Tension is mounting in what increasingly appears to be a personal conflict between Ukrainian Prime Minister Volodymyr Groysman and the CEO of state oil and gas company Naftogaz, Andreyi Kobolyev.
The Cabinet of Ministers on March 21 decided to change Naftogaz’s status in order to strip the state company’s supervisory board of its powers to elect company officials, leaving it with practically no control over important decisions.
Instead, the company’s shareholders – the government holds the majority stake – now have the power to elect and fire members of the board and its chairman during general meetings, without having to consult the supervisory board beforehand.
Daniel Vajdich, president at Yorktown Solutions advisory firm as well as the Atlantic Council’s nonresident senior fellow, says that such a move by the cabinet is illegal.
“The Cabinet of Ministers has illegally and unilaterally made changes to the Charter of Naftogaz,” Vajdich wrote in an email to the Kyiv Post. “Under the changes, Naftogaz has been stripped of its status as a Public Joint-Stock Company. Naftogaz’s shareholder, the state, now has sole authority to hire and fire the company’s entire management board… As a result, the supervisory board of Naftogaz has been stripped of its authority, which violates Ukraine’s Law on Joint-Stock Companies.”
The cabinet’s decision came just a day after Groysman announced that the cabinet had agreed to let Kobolyev – the incumbent CEO of the state oil and gas monopoly Naftogaz – remain in place for an additional year with annual pay of $450,000, which is half his previous salary.
Groysman has often criticized Kobolyev and Naftogaz’s supervisory board for taking large salaries while being unable to increase Ukraine’s natural gas production.
The cabinet’s decision appears to be the latest round in a feud that has been going on for two years – ever since Kobolyev moved to block the prime minister from removing the gas transit company Ukrtransgaz from Naftogaz’s control.
The new regulations issued by the cabinet also stipulate closer supervision of the chairman’s contract – as well as the supervisory board members’ contracts. All this gives much more power to the Cabinet of Ministers, and especially the prime minister.
Groysman’s taking aim at the supervisory board is likely to be a response to its members’ continuous support for Kobolyev in his conflict with Groysman.
In addition, the cabinet of ministers also envisages reforming Naftogaz even more substantially by turning it from a public company into a private joint stock company.
