Kyiv’s Western backers have raised deep concerns over the Ukrainian government’s unexpected decision to replace the head of state-owned oil and gas company Naftogaz.
The government said on April 28 that Andriy Kobolyev, Naftogaz’s chief since 2014, was dismissed from the post due to “unsatisfactory” results of the company’s operations last year, when it posted a loss of nearly $700 million.
The move threatens to complicate talks to access a $5 billion bailout from the International Monetary Fund.
Peter Stano, the lead spokesman for EU foreign policy chief Josep Borrell, said Brussels had “serious concerns” over the decision, and called on “the leadership of Ukraine to ensure that the management decisions at state-owned enterprises are taken in full accordance with basic tenets of recognized corporate governance standards.”
The U.S. State Department earlier said the “calculated move” showed “disregard for fair and transparent corporate governance practices.”
“Unfortunately, these actions are just the latest example of ignoring best practices and putting Ukraine’s hard-fought economic progress at risk,” spokesman Ned Price told reporters on April 29.
He added that the United States “will continue to support Ukraine in strengthening its institutions, including advancing democratic institutions and corporate governance reforms, but Ukraine’s leaders must do their part.”
Ambassadors from the Group of Seven (G7) major industrialized nations said in a tweet that “effective management and governance of state-owned enterprises, free from political interference, is crucial to Ukraine’s competitiveness, prosperity, and Ukraine fulfilling its international commitments.”
Kobolyev’s moves toward transparency won him support among Western investors and donors.
He was credited for overseeing an energy overhaul that helped Ukraine to narrow its budget deficit, and leading the former Soviet republic to a multibillion-dollar win in a legal dispute with Russian energy giant Gazprom in 2018.
He also faced criticism for increases of heating costs.
His successor, Yuriy Vitrenko, said on April 30 that Naftogaz will continue to cooperate with international partners and that the company needed to return to profit.
Vitrenko was serving as acting energy minister before his appointment as CEO.
Ukraine’s Western backers tied financial aid to the country to concrete steps to clean up state companies such as Naftogaz, one of the country’s largest companies by revenue.
Naftogaz has long been the object of corruption schemes by officials and oligarchs, but the situation began to change after the 2014 upheaval that swept pro-Kremlin President Viktor Yanukovych from power.