Skip to content
Transmission towers and power lines near a missile damaged high-voltage electricity sub-station, operated by a state-owned company Ukrenergo, in central Ukraine, on March 1, 2023. (Andrew Kravchenko/Bloomberg via Getty Images)
This audio is created with AI assistance

Support independent journalism in Ukraine. Join us in this fight.

Become a member Support us just once

Editor’s Note: This is issue 98 of Ukrainian State-Owned Enterprises Weekly, covering events from July 15-28, 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

1. The Verkhovna Rada adopts a draft law on the merger of GTSOU and MGU. On  July 28, 2023, MP Yaroslav Zheleznyak (Holos faction) reported that the Verkhovna Rada adopted Draft Law No. 9311-1-d on the corporate governance of Gas Transmission System Operator of Ukraine (GTSOU).

The Energy Community Secretariat welcomed this law, naming it a milestone for corporate governance reform in Ukraine. The Secretariat emphasized that it has supported the Rada, the government, and GTSOU in making this reform happen in close collaboration with the IMF, the European Commission, the World Bank, and the independent corporate governance experts Andriy Boytsun and Oleksandr Lysenko.

This bill built on its earlier version, No. 9311-1, which had been proposed by MPs Maksym Khlapuk (Holos), Yaroslav Zheleznyak (Holos), and other MPs. Draft Law No. 9311-1 was drafted by two members of the SOE Weekly team, Oleksandr Lysenko and Andriy Boytsun.

In SOE Weekly's Issue 89, we reported that this draft law corrected the shortcoming of the government’s bill and aimed to help Ukraine meet its commitments to the IMF and other international obligations. (See more in Issue 89).

Draft Law No. 9311-1 was then finalized by the Energy Committee of the Verkhovna Rada, becoming Draft Law No. 9311-1-d. That version was submitted by the Committee’s Chair Andriy Gerus (Sluha Narodu), Maksym Khlapuk (Holos), and other members of the Committee.

The bill incorporates the necessary safeguards to ensure the appropriate implementation of corporate governance elements at GTSOU. It envisages the following steps for that purpose:

  • Merge Main Pipelines of Ukraine (MGU) with GTSOU, resulting in the liquidation of MGU. This implies transferring the shareholder rights over GTSOU from MGU directly to the Ministry of Energy and adopting a new charter of GTSOU that introduces a supervisory board as a governing body of GTSOU.
  • After the merger is completed, GTSOU’s new supervisory board should be appointed by 31 October 2023. In the interim, the current members of MGU’s supervisory board will serve as GTSOU’s supervisory board.

The draft law was approved in the first reading in the Rada’s session on 13 July, and then approved in the second reading on 28 July. (It only needs to be signed by the President to become effective. – SOE Weekly.)

In SOE Weekly's Issue 97, we reported that Ukraine promised the IMF to complete the corporate governance reform of GTSOU by the end of October 2023.

Under the commitment, Ukrainian authorities must transfer the GTSOU’s shares from the Main Gas Pipelines of Ukraine (MGU) to the Ministry of Energy and adopt a new GTSOU charter.

The charter must be developed with Ukraine’s energy regulator and the Energy Community Secretariat and approved by the end of July 2023 (a structural benchmark, carried over from the original IMF Memorandum, which we discussed in Issue 82SOE Weekly).

After Draft Law No. 9311-1-d becomes effective, GTSOU’s charter must be amended to pave the way for a competitive, transparent, and merit-based nomination procedure for the new supervisory board that should be appointed by the end of October 2023 (a new structural benchmark, added after the first review of the IMF programme – SOE Weekly), IMF said.

2. The Cabinet takes a step towards a competitive selection of GTSOU’s supervisory board. On July 25, 2023, the Cabinet of Ministers decided to include Gas Transmission System Operator of Ukraine (GTSOU) in the list of companies where independent members of supervisory boards are selected via a competitive selection supported by professional head-hunters.

According to the Ministry of Economy, supervisory board members would be appointed through the SOE Nomination Committee with the involvement of international partners.

In general, SOEs cannot run competitive selections during martial law, but a number of important state-owned companies are exempt from this restriction.

(As we reported in Issue 92, GTSOU announced a Prozorro tender to procure the services of an executive search company to find candidates for independent supervisory board members for GTSOU, with an expected value of UAH 2 million (around €50,000), excluding VAT.

According to Prozorro, the bidding took place on 30 June. Two companies competed, and Executive Search Ukraine LLC, a company operating under the Amrop brand, won the tender with a bid of UAH 1,740,000, or around €42,000. – SOE Weekly.)

Wheat prices rise sharply after Russian attacks on Ukrainian port infrastructure
Wheat and corn prices have risen sharply after a barrage of Russian attacks on Ukrainian ports and grain infrastructure that have followed the collapse of the Black Sea Grain Initiative.

Energy sector

1. Naftogaz takes over another few of Firtash’s gas distribution companies. On July 18, 2023, Gas Distribution Networks of Ukraine LLC (Gazmerezhi brand), a Naftogaz subsidiary, reported that Sumygaz, Vinnytsiagaz, and Dnipropetrovskgaz joined Naftogaz Group.

These gas distribution companies were part of fugitive oligarch Dmytro Firtash’s Regional Gas Company (RGC) Group.

The Naftogaz subsidiary, Chornomornaftogaz, manages the assets of Sumygaz, Vinnytsiagaz, and Dnipropetrovskgaz. Gas Distribution Networks of Ukraine LLC coordinates the newly joined teams, optimises their work, drafts their development strategy and gets them proper licensing, the company said.

On June 29, 2023, Gas Distribution Networks of Ukraine LLC announced the acquisition of three more of Firtash’s regional gas companies: Kyivoblgaz, Zhytomyrgaz, and Lvivgaz. Chornomornaftogaz was also appointed as manager of these companies’ shares.

In SOE Weekly's Issue 71, we reported that Naftogaz changed the management of regional gas distribution companies Kharkivgaz and Dniprogaz on Jan. 16, 2023. Both were also part of Firtash’s RGC Group.

RGC accused Naftogaz of an “attempted raid”. In response, Naftogaz referred to the Cabinet of Ministers’ Decision No. 429-r dated May 28, 2022, which transferred the corporate rights of about 20 regional gas distribution companies to its subsidiary Chornomornaftogaz.

Earlier in May 2022, Kyiv’s Pechersk Court seized shares of Firtash’s regional gas companies because they evaded payment for the use of gas networks. (After that, the Cabinet transferred these rights to Chornomornaftogaz.) RGC then filed lawsuits to overturn the Pechersk Court’s decision. This delayed the process of changing management significantly.

In September 2022, Naftogaz established a new subsidiary named Gas Distribution Networks of Ukraine LLC to consolidate the regional gas distribution companies.

2. Ukrenergo to receive $240 million in grant aid from international partners. On 18 July 2023, Ukrenergo, the Ministry of Energy, and the Ministry of Finance, signed two agreements with the World Bank (IBRD), Ukrenergo CEO Volodymyr Kudrytskyi reported.

Under the first agreement, German government’s grants (provided to Ukrenergo via the IBRD) would be used to purchase and install STATCOM, special devices that improve the stable operation of the Ukrainian power system, Kudrytskyi said.

The second agreement provides aid to Ukrenergo to buy high-voltage equipment like autotransformers to replace parts that had been damaged by Russian missiles and drones, the company’s CEO added.

In SOE Weekly's Issue 94, we reported that the European Bank for Reconstruction and Development (EBRD) would support the Ukrainian energy sector with a €600 million aid package in 2023. The funds would go to Ukrenergo, Naftogaz, and Ukrhydroenergo.


1. The HACC extends the pre-trial investigation in the Pyvovarsky case for another two months. On 13 July 2023, the High Anti-Corruption Court (HACC) extended the pre-trial investigation of former Infrastructure Minister Andriy Pyvovarsky for another two months. Pyvovarsky has been charged with abuse of power.

According to the court’s ruling, the ex-minister must appear at the investigator, prosecutor or court’s request; notify the investigator or prosecutor of any travel or changes of residence; and refrain from communicating with other people specified in the case.

As we reported in SOE Weekly (Issue 85), the National Anti-Corruption Bureau of Ukraine (NABU) and the Specialised Anti-Corruption Prosecutor’s Office (SAPO) served Pyvovarsky with a notice of suspicion for allegedly causing over $30 million in damage to the state in 2015 by allowing private companies to charge half the harbour dues at Pivdenny seaport.

Pyvovarsky then argued that the charges were unfounded, because according to the Law “On Sea Ports of Ukraine,” proceeds from tonnage tax are distributed between the user of the port’s harbour (in this case, USPA) and the owner of the operational harbour (in this case, private company TIS).

After he posted bail of Hr 10 million, Pyvovarsky was handed an amended suspicion accusing him of causing $43.6 million in damage. The pre-trial investigation was later extended until Aug. 22, 2023. (See Issue 88 for detail.)

For a detailed overview of the Pyvovarsky case, see SOE Weekly’s Issues 76, 77, 79, 80, 82, 83, 85, and 88.

2. The Cabinet to allocate more than €38 million loan to buy rails for Ukrzaliznytsia. On July 25, 2023, the Cabinet’s representative in the Verkhovna Rada Taras Мelnychuk reported that the Cabinet of Ministers approved a €37.6 million loan from the French government to purchase rails for Ukrzaliznytsia.

(The resolution was not publicly available at the time this report was written. – SOE Weekly.)

The funds are received under the Framework Agreement between the governments of Ukraine and France under a special fund of the state budget for the implementation of the rail supply project for Ukrzaliznytsia.

Ukraine’s south threatened with long-term economic, agricultural decline after Kakhovka dam destruction
Ukraine’s agricultural heartland in the south of the country is threatened with long-term decline following the destruction of the Kakhovka Hydroelectric Power Plant and dam, Ukrainian officials fear. The destruction of the dam in the early hours of June 6, and the start of the draining of the Kakh…

Other sectors

1. NABU and SAPO expose a Hr 450 million international corruption scheme at Polygraph Combine Ukraina. On July 21, 2023, the National Anti-Corruption Bureau of Ukraine (NABU) and the Specialised Anti-Corruption Prosecutor’s Office (SAPO) reported that they exposed a massive fund misappropriation scheme at the state enterprise Polygraph Combine Ukraina. Over Hr 450 million has been stolen.

(Polygraph Combine Ukraina specialises in producing passports, ID cards, and other secure documents and printing products. – SOE Weekly.)

Five suspects were charged, including the former CEO, a former department head, and a private individual. Additionally, documents were sent to Estonia to notify two of its citizens (the CEO and manager of a controlled company) of suspicion, NABU said.

The CEO of Polygraph in 2013 allegedly bought an Estonian company through proxies and insisted on using it as an intermediary to buy materials to make passports, ID cards, and driver’s licenses.

The intermediary company bought the materials directly from manufacturers and then resold them to the state enterprise at a price inflated by 4-6 times. During 2013-2016, the criminal group embezzled approximately half a billion hryvnias through this scheme, NABU claimed.

NABU and SAPO did not name the charged former CEO, but according to the media, Maksym Stepanov was in charge of Polygraph at the time. He later served as head of the Odesa Regional State Administration and Minister of Healthcare.

NABU further alleged that the charged CEO concealed the sale of 45% of his shares in a non-functioning company (with an actual market value of around $100,000) to another company under his control for $1.35 million. He then declared this money officially. Part of this money, $150,000, was transferred directly to the accounts of the CEO’s close relatives.

(That is, NABU suggests that Stepanov laundered $1.35 million in this manner. – SOE Weekly.)

The company under the former CEO’s control registered patents for some of the protective elements used in Ukrainian passports. This way, every citizen receiving documents not only paid inflated prices but also “donated” to the official for his “intellectual contribution”, NABU said.

At the beginning of 2022, the government supported NABU’s initiative and changed technical requirements and images of protective elements in Ukrainian documents, getting rid of elements that had been patented by the suspect.

Evidence from Estonia supports the existence of a criminal scheme and money laundering. As part of the joint investigation, Estonian law enforcement authorities held four individuals accountable for money laundering from Polygraph.

French law enforcement is also working on verifying its citizens’ involvement in this crime.

Stepanov confirmed on his Facebook page that he received his notice of suspicion. He wrote that he was currently away on a business trip but was working with his lawyer on this matter and was studying the case file in detail.

Stepanov referred to NABU’s accusations as “nonsense” and promised to provide more detailed comments in a few days.


1. The Cabinet approves technical changes to launch large-scale privatization through Prozorro.Sale. On July 18, 2023, the Cabinet of Ministers approved a resolution establishing the procedure for authorising and organising electronic auctions to privatize large-scale assets.

According to the Ministry of Economy, the amendments approved by the government define technical requirements for electronic marketplaces that will be eligible to work with large-scale privatization. As of today, more than 40 such marketplaces have been accredited in the Prozorro.Sale system, but only those that meet these requirements will be able to be involved in large-scale privatization.

The changes adopted by the Cabinet should also improve online bidding for small-scale privatization to reduce the number of dishonest bidders who disrupt auctions for the sale of state property. An e-auction participant who offers the second highest bid will not be allowed to refuse to purchase the asset in case the winner refuses to do so.

If the first- or second-place bidders refuse to pay for the asset in full, they will have to pay almost 40% (i.e., 20% each – SOE Weekly) of the starting price into the state budget.

According to Deputy Economy Minister Oleksii Sobolev, the government plans to launch a large-scale privatization process soon, “which should significantly increase state budget revenues.”

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 in assets.

In Issue 90, we reported that the Verkhovna Rada unblocked the large-scale privatization.

In Issue 93, we reported that the SPFU’s large-scale privatization plans include three state-owned companies: United Mining and Chemical Company (UMCC), Odesa Portside Plant (OPZ), and Centrenergo.

2. The SPFU will be able to form separate pools of assets for privatization. On July 14, 2023, the Cabinet of Ministers approved a resolution that gave the State Property Fund of Ukraine (SPFU) the right to pool state assets to privatize them as a single lot.

According to the SPFU, the main goal of the new mechanism is to increase the interest of businesses in investing in state assets. Pools attract more attention from investors who are interested in implementing large-scale projects and can make large-scale investments. Currently, the SPFU is selling one object at a time.

Pools of privatization objects would be formed from enterprises operating in the same sector. The products of one of them can be used as raw materials for another, the SPFU explained. The new mechanism can be used for both small and large-scale privatization.

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

1. Sense Bank nationalized, new executive and supervisory boards appointed. On July 21, 2023, the National Bank of Ukraine (NBU) announced its decision to pull off the market the last major Russian bank in Ukraine, Sense Bank (which had operated under the name Alfa-Bank until Dec. 1, 2022).

The bank’s ultimate beneficial owners were sanctioned Russian oligarchs Mikhail Fridman, Petr Aven, and Andrey Kosogov.

The NBU’s Executive Board also appealed to the Cabinet of Ministers to nationalise Sense Bank. Based on a decision of the NBU Board, the Deposit Guarantee Fund (DGF) introduced a temporary administration on 21 July.

NBU Governor Andriy Pyshnyi also said that the state’s share (by assets – SOE Weekly) in the banking system is growing by 3.3% to 56% as a result of this nationalisation.

He added that the NBU is prepared for any developments related to potential legal challenges from Sense Bank’s former shareholders against the decision to nationalise the bank.

On July 21, 2023, the Cabinet of Ministers decided to purchase all the shares of Sense Bank from the DGF for Hr 1.

On July 22, 2023, the Ministry of Finance and DGF signed a sale and purchase agreement for 100% of Sense Bank, under which the bank became state-owned.

The DGF appointed the supervisory and executive boards based on proposals from the Ministry of Finance of Ukraine, with the NBU’s approval.

According to the Ministry of Finance and NBU, Dmytro Kuzmin (former CEO of Universal Bank, former representative of PrivatBank in the supervisory board of PrivatBank Latvia – SOE Weekly] was appointed as Sense Bank’s new CEO.

On July 23, the DGF terminated the interim administration at the bank. On July 24, Sense Bank announced the start of work of the new executive and supervisory boards.

Şevki Acuner was appointed as the chair of the supervisory board.

(Acuner is a former EBRD Director in Ukraine and a former chairman of the supervisory boards of Ukrzaliznytsia and Ukrenergo.

Acuner has also been the chair of Oschadbank’s supervisory board since June 2019, but on Oct. 1, 2019, the Ministry of Finance terminated the powers of several board members, including Acuner, as the NBU did not approve these candidates. The NBU cited a conflict of interest and improper performance of duties among the reasons for refusing to approve Aсuner’s candidacy.

According to the NBU, Acuner not only chaired the supervisory board of Oschadbank but also the supervisory board of two large SOEs, Ukrenergo and Ukrzaliznytsia, which are the bank’s clients. As the board chair of these companies and having a mandate to organise their work, he had leverage over the decision-making processes in these companies, the NBU claimed back then.

The NBU also alleged that Aсuner did not properly perform his duties as the board chair of Oschadbank when the board extended the powers of the bank’s then CEO, Andriy Pyshnyi (now the NBU Governor), in violation of the requirements for competitive selection.

Acuner and other disqualified members said in 2019 that they were “shocked” by the regulator’s decision. They also suggested that the real reason for their disqualification was the board’s decision to extend the contract with Pyshnyi.

At the end of 2019, Acuner sued the NBU at the Kyiv District Administrative Court. He considered the decision to terminate his powers at Oschadbank’s supervisory board to be “biased, illegal, and taken by the regulator in excess of its powers”.

In February 2020, the court upheld his claim and cancelled the NBU’s decision. In July 2020, the NBU won the appeal. In May 2021, the Supreme Court issued a cassation decision in favor of Aсuner. Despite this, he was no longer a member of the bank’s supervisory board. – SOE Weekly.)

The supervisory board also includes:

  • Andrii Pronchenko – independent member; former managing partner of PwC Legal Ukraine, chief legal officer of DNA Payments Group;
  • Rostyslav Dyuk – independent member; chair of the board of the Ukrainian Association of Fintech and Innovative Companies (his former deputy Inna Tyutyun joined the bank’s executive board);
  • Andrii Svystun – deputy chair, state representative; former member of Ukrgasbank’s supervisory board; and
  • Vladyslav Vlasiuk – state representative; former deputy chief at Patrol Police of Ukraine and former chief of staff at National Police of Ukraine; former Director of the Directorate for Human Rights, Access to Justice and Legal Awareness at the Ministry of Justice; current adviser to the President’s Office and the secretary of the International Working Group on Sanctions against Russia (also known as the Yermak-McFaul Group).

The executive board, except Kuzmin, includes:

  • Olena Zubchenko – deputy chair of the board; former head of Financial Policy Department at the Ministry of Finance;
  • Oleksiy Shklyaruk – member of the board, chief risk officer; former chief risk officer at Agroprosperis Bank and former head of SME Risk Division at Credit Agricole;
  • Inna Tyutyun – member of the board; deputy chair of the board of the Ukrainian Association of Fintech and Innovation Companies, former deputy chair of the executive board at Ukrgasbank; and
  • Andriy Sokolov – member of the board; former deputy head of Corporate Business Department at Bank Pivdenny.

In SOE Weekly's Issue 91, we reported that the Verkhovna Rada adopted Draft Law No. 9107-1, which allowed the NBU to nationalise Sense Bank.

In Issue 94, we reported that the law on nationalization of Sense Bank came into force.

As we also wrote in Issue 94, ABH Holdings S.A. (ABHH), the nominal owner of Sense Bank’s shares, said that it was seriously concerned that the NBU would nationalise Sense Bank and only give a nominal amount to ABHH in compensation. ABHH said that it would complain to an international court in that case.

Support independent journalism in Ukraine. Join us in this fight.
Freedom can be costly. Both Ukraine and its journalists are paying a high price for their independence. Support independent journalism in its darkest hour. Support us for as little as $1, and it only takes a minute.
visa masterCard americanExpress

News Feed

5:59 PM

Russia claims to have captured Novomykhailivka, Ukraine denies.

The situation in Novomykhailivka in Donetsk Oblast is "tense but under control," Yaroslav Chepurnyi, spokesperson of the 79th Separate Airborne Assault Brigade told the Kyiv Independent on April 22, after Russia claimed to have captured the village earlier in the day.
Ukraine Daily
News from Ukraine in your inbox
Ukraine news
Please, enter correct email address

Editors' Picks

Enter your email to subscribe
Please, enter correct email address
* indicates required
* indicates required
* indicates required
* indicates required
* indicates required


* indicates required
* indicates required


* indicates required
* indicates required
Successfuly subscribed
Thank you for signing up for this newsletter. We’ve sent you a confirmation email.