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September 22, 2017 www.intellinews.com I Page 4
members of supervisory boards of state-owned companies. "It is impossible for foreigners to complete necessary actions with such inac- tion leading to potential criminal claims against us," the independent board members wrote.
The European Bank for Reconstruction and De- velopment (EBRD), Naftogaz's main international partner and donor, has warned Ukraine’s leader- ship that the possible collapse of the country’s energy sector reform could shatter international confidence in the current government in Kyiv.
Specifically, Sir Suma Chakrabarti, the president of the EBRD, warned the Ukrainian leadership of negative effects from the threatened resignation of the independent board members of Naftogaz.
This move might not only "severely dam-
age" the company at a time when its trans- formation is finally beginning to take hold,
but could also "shatter the international confidence in your government’s commit- ment" to reform and restructure Naftogaz and other state-owned enterprises in Ukraine, said the letter published by bne IntelliNews.
Sir Suma was in Kyiv for a conference in ear- ly September and followed up with award- ing Kyiv poor marks in its progress report, saying, “Ukraine just does not have the luxury of further delaying the reforms".
The EBRD’s unusually direct criticism appar- ently has had no effect on the government,
as Charles Proctor, an independent member
of the supervisory board, said when he re- signed from his post, citing lack of the govern- ment's support required to deliver corporate governance reform. Proctor was the second supervisory board member to resign in the last six months, following the resignation of the
head of Naftogaz’s supervisory board Yulia Ko- valiv, who represented the state of Ukraine.
Among the major Naftogaz and EBRD demands to the Ukrainian government, was an approval of the company’s financial plan for 2017 and performance indicators for Naftogaz's supervi- sory board. The monopoly's financial plan pre- pared according to international standards was agreed by the company’s board and submitted to the Ukrainian cabinet for approval in April.
According to Ukrainian media, the Ukrain-
ian government greenlighted the draft finan- cial plan for Naftogaz in July. However, a Kyiv source with knowledge of the matter told bne IntelliNews that the government failed to im- plement all necessary procedures necessary for approval and further implementation of the above mentioned documents, which also trig- gered negative reactions from the EBRD.
The current crisis is also undermining possible further cooperation between the Ukrainian gov- ernment, Naftogaz and the EBRD over multi- million funding to Kyiv for natural gas purchases. "The latest support programme included a $300mn loan facility provided by the EBRD for Ukraine’s gas purchases from European sup- pliers. Currently, Naftogaz sent signals that
it wants to extend this cooperation. They in- tended to negotiate a new $1bn loan for gas purchases," the source told bne IntelliNews.
Recently, the government in Kyiv also re- fused to increase the price of gas for the coun- try's households from October 2017 by 18.84% or UAH931 per 1,000 cubic metres (cm) to UAH 5,873 without VAT. The hike was in line with demands of the International Monetary Fund (IMF), and was necessary for the im- provement of Naftogaz's financial results.