Naftogaz CEO: Four Steps Needed to Bring Reforms Back on Track

Naftogaz CEO Andriy Kobolyev suggested four actions September 20 to remedy possible "disruption in the supervisory board's work may complicate the group's access to funding for gas purchase and investment projects as well as affect the company's positions in the international courts."

The previous day, supervisory board chairman Paul Warwick and fellow independent board member Marcus Richards resigned, citing "political meddling" by the government to frustrate promised reforms such as the unbundling of Naftogaz and introduction of new public service obligation rules. 

Naftogaz management supports such reforms, and Kobolyev thanked both men for "their contribution to the group's transformation."

Kobolyev suggested four urgent actions which could remedy the situation.

"All parties should catch up on implementing the Naftogaz Corporate Governance Action Plan, taking into account recommendations of the International Monetary Fund (IMF), European Bank for Reconstruction and Development (EBRD) and other Western partners. In particular, a material progress should be achieved in transferring of authority from the government to the company's governing bodies as stipulated by the plan," he said.

Another important step should be to depoliticise gas prices, he added, stating that Naftogaz is ready to support recent proposals of the IMF, the Energy Community secretariat and the World Bank, or the Anti-monopoly Committee of Ukraine to that end.

Kobolyev also urged for a transparent contest to fill the vacant positions in Naftogaz supervisory board should be held as soon as possible.

Another urgent task is the consideration and approval of the company's strategy by the government, to which end, Kobolyev said that both Naftogaz management and the supervisory board have already submitted a proposed strategy.

Four members of Naftogaz supervisory board have decided to resign in the past five months, including Yulia Kovaliv, the government's representative, in April, followed by independent director and former Dana Petroleum CEO Charles Proctor who more recently offered his resignation. According to the Naftogaz charter, its supervisory board has seven members, four of whom must comply with independence criteria and three represent the government.

Mark Smedley