SE NPC Ukrenergo officially states about the intentional obstruction of the company’s corporatisation and the process of introduction of the electricity market in the state by the Commission for reorganisation of SE NPC Ukrenergo (hereinafter referred to as the Commission) of the Ministry of Energy and Coal Industry of Ukraine (hereinafter referred to as the Ministry).
Thus, the Commission failed to prepare the property assessment act and failed to transfer it for further approval to the Ministry and the State Property Fund of Ukraine within the established period by 12 October 2018. The Commission’s decision specifies a new date for inventory on 31 October. This actually means the restart of the corporatisation process. On this basis, the decision was approved to transfer the management functions with respect to SE NPC Ukrenergo to the Commission and to delegate the powers of managing the company’s current activities to the Chair of the Commission, namely Deputy Minister Mykhailo Blyzniuk.
Responsibly, we state that SE NPC Ukrenergo complied with all legislative and methodological requirements concerning corporatisation of the enterprise. In particular, an independent appraiser performed a complete inventory and assessment of the company’s property, the SPFU provided a positive review of the assessment, an audit of the transfer balance was performed. Within the terms specified by the law, all information was submitted to the Commission for consideration and approval together with suggestions for discussion and additional information. Ukrenergo did not receive any significant comments, except for the requests for additional information, which were answered within a short time, either from the members or from the Chair of the Commission.
Together with the provision of all property assessment documents confirmed by the audit, Ukrenergo conducted consultations with specialists of the State Property Fund of Ukraine, who confirmed the correctness of such actions.
In view of the breach of terms for approval of property assessment documents and delays in approving key documents in the course of the corporatisation process, Ukrenergo has doubts about the impartiality of the Commission for reorganisation. Ukrenergo believes that the transition of the management of the current activities to the Commission’s Chair Mykhailo Blyzniuk is groundless and unreasonable.
Ukrenergo appeals to the Ministry of Energy and Coal Industry to intervene in the situation and ensure the stable operation of the company, which is one of the examples of an effective corporate governance reform in the sector of state enterprises. This was stated in the report “Anti-corruption reforms in Ukraine: prevention and prosecution of corruption in state enterprises” prepared by the Organisation for Economic Cooperation and Development (OECD) and issued in June 2018.
A major concern is the possible reaction of existing and potential Ukrenergo investors. Starting from 2015 and up to the present day, the company invested more than UAH 13 billion of its own and invested funds in modernisation of the grid in accordance with the ENTSO-E standards. In 2019-2021, the amount of investments is expected at the level of at least UAH 20 billion.
Ukrenergo’s partners are the world’s leading financial institutions (EBRD, EIB, IBRD, KfW, etc.) and operators of the European electricity market. Any instability or non-fulfilment of the state’s obligations to the European investment community can become a significant barrier to implementing reforms of the electricity sector in line with the Energy Strategy of Ukraine and negatively affect the reputation of the energy sector and the state as a whole.
In addition, members of the Supervisory Board of Ukrenergo have not been appointed as of today, while the terms and conditions of their contracts have not been approved yet, despite the fact that the appropriate decision of the Cabinet of Ministers of Ukraine was adopted on 3 October this year.
It should also be noted that the commencement of the full-fledged operation of the Supervisory Board and corporatisation of Ukrenergo are among the key conditions for Ukraine to receive macro-financial assistance from the EU.