Kiev Recruits UK ex-Regulator to Board

Ukraine's cabinet of ministers has appointed six independent directors to the board of its state monopoly Naftogaz Ukrainy, including a former British energy regulator Clare Spottiswoode.

As head of Ofgas (now Ofgem), Spottiswoode introduced competition and the third-party carrier model into the British gas market in the mid-1990s, imposing drastic price controls on British Gas' transmission business.

Also on the board are Amos Hochstein, who serves as special envoy and coordinator for international energy at the US State Dept and leads its Bureau of Energy Resources; Bruno Lescoeur, a former EDF and Edison director; and Steve Haysom, a Canadian.

Local appointees are Oleksandr Hrytsenko, Serhiy Popyk and former energy and coal minister Volodymyr Demchyshyn – the only member who has served on the board since its formation in April this year.

“I very much welcome this decision of the government and would like to thank everybody who made this progress possible. We are excited by the strength of the new board and look forward to our work together. Naftogaz requires a professional and fully empowered supervisory board to continue the group’s transformation successfully,” Naftogaz CEO Andriy Kobolev said.

He said the appointment of the supervisory board members is "one of a number of urgent steps to achieve a material progress in the reform of Naftogaz and Ukraine’s gas market. It is crucial that the implementation of the corporate governance action plan is complete, with a corresponding handover of authority from the government to the corporate bodies. The approval of the group’s development strategy by the government as well as the depoliticising of gas prices are also important pre-requisites for this progress."

The company is planning to unbundle its transport from its supply business, and has already adopted European Union-compliant gas transmission standards of performance. However the company says it cannot unbundle until the ship-or-pay contract dispute with Gazprom is settled. That decision, by the Stockholm arbitration court, is expected now at the end of February 2018.

The appointment of the supervisory board was an important step in the implementation of the corporate governance action plan, aimed at bringing corporate governance system in Naftogaz in line with the recommendations of OECD for state-owned enterprises. The corporate governance reform is a commitment of Ukraine’s government and Naftogaz under the $300mn credit facility provided by the European Bank for Reconstruction and Development (EBRD) and guaranteed by the state of Ukraine. But the four independent members all left earlier this year, the last two quitting late September.