Take wrecking ball to everything: how government dismissed Kudrytskyi, head of Ukrenergo, after three years of failed attempts
On Friday, it was decided at the Supreme Commander-in-Chief’s Headquarters to dismiss the chairman of the board of Ukrenergo, Volodymyr Kudrytskyi. The reason for this was the alleged shelling on August 26, which again damaged Ukraine’s power system. As a result of the vote, the commander of the Air Force, Lieutenant General Mykola Oleshchuk, and Kudrytskyi were to resign.
But while Oleshchuk can be dismissed by the president himself, only the supervisory board can fire the chairman of Ukrenergo's board. And until Monday evening, the main intrigue of the issue was whether Ukraine had independent corporate governance. Now there are very serious doubts about this. The Supervisory Board fired Kudrytskyi.
However, the real reason for the dismissal was not the shelling, but the fact that Kudrytskyi was not a part of the coordinate system of 5-6 managers. Over the past 3 years, they have tried to dismiss Kudrytskyi more than once, and it has already become a kind of meme. I think my colleagues even had articles on this topic prepared.
Experts have repeatedly named Energy Minister Herman Halushchenko and Deputy Head of the Presidential Office Rostyslav Shurma as the main people interested in this dismissal. However, it never came to a public confrontation that could legalize this version.
Kudrytskyi was elected chairman of Ukrenergo's board in a competitive tender after the previous head, Vsevolod Kovalchuk, resigned.
Since September 2019, Kudrytskyi has served as the First Deputy Chairman of the Board, and since the end of February 2020, he has been acting as the Head of Ukrenergo. He joined the company in 2016 and held the position of Deputy Director for Investments.
Previously, Kudrytskyi worked as Development Director at Ukrtransnafta, and was an Operations Manager and Internal Audit Director at leading international and Ukrainian companies: MHP S.A., EastOne, TNK-BP, Grant Thornton. He holds a degree in international economics from Kyiv National Economic University, is a member of the Association of Chartered Certified Accountants (ACCA) in the UK, and is a certified internal auditor of the Institute of Internal Auditors (IIA) in the US.
At the time Kudrytskyi took office, Ukrenergo was subordinated to the Ministry of Finance. This was part of the corporate reform on which Ukraine's accession to ENTSO-E depended, as well as the receipt of a €500 million loan tranche under the Memorandum of Understanding with the EU in 2019.
The transfer of Ukrenergo to the management of the Ministry of Finance was an important step in creating the preconditions for the company to successfully pass certification in accordance with the standards of the pan-European energy system ENTSO-E for joining it in the future. So was the establishment of an independent supervisory board at the company.
However, in July 2021, Ukrenergo, as well as the Mahistralni Gazoprovody Ukrainy and the Market Operator, were transferred to the Ministry of Energy, despite the comments and criticism of international partners.
This was part of the policy of the then new Energy Minister Herman Halushchenko.
Instead, he agreed to the corporate reform of Energoatom, which is now subordinated to the Cabinet of Ministers.
Since 2021, according to the publication's sources, Ukrenergo's management has repeatedly received "interesting" offers to invite the right people to security or procurement positions. And when this did not happen, attempts began to change the management and supervisory board of Ukrenergo.
The Supervisory Board was to be rotated just before joining ENTSO-E.
The new Supervisory Board of the company includes, in particular, Dejan Ostojic, Peder Andreasen, Daniel Dobbeny, Roman Pionkovskyi as independent members, Yurii Tokarskyi, Mykhailo Ilnytskyi, Yurii Boiko as representatives of the state.
But before that, the Ministry of Energy tried to replace almost the entire board of the operator.
According to a letter received by the EP from sources in the Cabinet of Ministers, Oleksii Brekht (acting board member and director of network operation and development), Maksym Yurkov (board member and corporate secretary), and Andrii Nemyrovskyi (board member) were to lose their positions.
At the same time, it was planned to appoint Yurii Hapon and Serhii Pushkar to the board, and Dmytro Olefir, Yaroslav Pomyluiko, and Oleh Kozachuk could also join the board. The Ministry of Energy submitted the candidates.
The plan failed. But attempts to influence the operator did not fail. For example, to explain to whom to pay off debts and to whom not to. If you have forgotten, 2021 was marked by great indignation among green energy producers that they were not being paid. But it was not them who were asked to pay. They were asked to pay much larger players.
In the first year of the full-scale invasion, Kudrytskyi was not attacked much. At least not publicly. Although this year an audit appeared, where, in addition to the expensive purchase of transformers at $10.6 thousand for megavolt-ampere from Soiuz company (which was later reminded of its work in Russia through certain media materials), the company was also blamed for the delay in launching electricity exports as part of the connection to ENTSO-e.
As you know, this connection was supposed to take place only in 2023, and it was only by a miracle, as part of the testing, that we found ourselves connected to Europe, and not completely dependent on Russia.
However, this did not stop some auditors from writing in their report: "The opening of electricity exports only in the amount of 100 MW from June 30, 2022 indicates an unreasonable delay on the part of NPC Ukrenergo to open and increase the capacity of the interstate crossing for electricity exports to Europe (in the context of the energy crisis in Europe due to the restriction of Russian energy consumption) has led to a shortfall in the receipt of funds for the crossing by NPC Ukrenergo and to the limitation of the capabilities of state-owned producers and their shortfall in income from electricity exports to Europe due to the limitation of the amount of interstate exports. [...] Trading at the auction for access to the 100 MW interstate crossing between the UES of Ukraine and ENTSO-E brings NPC Ukrenergo income of UAH 10 million per day."
Since the beginning of 2023, journalists have increasingly heard about the intentions of certain individuals on Bankova Street and in the Ministry of Energy to dismiss an outsider CEO of Ukrenergo.
It was then that the proceedings on the procurement of bulletproof vests, in which the current head of the arms procurement agency, Maryna Bezrukova, appeared, as well as the audit of the State Audit Service of Ukraine, where Ukrenergo's management was accused of cutting plates incorrectly. Yes, you read that right.
"The figure announced by the SASU of 68 billion hryvnias of some inefficiencies, violations, and so on. Of these, 36 billion - I'm not kidding now - is the name of a line in the balance sheet of our international reporting, it seemed wrong to them. There is a line in the balance sheet called the "corporatization effect". This is an effect that we reflect in the balance sheet because when we were corporatized, the state did not transfer all our property to us. Main power transmission lines are not subject to transfer of ownership under the law. However, we have it on our balance sheet and accounted for. That is why we show it as an asset on the active side of the balance sheet, and we have to show something on the passive side of equity. We have reduced it to the effect of corporatization," Volodymyr Kudrytskyi said in an interview with Censor.NET last year.
This is despite the fact that international auditors had no complaints against the company's management.
However, on September 20, the Prosecutor General's Office came to Ukrenergo's office with a search warrant, during which law enforcement officers sought to obtain documents based on the results of the State Audit Service (SASU) audit.
At the time, many drew parallels between the two events.
In August, Bihus.Info published a story that solar power plants co-owned by the brother and entourage of the Deputy Head of the Presidential Office Rostyslav Shurma received payments under the "green tariff" until the summer of 2023, although they were located in the occupied territories and probably had no connection to the unified energy system of Ukraine.
Despite the fact that in an interview with Radio Liberty Kudrytskyi said he was not sure that the payment of the "green" tariff to Shurma's stations should be qualified as theft of public funds, as the law did not provide an answer on how to act in this case, and Bankova Street decided that it was the chairman of the Ukrenergo board who was involved in the leak.
It is worth noting that this is not the first time that the interests of Ukrenergo's management and the entourage of the Deputy Head of the Presidential Office have clashed.
In the autumn of 2022, the Poles asked Ukraine for help with electricity. This was before Russia started destroying our energy system and we were still going to make money on exports.
At the time, President Volodymyr Zelenskyy promised Polish Prime Minister Morawiecki to urgently complete the construction of a high-voltage power line between Ukraine and Poland by December 8. This would allow not only to support our neighbouring country, who have taken in more than a million Ukrainian refugees but also to earn up to UAH 40 million a day from energy exports, Nashi Hroshi noted.
To this end, in early September, Ukrenergo announced a tender for the installation of transformers and relay equipment with an expected cost of UAH 263.80 million at Khmelnytskyi NPP (the power line to Poland starts from there).
EDS, a company affiliated with Rostyslav Shurma, wanted to apply for this tender.
However, due to the media coverage, EDS had to withdraw, and the aforementioned Soiuz company won the bidding process. In the end, the implementation was blocked due to a lawsuit filed by the Hromadskyi Nahliad (Public Watch) organisation, founded by a certain Hladush, now known for raiding a community in the Kyiv region.
After Ukrenergo received the task to build shelters at energy facilities, the company received regular visitors from the heads of regional state administrations with offers to hire their local contractors.
Imagine how much money could have been made on concrete and rebar to protect energy facilities. But the problem was that the contractors did not like the estimates. In fact, Ukrenergo built the shelter even cheaper than the State Agency for the Restoration and Development of Infrastructure of Ukraine.
It seems that even now someone has a strong desire to get access to the 0.5 billion that Ukrenergo will receive from its partners.
The latest rumors from the energy market are also not encouraging. Ukraine was supposed to start negotiations with Poland to cover the electricity deficit. Our neighbouring country have a lot of coal in their mines, and they would be happy to burn it, but they are hampered by quotas. If it were registered as aid to Ukraine, the EU could theoretically agree. But there is at least one bright mind in Ukraine who wrote a letter asking that this non-existent agreement be secured not by market operators but by traders.
Some "5-6 effective managers" have other reasons besides the desire to make money.
For example, against the backdrop of Ukrenergo's management, Minister Halushchenko sometimes just looked very shabby.
Let's remember July, when we were without electricity for 18 hours. It happened because on July 15, two current transformers burned down at the South Ukrainian Nuclear Power Plant (SUNPP).
But Energy Minister Halushchenko did not recognise this, and blamed everything on problems in the grid (i.e. the responsibility of Ukrenergo). And after Oleksandr Kharchenko, director of the Energy Research Centre, wrote about the breakdown, the minister accused the expert and the journalists of being Russian psyops and that he would complain about them to the special services.
Then People`s Deputy Yaroslav Zhelezniak published a response to a parliamentary inquiry to Ukrenergo on his Telegram. The company confirmed to him the "extraordinary event" that occurred at the South Ukrainian NPP on July 15.
And then the IAEA confirmed the breakdown.
This gave the "highly efficient" managers to have a grudge against Kudrytskyi.
And the shelling on August 26 was used as a pretext for resignation.
As early as Wednesday, journalists found out that Bankova Street was holding a casting of candidates for the positions. Among them:
- Dmytro Olefir (chairman of the supervisory board of Market Operator, previously dismissed from NEC, but the authorities are constantly trying to get him back on the board. He is a friend and former adviser to Minister Halushchenko);
- Oleh Kozachuk (former director of Khmelnytskoblenergo. Do you remember the beginning of the article? He was mentioned there as a potential member of Ukrenergo's supervisory board from Halushchenko);
- Oleksandr Havva (was an advisor to Energy Minister Halushchenko, chairman of the board of Market Operator);
- Artem Nekrasov (acting head of Harpok, also from the ministry).
Over the past 3 days, there was hope that the head of Ukrenergo would be protected by Western partners.
The ambassadors made a statement about the undesirability of the resignation and asked to postpone consideration of Kudrytskyi's resignation until the Supervisory Board is completed with a seventh member (this would greatly change the balance of power during the vote, but the state has an established practice of manipulating the appointment of boards. One of the most problematic at the moment is the appointment of the supervisory board of the Arms Procurement Agency).
Three members of the supervisory board from the state - Yurii Tokarskyi, Oleksandr Baraniuk, Yurii Boiko, and one independent member - Roman Pionkovskyi - voted for the dismissal.
Oleksii Brekht, Deputy Chairman of the Management Board, will act as Chairman of Ukrenergo.
Kudrytskyi's last working day was 4 September.
He will leave his post with Ukraine's connection to the European ENTSO-E grid and other achievements.
By comparison, the head of the Antimonopoly Committee of Ukraine, accused of illicit enrichment, which he could only justify by selling raspberries, will remain in office. As well as the Minister of Energy, whose department set a seasonal record for corruption, and who did not even come to the parliament to report.
Tetiana Nikolaienko, Censor. NET
