Yuriy Vitrenko, one of the reformers who transformed a corruption-riddled Naftogaz into a profitable oil & gas entity for the state, is now acting energy minister, under an appointment made on Dec. 21 by the Cabinet of Ministers. He will also serve as the first deputy energy minister after Olha Buslavets, the former acting energy minister, resigned from the post.
The move comes less than a week after parliament rejected to confirm his nomination for the post, another sign that President Volodymyr Zelensky has lost control of his nominally ruling 246-member Servant of the People party. But Vitrenko’s appointment as acting minister, in a sector rife with oligarchs and murky transactions, signals that Zelensky and Prime Minister Denys Shmyhal are intent on attacking corruption and modernizing the vital part of the economy.
London-based analyst Timothy Ash called the appointment a “decent hire,” but noted his lack of support in the 422-member parliament. Kyiv Post columnist Bohdan Nahaylo noted that “the Energy Ministry is a major prize for of all the oligarchic sharks feeding in Ukraine’s fertile economic waters. Since May 2020 it has been headed by Buslavets, regarded as an associate of Ukraine’s richest oligarch and energy baron, Rinat Akhmetov….Of course, not only Akhmetov but others who have had their snouts in the feeding trough that is Ukraine’s energy sector, would hardly welcome a strong, independent professional with a record of integrity in this post.”
In fact, in a Kyiv Post interview after he left Naftogaz in May amid a fallout with his former ally CEO Andriy Kobolyev, Vitrenko said that billionaire oligarchs Ihor Kolomoisky and exiled oligarch Dmytro Firtash, who is fighting corruption charges in the U.S., still have too much power over the sector. “The oligarchs never left,” he said.
Among other achievements, Vitrenko spearheaded successful litigation against Russia’s state-controlled Gazprom, leading to a $2.9 billion arbitration award in a dispute over fees for transiting Russian gas through Ukraine’s pipelines. Vitrenko worried that, after his departure, Naftogaz would be less interested in pursuing other litigation against Gazprom.
“The real reason for my firing is this fight with Gazprom is not a priority for the government as well as the fight with corruption and some reforms,” Vitrenko said, referring to an array of lawsuits that could help Ukrainian taxpayers recover up to $17.3 billion from the Russian energy company and other market players for past misdeeds and seizure of assets in now Kremlin-controlled Crimea.
At the time, Vitrenko called for Naftogaz — with $10 billion in revenue and 80,000 employees — to be privatized or liquidated because it’s not being run as a modern company, noting that oil and gas production has been stagnant for decades.
The energy sector has numerous other problems, including a lack of foreign investment, heavy reliance on polluting coal, and debts of $1 billion to the renewable energy sector.
In other moves, Yulia Kovaliv resigned as deputy head of the President’s Office. Kovaliv also headed the Office of the National Investment Council, a non-governmental organization that partners with the government to lure investors to Ukraine. In an interview with the Kyiv Post published on July 10, 2020, Kovaliv talked about the difficulties of attracting investment amid the COVID-19 pandemic and the need to give special protections from Ukraine’s corruption courts to large investors.
The Cabinet of Ministers also appointed former head of the Main Investigation Department of Financial Investigations of the Service Vadym Melnyk as Head of the State Fiscal Service, according to Interfax-Ukraine news agency. The 48-year-old colonel of the tax police, Melnik headed the investigation department of the State Fiscal Service in 2014-2016, and before that he held various positions in the structure of the tax police.
