Naftogaz Probes Ethics of Gas Trades

The supervisory board of Ukraine state monopoly Naftogaz has initiated an investigation into sales of gas to  a major private company ERU Trading in Q4 2018. It is checking that Andrei Favorov, the head of the group’s integrated gas business, had acted properly.

Naftogaz said March 20 that Favorov had sold his shares in ERU Trading by that point, but that the trades were below the market value.

The company’s executive director Yuriy Vitrenko earlier submitted a request to the company’s compliance service and the ethics and unbundling committee of the supervisory board. The internal investigation concluded that Favorov had no conflict of interest as he had sold his share in ERU Trading before assuming office.

Naftogaz has now engaged an independent forensic auditor. "The investigators are reviewing the issue of the alleged conflict of interest and are evaluating specific transactions in question for any deviations from standard market practices," Naftogaz said.

“Naftogaz has implemented a system of internal controls based on OECD principles of corporate governance and pursues zero tolerance to corruption. The supervisory board has taken into account the view of the compliance service and will draw final conclusions based on the results of the independent forensic audit. The conclusions will be communicated to the public in a company’s statement,” said Bruno Lescoeur, the chairperson of the audit and risks committee of the supervisory board and former CEO of French-owned Edison.

Ukraine's state entities are encouraged to make use of the online tendering platform, Prozorro (Ukr. for 'transparency'), which provides an audit trail of who bid or offered how much for what goods and services. It was intended to speed up state procurement and stamp out corruption. Charges of corruption have become a problem for the incumbent, Piotr Poroshenko, in this month's presidential elections.

Naftogaz passes on price cuts

Naftogaz took advantage of the market situation and bought enough gas in March to meet the demand of some of the group’s household customers and all industrial consumers and is passing on the savings, it said March 19.

Industrial users, who prepay for gas, will pay hryvnia 5990/’000 m³ excluding VAT and delivery. 

This means that Naftogaz’ supply arm can lower the price for April by 2%, meaning the delivered price for these consumers will be hryvnia 8,380/’000 m³, instead of hryvnia 8,550/’000 m³ including VAT and delivery.