Naftogaz supervisory board head quits as Ukraine's energy reforms teeter

Naftogaz supervisory board head quits as Ukraine's energy reforms teeter
Yulia Kovaliv, head of the supervisory board at the Ukrainian state gas company, resigned on April 14. / Photo by Naftogaz
By bne IntelliNews April 14, 2017

The head of the supervisory board of Ukrainian state gas giant Naftogaz, Yulia Kovaliv, has submitted her resignation letter before her powers are terminated on April 17, the company said in a statement published on April 14.

The move follows the receipt on April 6 by the government of a letter from four of the independent board members – Paul Warwick, Markus Richards, Charles Proctor and Yulia Kovaliv – expressing deep concern over the situation in the company. Without “material progress” it would be “inappropriate and untenable” for them to continue as supervisory members, they said.

Among other points, the independent board members demand the “resolution of issues” related to the new electronic system for the declaration of wealth and assets of Ukrainian officials. Recent changes to legislation now require the independent board members to also file e-declarations through the system that was introduced last year to help prevent corruption. In the letter, the four members said they believe it to be  “impossible for foreigners to complete necessary actions with such inaction leading to potential criminal claims against them”.

On April 7, Sir Suma Chakrabarti, the chief of the European Bank for Reconstruction and Development (EBRD), warned the Ukrainian leadership of negative effects from the threatened resignation of the independent board members of Naftogaz.

This move might not only “severely damage” the company at a time when its transformation is finally beginning to take hold, but could also “shatter the international confidence in your government’s commitment” to reform and restructuring of Naftogaz and other state-owned enterprises in Ukraine, said the letter published by bne IntelliNews.

On April 14, Kovaliv noted in a statement that the international partners have acknowledged the reform of Naftogaz and Ukraine’s gas market as one of the most successful in the country’s past three years. She also points out “some remarkable results” of the successful reform, such as lower deficit of public funds, the removal of unnecessary intermediaries from the market and the elimination of the major corruption source in the gas sector.

However, Kovaliv without elaborating cited a “clash of opinions on further development of Naftogaz and lack of consensus regarding the implementation of the corporate governance reform according to the initially envisaged plan”.

Kovaliv will now focus on her job at the National Investment Council Office, the company added in the statement.

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