Cabinet to seek replacement of Naftogaz CEO

Ukraine’s Cabinet decided on Mar. 6 to announce a competition
for the position of CEO of state natural gas production and transit monopoly
Naftogaz, the government’s website reported the same day. A 30-day competition
will start on March 26, the day after the government’s contract with current
CEO Andriy Kobolev expires. The Naftogaz CEO has been under heavy criticism in
recent months after it was revealed that he receives an exceedingly high
monthly salary (about USD 77 K per month, according to decision of the
compmany’s board) and bonus payments. Kobolev has also criticized the Cabinet
over its alleged failure to consider the costs of Naftogaz’s distribution
services in the government’s price hikes on households.

In his remarks at the March 6 Cabinet meeting, PM
Volodymyr Groysman minimized Kobolev’s role in Naftogaz’s key achievement – a
USD 2.6 bln award in the international courts against Gazprom – stating it was
lawyers who achieved that victory.

In February, Naftogaz’s supervisory board decided to prolong
its contract with Kobolev as CEO for three years and submitted its
recommendation to the Cabinet, which has the final say on the CEO, according to
the company statute.

Alexander Paraschiy: Groysman
has been long at odds with Kobolev and criticizing him publicly. The comment
about Kobolev not being responsible for the landmark ruling against Gazprom
removed any doubt that that Groysman no longer wants him in charge.

On the one hand, Kobolev’s possible replacement raises
Naftogaz’s operating risks, as well as risks related to its pending legal
claims against Gazprom, in which Kobolev took active role. That can be also a
reputational loss for the company. At the same time, a possible replacement may
speed up the planned unbundling of Naftogaz, a process that is being demanded
by Ukraine’s Western partners, who are dissatisfied with the current pace.