting 725.4 million cubic meters in 2021. According to European Pravda, its 2021 net profit was Hr 5.65 billion ($154 million). In 2022, this fell to Hr 3.77 billion ($103 million).

On May 22, before the Cabinet’s approval, Ukrnaftoburinnya said on its website that Ukrnafta “is destabilizing its work and participating in a raider seizure (of Ukrnaftoburinnya)”. On May 23, Ukrnaftoburinnya filed a criminal complaint with the National Anti-Corruption Bureau of Ukraine (NABU).

Ukrnaftoburinnya asked NABU “to protect a private company, one of the largest taxpayers, from a brazen raider attack inspired by officials from the highest levels of government.”

On May 29, Ukrnaftoburinnya said that its owner, JKX Ukraine B.V., sent an official appeal to the acting head of ARMA “regarding the illegal alienation of its assets in Ukraine.” The company claimed that the recent decision to transfer Ukrnaftoburinnya’s corporate rights under Ukrnafta’s management was not in line with the law.

As of May 26, neither the shareholders nor Ukrnaftoburinnya itself had the opportunity to review the justification for the need to apply the specifics of asset transfer, which ARMA should have cited in its letters to the Cabinet, JKX Ukraine said.

In its statement, the company called on ARMA to “officially recognize that there are no grounds to apply a special procedure for managing the seized assets and return the property to its legitimate shareholders.” It also called on Ukrnafta “to refuse to accept the seized assets and to take any action to manage them”.

In SOE Weekly (Issue 84), we reported that ARMA received all shares of Ukrnaftoburinnya after the asset was seized on April 7.

The shares were seized in connection with a criminal investigation into the development of Ukraine’s largest explored gas field, the Sakhalin, in Kharkiv Oblast. (See more about this case in Issue 84 – SOE Weekly.)

In Issue 86, we reported that Ukrnafta’s CEO Sergii Koretskyi asked the Ministry of Economy to hand the corporate rights of Ukrnaftoburinnya to Ukrnafta.

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