Page 65 - UKRRptJul21

9.2 Major corporate news 9.2.1 Oil & gas corporate news
Clare Spottiswood, head of the Naftogaz supervisory board, has called a board meeting to consider the dismissal of CEO Yuriy Vitrenko, Interfax-Ukraine reported on June 16 citing the initiator. The initiative is a consequence of the June 15 resolution from the National Agency on Corruption Prevention (NACP) against Vitrenko and Spottiswood considers that it is in the interest of Naftogaz, Interfax-Ukraine reported. According to Spottiswood, PM Denys Shmyhal is obliged to decide on Vitrenko’s dismissal in ten days.
Yuriy Vitrenko is still CEO of Naftogaz. The National Agency on Corruption Prevention is appealing a ruling on June 18 that suspended the Agency’s own suspension order. With Prime Minister Shmygal backing Vitrenko, it appears that the three government members of the Naftogaz Supervisory Board are blocking an attempt to hold a meeting and vote him out.
More than two-thirds of 7mn tons of diesel fuel that the country consumes yearly is sourced from Belarus and Russia. This left Ukraine scrambling to compensate for a monthly shortfall of about 170,000 tons of diesel fuel, then-Economy Minister Ihor Petrashko told the Kyiv Post. Five trading sources told Reuters the deficit in May could reach 270,000 tons. Besides diesel, Ukraine is heavily reliant on Russia’s coking coal, importing 65 percent last year in volume terms; Russia also accounted 92 percent of total imports of anthracite coal, which is used to produce electricity at thermal power plants.
In August 2020, the government canceled Naftogaz’s public service obligations to sell gas at subsidized rates and opened the gas market in Ukraine. From now on, Ukrainian can choose their gas suppliers, another step to a free gas market in the country. However, exiledbillionaire oligarch Dmytro Firtash dominates the retail end of the natural gas trade through regional distribution companies which keep pumping gas from the pipeline without paying for it. Since 2020, these companies already owe a staggering $326mn debt to the state.
9.2.3 Transport corporate news
Ukrainian Railways (Ukrzaliznytsia) losses extended into the first quarter of this year, suffering a $62mn loss for Q1, the railroad reported in June. Passenger traffic peaked at 4.5mn, which was only 63% the level of Q1 last year. Cargo rates, especially for iron, are kept below comparative rates in Poland. Although UZ belongs to the state, it paid about $208mn in land taxes and fees in Q1. Before the pandemic, UZ recorded $109mn in net profit. The collapse in passenger traffic pushed the railroad into a $435mn net loss last year. The company expects to return to a more profitable outcome later this year.
The nation’s largest employer, Ukrainian Railways (Ukrzaliznytsia) cut its staff by 3% last year, to 243,387. The company pays an average monthly wage of $409 – 18% below the national average. UZ’s level of debt is $1.5bn
65 UKRAINE Country Report July 2021 www.intellinews.com