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Thursday, April 29, 2021
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Editor’s Note:  There is bad blood behind the successful coup d’etat at Naftogaz. Today, Yuriy Vitrenko comes back in triumph to run a company that one year ago pushed him into exile in Berlin. But, after the dust settles, historians probably will be kind to Kobolyev’s seven year reign at Ukraine’s state oil and gas company. By cutting off major corruption streams, he converted a drain on the treasury into the nation’s largest taxpayer. Last year, it was again a money loser. But, in a taste of things to come, it was the first year that Naftogaz accounts did not reflect revenues from Russian gas shipments. From an investor point of view, a reformer has replaced a reformer. Ideally, Vitrenko will crack open the monopoly and allow foreign companies to jump start Ukraine’s oil and gas production. Historians – those annoying people again – remind us that well into the 1970s, Ukraine SSR was the top oil and gas producing republic of the 15 Soviet republics. Back to the future, anyone?  With Best Regards Jim Brooke

Thursday, April 29, 2021
Officially, there have been 2 million cases of coronavirus in Ukraine over the last year.

However, in a UNICEF survey of 2,027 Ukrainian adults interviewed by cell phone in April, 22% of respondents said they had fallen sick with coronavirus. If this percentage is applied to Ukraine’s adult population of 30 million, it indicates that around 6 million Ukrainians have had coronavirus.

Thursday, April 29, 2021
The opening comes as Kyiv still records about 1,000 new coronavirus cases a day,

Mayor Klitschko reports. Among the reported cases, 40% are men and 60% are women. On a national scale, 9,590 new cases were reported yesterday, half the level of the peaks in early April.

Thursday, April 29, 2021
Kyiv lifts its strict lockdown Saturday,

opening the Metro to all riders, allowing indoor restaurant dining, and opening shopping centers, gyms and open-air markets. The opening comes in time for Orthodox Easter, which is celebrated on Sunday. In theory, Kyiv schools open Wednesday, but in reality most reopen on Tuesday May 11.

Thursday, April 29, 2021
In a different kind of complaint about a Ukrainian state company Supervisory Board,

Richard Deitz, President of London-based VR Capital Group, charges that the Ukrzaliznytsia board has failed to act decisively to negotiate a deal for debt obligations VR bought two years ago from Prominvestbank. Last week, Ukraine’s Supreme Court confirmed UZ’s obligation in four cases. Instead of settling the debt at a discount in 2019, UZ is running up interest and penalties, pushing the total owed over $100 million. “The amount keeps going up,” Deitz tells the UBN of the 14 cases. “The real issue is the failure of corporate government governance. The management board and the supervisory board did not do what they are supposed to do. The loser is the taxpayer in Ukraine.”

Thursday, April 29, 2021
Russia’s recent military buildup on Ukraine’s eastern border has re-focused Washington’s attention on the potential perils of the Nord Stream 2 Russia-Germany Baltic sea gas line,

 Diane Francis writes in a new Atlantic Council blog. Noting that Russia hopes to finish the 1,230 km project this summer, this veteran Ukraine watcher warns that commissioning “would also remove a major obstacle to future large-scale Russian military operations against Ukraine, potentially paving the way for a major escalation in the seven-year conflict between the two countries.”  She adds: “Once construction of the pipeline is finished, opponents fear Moscow will sabotage existing supply routes via Ukraine in order to force Germany to accept deliveries via Nord Stream 2.”

Thursday, April 29, 2021
PricewaterhouseCoopers was won the contract, which is valued close to $2 million to audit the Naftogaz Group’s financial statements for 2021 and 2022

, the state company has reported. The Cabinet of Ministers made the choice after reviewing results of a ProZorro competition. In addition to auditing the accounts of nearly 30 companies of the Group, PWC is review financial statements to support the issuance of Eurobonds.

Thursday, April 29, 2021
Naftogaz Group has cut its capital expenditures by 44.5% last year, to $54 million,

from $99 million. The biggest area, exploration and production, fell by 26%, to $39 million. Oil and gas production by Naftogaz, the nation’s largest producer, has been stagnant for the last several years.

Thursday, April 29, 2021
Kobolyev made no public comment yesterday about his dramatic fall.

 Vitrenko, his former deputy, said the CEO switch is a “logical” response to “inefficient management of Naftogaz Ukrainy.” “The state must be an active owner,” he said in an interview last night with Interfax Ukraine. “The Cabinet of Ministers has the right and obligation to respond to problems in the company…When you submit a financial plan and promise something, and, then, instead of the planned 11 billion UAH [$400 million] of profit, you receive 19 billion UAH {$685 million] of loss, it leads to the fact that your owner reacts.”

Thursday, April 29, 2021
“Dismissed. Reappointed. Andriy gone. $2bn cash reserves in company,”

one foreign member of the Supervisory Board emailed the UBN last night. “Prospect of developing serious new gas basin in Black Sea and others and were going to raise a bond issue next week – killed. As are longer term plans to transform Ukrainian gas reserves. What are they playing at? Perfect gift to Russians. Incomprehensible.”

Thursday, April 29, 2021
The dismissal of Kobolyev “is legal manipulation” and “demonstrates a return to practice manual management of state enterprises,”

reads a defiant statement posted by the company’s outgoing management on the Naftogaz Group Facebook page. The change at the top comes as Naftogaz was planning to issue a Eurobond. In this light, the manifesto, posted also on the company’s website declares: “This is clear signal to investors in securities of Ukrainian issuers: the working conditions of state enterprises of Ukraine are unpredictable and can be changed depending on political expediency.”

Thursday, April 29, 2021
Objections swirl over the legal maneuver used to bypass the Board and fire an executive who was one year into a four-year contract.

“This violates the charter of Naftogaz and violates our obligations, in particular, to the IMF to ensure the independence of Naftogaz,” said Inna Sovsun, a Rada Energy Committee member from the pro-Western Holos party, on the party’s website. A major demand of Ukraine’s pro-Western reformers is the installation of independent boards to control state companies.

Thursday, April 29, 2021
Defenders of Kobolyev noted that despite last year’s loss,

the company paid $5 billion in taxes – 17% of Ukraine’s tax receipts. Kobolyev leaves Naftogaz with $2 billion in cash on hand, a war chest to buy gas for the winter.

Thursday, April 29, 2021
This afternoon, the Rada is to meet to vote on the candidacy of Herman Halushchenko for the post of Energy Minister.

Supported by the Rada Energy Committee, Halushchenko, is Vice President of Energoatom, the state company that runs Ukraine’s four nuclear power plants. Nuclear supplies half of Ukraine’s electricity.

Thursday, April 29, 2021
To fire Kobolyev, the Cabinet of Ministers suspended the Supervisory Board for two days,

the body charged with personnel decisions. Next Wednesday, a search is to start for new Board members. Vitrenko, the former number two at Naftogaz, has won a 1-year contract. Since December, he has served as Acting Energy Minister.

Thursday, April 29, 2021
Yuriy Vitrenko starts work today as the new CEO of Naftogaz, reports the government portal.

Yesterday, the Cabinet of Ministers fired Andriy Kobolyev, a 20-year company veteran, who had held the CEO post since March 2014. Kobolyev is credited with cutting corruption, but criticized for failing to increase gas production. His downfall came after news of last year’s disastrous results – the loss of $685 million, the first loss since 2015.

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