EU informs PM Groysman about concerns over Ukrenergo

Head of the Delegation of the European Union to Ukraine Hugues Mingarelli and Director of the Energy Community Secretariat Janez Kopač have sent a letter to Ukrainian Prime Minister Volodymyr Groysman to express concern about developments around the state-owned operator of Ukraine's integrated power grids, Ukrenergo.

The two EU officials say they are concerned about three "disturbing initiatives" by Ukraine's Energy and Coal Industry Ministry and the Ukrenergo corporatization commission, the RBC Ukraine media outlet reported on October 22.

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"First, the Ministry of Energy would like to offer a significantly law salary to the Supervisory Board Members compared with what was recommended by the nomination committee. This would lead to candidates rejecting the offer and hence the Board not becoming operational," reads the letter.

"Second, the corporatization commission established by the Ministry of Energy and, since recently, chaired by Deputy Minister [Mykhailo] Blyznyuk, has failed to approve the valuation report of Ukrenergo's assets. As a result, this procedure, estimated to take at least 3.5 months, will need to start again. This will lead to a significant delay in preparing the certification of Ukrenergo and put into question the unbundling process," it added.

"Third, the corporatization commission has also concluded that Ukrenergo has acted with negligence in the value process. The commission has unilaterally granted management powers of the company to its chairman, Deputy Minister Blyznyuk. Without judging the claim, and in view of the severe impact of this decision, we would strongly advise that – before it comes into effect – the legal services of the government assess if such a decision is within the remit of the mandate of a corporate commission," the officials wrote.

As RBC Ukraine reported earlier, Ukrainian Energy and Coal Industry Minister Ihor Nasalyk planned to expand his powers to manage state-owned Ukrenergo, while blocking its corporatization.

Ukrenergo's corporatization is one of the conditions for Ukraine to receive the European Union's macro-financial assistance.