Everyone knows that Ukraine is under the influence of a group of oligarchs who are very hard to dislodge.
These oligarchs have many smart strategies for staying on top. But far and away, the number one way they got so rich and powerful was by being allowed to buy up all of the country’s strategic assets and infrastructure. Everything from energy to resources, without which Ukraine can’t function.
A lot of these buy-ups happened in the wild 1990s, when the oligarchs got their start. But this practice continues today due to the poor vigilance of state regulators. In spite of attempts at transparency, rigged tenders and monopolistic purchases persist.
Ukraine’s Anti-Monopoly Committee (AMCU) is reviewing a pending acquisition of Kirovohradoblenergo, a big electricity distribution company in the eponymous Kirovohrad Oblast. The buyer is DTEK, Ukraine’s largest private energy company belonging to Rinat Akhmetov, Ukraine’s richest oligarch. Akhmetov’s net worth is estimated at $11.5 billion, according to a Nov. 4 report published by NV magazine.
If the AMCU cares about the well-being of Ukraine, it will not allow the sale to proceed, even with conditions.
DTEK owns about 70% of Ukraine’s thermoelectric power generation and reportedly over 40% of the regional electricity distributors (oblenergos). Ownership of more than 35% is legally considered a monopoly.
The Kirovohradoblenergo purchase will only increase Akhmetov’s monopolistic grasp over Ukraine’s nervous system, its energy distribution grid.
If we want to see what happens when only one man controls most of the regional distribution network, we can look no further than oligarch Dmytro Firtash’s ownership of 70% of the country’s gas network.
His companies owe untold hundreds of millions of dollars to Ukraine’s state-owned companies but manage to get away with it, while making big profits for their boss.
More importantly, when one man owns so much of a vital resource or infrastructure, without which people will literally die, the government will dare less and less to curb his ambition and his power would only snowball from there.
And let’s not forget the murky ownership of this regional energy distributor, Kirovohradoblenergo. The company has been linked to Russian Duma member Alexander Babakov, who used layers of offshore companies to acquire strategic assets throughout Ukraine. It was his entities that sold other oblenergos to Akhmetov over the years.
It would behoove authorities to dig their hands into the muck and sort out who owns what before authorizing any buying or selling of such important enterprises.
It is our hope that the Ukrainian regulators will do the right thing.
