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Gas billions for President's Office: Who stands behind Kobolev's dismissal from Naftogaz?

Author : Olena Holubeva

Source : 112 Ukraine

The Cabinet of Ministers literally stunned yesterday with a castling in the leadership of the country's largest state corporation, NJSC Naftogaz. In a matter of hours, the government dismissed Andriy Kobolev, appointing Yuriy Vitrenko instead
10:00, 30 April 2021

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Open source

Usually, such decisions cannot be hidden - information from sources leaked the day before to the press, anonymous telegram channels. But until recently, there was no information about Kobolev's dismissal. There was complete silence on the air, although, as MP Serhiy Nagornyak assured 112ua.tv yesterday, some of the deputies of the Committee on Energy and Housing and Utilities Services knew about the upcoming personnel reshuffle with the participation of Vitrenko and Kobolev before yesterday's meeting.

Vitrenko was about to be fired from the Ministry of Energy, appointing the minister Herman Halushchenko. Vitrenko, for whom the Verkhovna Rada failed twice to vote for the post of Deputy Prime Minister - Energy Minister, was already spoken of as a "downed pilot". Sources reported that Vitrenko was allegedly in conflict with Prime Minister Denis Shmygal. There were so many publications that Yuriy Vitrenko even had to make excuses on Facebook. And so yesterday's "downed pilot" landed today in the chair of the CEO of the largest gas company in Ukraine.

Most of the experts and politicians agree that Vitrenko's unexpected career victory was ensured by the patronage of the head of the President's Office, Andriy Yermak, who had been digging under Kobolev for a long time. Yermak promoted Vitrenko to the post of Deputy Prime Minister for Energy. If the appointment had taken place, Naftogaz, as well as other key companies in the sector, would have been subordinate to Vitrenko.

Related: Decision on certification new operator of Ukrainian gas transmission system by European Energy Community is expected on December 26, - Kobolev

Conflicting information was received on the public plane about Kobolev's relationship with the president's team. Most experts and politicians speak of Kobolev as an independent figure (independent in Ukrainian realities - independent of the OP, no more) and a top manager who did not make concessions to the presidential messengers. Supposedly, relying on the strong support of the West, he was not "tame" and was in no hurry to satisfy the wishes of the President's Office, including on the issue of gas prices for the population, which is sensitive to Zelensky's rating. Kobolyev also maintained an equidistant relationship with the most influential oligarchs. At the same time, the influence of Kobolev and the NAK in the country was enormous. The authorities made unprecedented concessions: the most promising areas for gas production were transferred to Naftogaz without a tender: the Black Sea shelf, the Yuzivska area. Kobolyev retained the right to dispose of Ukrgazvydobuvannya's cheap gas.

Our interlocutors say that President Zelensky hesitated to the last point about the castling in Naftogaz, which indicates Kobolev's strong positions. In an interview with Interfax-Ukraine, Vitrenko said that "with the current appointment, everything was decided in a matter of hours." He clarified that the offer to head Naftogaz came from President Vladimir Zelensky and Prime Minister Denys Shmygal. “It was not my initiative. It was just when it became clear that the plan to appoint me first deputy prime minister - minister of energy due to objective and subjective circumstances could not be implemented, then the country's leadership - both the president and the prime minister - proposed to consider this option,” he said in an interview.

Related: Naftogaz extended contract with Kobolev for four years

According to the charter of the Naftogaz, the appointment and dismissal of the board, including its head, is approved by the Supervisory Board. Kobolev's team said that the independent members of the Supervisory Board did not give their consent to the personnel reshuffle.

At the same time, a message appeared on the website of the Cabinet of Ministers that the activities of some members of the Supervisory Board were suspended. And then it was added that they continue to serve until the appointment of new members of the supervisory board. "In fact, Naftogaz's Supervisory Board was fired for two days in order to be able to change the head of the company's board," said Kobolev's ally, Olena Osmolovska, who had been in charge of communications at Naftogaz for a long time.

In the release of the Cabinet of Ministers on the appointment of Vitrenko to the post of head of the NJSC, the government justifies such an unexpected and not entirely legal decision: they say, Naftogaz suffered losses of 690 million USD last year, which was the reason for the personnel reshuffle.

The fact that Naftogaz would end 2020 at a loss was known back in the fall. The Accounts Chamber came to the corresponding conclusion. The authorities were in no hurry to make claims to the members of the Supervisory Board and Kobolev at that time. In addition, last year was the first one that Naftogaz finished without profit, said Gennady Kobal, director of ExPro Consulting. According to him, the main reason for the losses received by Naftogaz in 2020 is the collapse of gas prices in 2020. True, the NAK can be reproached for the fact that private traders turned out to be flexible: they optimized costs, reduced investments, promptly implemented standard anti-crisis measures, which helped them maintain financial stability.

Related: Cabinet approves extension of Naftogaz contract with Kobolev

The fact that Naftogaz would end 2020 at a loss was known back in the fall. The Accounts Chamber came to the corresponding conclusion. The authorities were in no hurry to make claims to the members of the Supervisory Board and Kobolev at that time. In addition, last year was the first one that Naftogaz finished without profit, said Gennadiy Kobal, director of ExPro Consulting. According to him, the main reason for the losses received by Naftogaz in 2020 is the collapse of gas prices in 2020. True, the Naftogaz can be reproached for the fact that private traders turned out to be flexible: they optimized costs, reduced investments, promptly implemented standard anti-crisis measures, which helped them maintain financial stability. In contrast, Naftogaz did not manage to reorganize itself on a "crisis track".

Note that Naftogaz is not the only state-owned company that suffered a loss in 2020. Ukrenergo and Energoatom ended the year with losses. Now what? And their leaders will be asked to leave?

Complaints about space salaries and bonuses for top managers of Naftogaz in the context of Vitrenko's appointment also look, to put it mildly, strange. Will Vitrenko agree to receive less than Kobolev received as the head of Naftogaz? Will his salary and bonuses be cut to save the company from losses? Moreover, Vitrenko himself was recently "watered" for the multimillion-dollar prize he received from the state for his victory over Gazprom in the Stockholm arbitration.

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Whatever the official reasons the authorities may use as cover, one thing is clear: Zelenskiy and his Office must have good reason to dare to go against the will of the West. Obviously, the OP could not fail to understand: Western donors of Ukraine will be dissatisfied not only with the fact of Kobolev's dismissal but also with the way in which everything was done. The first reaction is expected: Western diplomats, to put it mildly, are unhappy and suspect that the authorities intend to subordinate the Naftogaz. The main intrigue now is whether the reaction of the American embassy will be public or whether Zelensky will be told everything without publicity.

Whatever losses Naftogaz received in 2020, the company continues to conduct successful commercial activities, selling gas to industrial enterprises, increasing its share in gas sales to the population, and carrying out profitable activities for storing gas in UGS facilities at prices quite comparable to European prices. This means that the NAC daily generates billions of real money, which can be useful for plugging holes in the budget, which has been bursting for several years at the critical seams of pensions, subsidies, funding for the army and medicine. According to the Naftogaz, in 2020 the company transferred UAH 141 billion to the state budget, which is 13% of the total income of Ukraine for the last year.

Related: Government officially reports on dismissal of Naftogaz CEO Kobolev

Many of the experts interviewed admit that the real reason for the change of the head of the NJSC is precisely that the OP had the opportunity to dispose of the financial resources of Naftogaz. The same is said in Kobolev's team.

“In our opinion, this (the dismissal of Kobolev and the appointment of Vitrenko) is due to the fact that Naftogaz is the only state-owned company that has a strong liquidity reserve. in order to ensure an affordable price for the annual gas product and also in order to properly prepare for the passage of the next heating season. If it happens that these funds are not used for their intended purpose, then preparation for the autumn-winter period will be in jeopardy. It will be very unpleasant situation for the state,” Osmolovska assures.

There is another reason as well. Kobolev reluctantly agreed to finance Zelensky's tariff populism from the Naftogaz budget. Vitrenko is expected to have a more accommodating position on this issue. Experts believe that the President's Office may require Vitrenko to find ways to reduce gas prices for the population. According to sources, the president's entourage was really enraged by the size of the annual prices that the suppliers published on April 25: their range is from 0,29 to 0,47 USD/cubic meter. They blame Kobolev for this state of affairs, who strongly advocates import parity.

Will Vitrenko be able to find an acceptable solution? Will he invent a way to reduce the gas price for the population without driving Naftogaz into an even greater loss? Will the already concluded contracts with suppliers be terminated? And will this ultimately help to save the rating of President Zelensky, or is he already hopeless?

Vitrenko was appointed to the position of the head of Naftogaz for a year. However, the situation will become clearer closer to the beginning of the heating season.

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