Ukraine’s government appoints new supervisory board of Naftogaz

The Cabinet of Ministers of Ukraine has approved today a new composition of Naftogaz supervisory board, appointing six new directors.

The following independent directors have joined the board: Clare Spottiswoode (Great Britain), Bruno Lescoeur (France), Amos Hochstein (U.S.) and Steve Haysom (Canada). In addition, the government has appointed Oleksandr Hrytsenko (Ukraine) and Serhiy Popyk (Ukraine) to represent the government on the board, together Volodymyr Demchyshyn (Ukraine) who has served on the board since its formation in 2Q 2017.

“I very much welcome this decision of the government and would like to thank everybody who made this progress possible. We are excited by the strength of the new board and look forward to our work together. Naftogaz requires a professional and fully empowered supervisory board to continue the group’s transformation successfully,” Naftogaz CEO Andriy Kobolyev said.

The head of Naftogaz reminded that the appointment of the supervisory board members is one of a number of urgent steps to achieve a material progress in the reform of Naftogaz and Ukraine’s gas market. It is crucial that the implementation of the Corporate Governance Action Plan is complete, with a corresponding handover of authority from the government to the corporate bodies. The approval of the group’s development strategy by the government as well as the depoliticizing of gas prices are also important pre-requisites for this progress.

Background information: the previous composition of the supervisory board has been approved by the government in April 2016. At that time the board consisted of three independent directors – Paul Warwick, Charles Proctor and Markus Richards – and two representatives of the government – the then First Deputy Minister of Economic Development and Trade, Yulia Kovaliv, and the former Minister of Energy and Coal Industry, Volodymyr Demchyshyn.

The appointment of the supervisory board in April 2016 was an important step in the implementation of the Corporate Governance Action Plan, aimed at bringing corporate governance system in Naftogaz in line with the recommendations of OECD for state-owned enterprises. The corporate governance reform is a commitment of Ukraine’s government and Naftogaz under the $300 million credit facility provided by the EBRD and guaranteed by the state of Ukraine.

The supervisory board was supposed to operate in a transitional mode until 1 April 2017 when it was expected to take over relevant supervisory functions. Yulia Kovaliv, the board’s chairperson, quit in April 2017; and the three independent directors announced their resignation in September 2017, explaining this decision with government’s critical delays in progressing with the agreed reforms.