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Oligarchs Kolomoisky, Akhmetov wage turf wars: Who to head Ukraine's Ministry of Energy?

Author : Olena Holubeva

Source : 112 Ukraine

Both oligarchs have interests in the energy sector, but they are often in conflict
10:00, 21 April 2020

RIA Novosti

Ukrainian Cabinet of Ministers appointed Olha Buslavets as acting Minister of Energy and the Environment, having dismissed the first Deputy Minister Vitaly Shubin, who, after the resignation of Minister Oleksiy Orzhel, served as an acting Minister.

It happened quite unexpectedly. David Arakhamia, the chairman of the Servant of the People faction, announced that the Verkhovna Rada would appoint the Minister of Energy without an acting prefix. "We will have a new minister on Thursday. I can’t say the name though," Arakhamia said on the air of one of the TV channels. He noted that the crisis in the energy sector requires a responsible person to head the ministry in order to make decisions.

Andriy Gerus, MP from the Servant of People, corroborated the fact that the Rada might consider the candidacy of a minister for a key agency in the energy sector. This might be Olha Buslavets or Oleg Seminsky, he said.

But the question of the appointment of the Minister of Energy in the Parliament was not raised. Instead, the Cabinet of Ministers appointed acting as Olha Buslavets. Why is there so much uncertainty around this ministry and there is still no full-fledged minister?

Related: Key challenges for Ukraine's new energy and ecology minister Orzhel

Buslavets vs Seminsky

The serious battles around the appointment of the Minister of Energy lasted for almost a month and a half. The surname Buslavets figured from the very beginning. Voting on her appointment to the post of Minister of was supposed to take place on March 30, but this did not happen: at the last moment this issue was removed from the agenda. Parliamentary Speaker Dmytro Razumkov said that this happened at the request of President Zelensky, who sent a corresponding letter.

April 13, Arakhamia said on television that the Ministry of Energy will remain with the interim for the time being. He said that an appointment immediately through parliament is impractical, the probationary period should be given (?).

Interviewed by 112.ua experts believe that the parliament just would not gather enough votes to appoint Buslavets. Her candidacy did not suit oligarch Ihor Kolomoisky, who retained influence in the Verkhovna Rada.

Head of the Verkhovna Rada committee on energy and housing and communal issues Andriy Gerus, who might be considered to be a person from Kolomoisky’s orbit, did not support Buslavets. On March 30 (the day when the Parliament was to be approved by Buslavets as a minister), Gerus wrote on Facebook that "he will not be able to press the green button while voting on the candidacy of the Minister of Energy." He explained that he considered Buslavets to be involved in approving the Rotterdam + import coal pricing formula, which was allegedly beneficial to oligarch Akhmetov.

Our sources say that unofficially on the sidelines of Buslavets has the nickname "Bee," hinting on the yellow and black colors of the corporate symbols of Akhmetov’s DTEK company. The Nashi Groshi outlet, referring to the draft government decree and an explanatory note to it, reported that in 2019, Buslavets was one of the developers of the draft Cabinet’s decree, who was asked to provide DTEK Vostokenergo LLC with a gas price lower than the Naftogaz sale price to the public and other protected consumers (PSO) at 46-69%.

Related: Ukraine's National Bank sues for oligarch Kolomoysky’s real estate worth $4,1 million

Earlier, at the roundtable “Risks and Benefits of the New Electricity Market”, Buslavets openly supported thermal generation (the sphere of influence of Akhmetov), ​​Energoatom reported. At the same time, Buslavets does not directly indicate a connection with the oligarch. Buslavets worked almost all the time at the Ministry of Energy - from April 2005 to February 10, 2020. She served as CEO of the Directorate of Energy Markets, was a member of the supervisory board of Ukrhidroenergo state-owned company.

There is no public evidence on Oleg Seminsky’s connection with Kolomoisky, as expert circles assure. "Oleg Seminsky’s candidacy appeared after Gerus’s visit to Zelensky. So far I see him as a candidate who is sailing in Gerus’s channel, and this is the best litmus test," said Oleksiy Kucherenko, First Deputy Head of the parliamentary committee on energy.

Seminsky is a member of the Servant of the People faction, Gerus’s deputy in the Committee on Energy and Housing.

From 2003 to 2011 Seminsky was the CEO of the Naftogazvydobuvannia production company, which holds a license for a large oil and gas sector. In the spring of 2013, the DTEK company of Rinat Akhmetov bought a 25% stake in this company from Nikolai Rudkovsky. The year before, in early 2012, Seminsky was kidnapped. In his own words, he was held captive for more than three years. And after returning, the main beneficiary of Naftogazvydobuvannia Rinat Akhmetov refused to accept him back to work. In an interview with Ukrainska Pravda, Seminsky stated that he considered Rudkovsky to be the customer of his abduction. Also, according to him, "the current beneficiary of the company (Akhmetov) stands behind this."

Related: Oligarch Kolomoisky wants more: Privat group aims to rise Ukraine's diesel, gas prices

Maneuver between Kolomoisky and Akhmetov

According to 112.ua, Ivan Plachkov (in February 2005 - August 2006 the Minister of Fuel and Energy of Ukraine, the former head of Kyivenergo), Oleg Dubina (from December 24, 2007, to 2 March 2010 - Chairman of the Board of Naftogaz), as well as Deputy General Director of Ukrtransnafta Andriy Pasishnyk.

The problem was that the candidates who suited Akhmetov did not suit Kolomoisky, and vice versa, our sources say. No wonder: both oligarchs have interests in the energy sector, but they are often in conflict. Whereas Kolomoisky, who is interested in cheap electricity for his ferroalloy plants, arranged for import-lowering electricity imports from Russia and Belarus (was opened thanks to the Gerus amendment), then Akhmetov, who controls thermal generation, is interested in selling electricity at inflated prices. Akhmetov is against importing coal from Russia, which was recently taken under the control of Kolomoisky’s structure (which supplied this coal to Centrenergo, a state-owned thermal power station that fell into the orbit of the influence of the oligarch). At the same time, Akhmetov’s mines suffered losses and were forced to send employees to a forced downtime. Kolomoisky launched a real war with the "green generation", where Akhmetov owns a large share of renewable energy generation.

Related: Ex-business partner of Kolomoysky’s enemy Leonid Vulf shot in Kyiv, - police

By the way, there is information that Vitaly Shubin, who was dismissed by the Cabinet of Ministers, who has been acting as acting in the ministry since March 10 (after Orzhel’s resignation), was the man who arranged for Kolomoisky. He closed his eyes to everything.

It will not be easy for the new minister

A whole pool of problems has accumulated in the energy sector. “The current situation in the energy sector is not just critical, but more critical than ever, and a full-fledged, profile minister is simply needed to resolve it,” Kucherenko emphasized. “Everything related to any ministry is important, especially during the crisis that we are currently experiencing. As for the Ministry of Energy, it’s especially important. Moreover, the position of the head of the department is still vacant. A new minister should be appointed in the near future,” Oleg Ustenko, an adviser to the president, member of the Supervisory Board of the Blazer International Foundation, emphasized.

According to Ustenko, there are a number of tasks that must be resolved immediately: “The agenda includes issues related to domestic gas production, which ensures energy independence of Ukraine. So far, not a single PSA has been concluded with companies that are winners in domestic gas production. Slowing down in this direction, in a situation when, due to the crisis as a whole, decreases the interest of financially resourceful investors in the direction of gas production, means that we can miss the chance, which then we risk not at all in the foreseeable future. The issue of green energy is urgent and requires immediate resolution. There are issues related to the supply of gas to the population and regulation of this direction (opening of the gas market for the population). A lot of problematic issues have accumulated in the coal industry. And these issues should not be decided by the president in terms of immediate intervention as a crisis manager, but by a profile minister who must respond promptly to problems in the sector as a whole and in the coal industry."

Related: Lack of reaction to DTEK Energy default: Demonstration of state’s weakness

As 112.ua reported, the situation with the growing crisis of defaults, which caused Energoatom to be in a difficult situation, also requires immediate resolution. By the way, after the dismissal at the initiative of ex-minister Orzhel from the post of president of atomic generation Yuri Nedashkovsky in less than six months, the company has already changed two leaders. As a result of debt for electricity supplied by the Guaranteed Buyer State Enterprise, 147 million USD cannot provide for the purchase and export of nuclear fuel, which affects national security issues.

Experts warn that if the situation in the industry is not improved, it will face a deep crisis, which will not be easy to get out of.

Responsibility for this situation, as a result, will be assigned to President Zelensky. “Maybe I’m overly categorical, but I’m trying to say that President Zelensky now bears almost full responsibility for the situation in the energy sector. Although, he probably does not suspect this. After all, it was he who became the object of manipulation by his inner circle, and without suspecting it, he became responsible for the decisions formed by his decrees and the National Commission for State Regulation of Energy and Public Utilities, and for the failures of Naftogaz, Yulia Kovaliv, deputy head of his office of the President, is a member of the Supervisory Board,” Kucherenko notes. 

Related: Russia hints on incorporation of Belarus in exchange for common price on energy carriers, - Lukashenko

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