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Ukraine’s cabinet of ministers staged a surprise management reshuffle of national gas giant Naftohaz Ukrainy following a meeting in Kiev on Wednesday evening.
The Cabinet temporarily sacked the independent members of Naftohaz’s advisory board for two days to assume operational control of the company and ordered the sacking of President Andrey Kobolev.
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Kobolev’s replacement is Yuri Vitrenko, Acting Minister of Energy. Kobolev was appointed to reform Naftohaz and the country’s gas market in 2014 and quickly integrated his former colleague Vitrenko.
However, Vitrenko left the company in July last year following alleged disagreements with Kobolev over further market reform in the country’s gas sector.
Stability issues
The apparent lack of consensus at the Naftohaz summit could undermine the Ukrainian government’s efforts to secure billions of dollars in new funding from the International Monetary Fund, which said reform to expand market-based gas pricing mechanisms is expected to continue despite the resulting potential price shocks. .
In addition, Naftohaz remains a party to the five-year gas transit deal with Russian gas giant Gazprom, with industry analysts in Kiev warning that any further instability in Naftohaz will be picked up by the Kremlin as a reason to halt gas flows. Russian gas to Europe through Ukraine. .
Naftohaz said in a statement that the cabinet decision is “legal manipulation” because, by law, only an independent advisory board is allowed to appoint or remove the head of the company.
Legislation ignored
The country’s legislation had already been amended to prevent any direct involvement of government officials in the operations of state-owned enterprises to avoid potential conflicts of interest, as independent advisory boards were created to review and verify appointments and guidelines. government.
Meanwhile, Kobolev wrote on his personal social media page that he only learned of his dismissal through “media reports.”
The Cabinet argued that it had to urgently terminate Kobolev’s employment contract after Naftohaz reported a net loss of 19 billion hryvna ($ 680 million) for last year against a net profit of 2, 6 billion hryvna in 2019.
However, Naftohaz said the loss came as the company set aside a reserve of over 23 billion hryvna to reflect late payments from gas traders and customers.
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