"During the quarantine lockdown in Ukraine an unidentified group of people who have influence with the current management of the State Property Fund of Ukraine ("SPF") or have aligned interests with them, attempted to illegally and without reason change the leadership of Khmelnytskoblenergo (Khmelnytsk region electricity distribution system operator (DSO) and other state regional energy companies ("oblenergos" as they are known) and thereby gain access to the financial resources of these successful enterprises" - this comes from an April 30 statement from the management of the companies, the full text of which is available on the Ukrainian News website.
On April 30, 2020 Joint Stock Company ("JSC") Khmelnytskoblenergo published a statement from the company's management. The statement refers specifically to attempts made by high-ranking officials of the SPF to replace the management of Khmelnytskoblenerho in direct violation of the procedures set out in the Law On Joint Stock Companies.
"On April 28, 2020, according to our information, a meeting of the Supervisory Board of JSC Khmelnytskoblenergo took place. At this meeting a decision was taken to dismiss the Acting General Director of the Company, Oleg Kozachuk, and an attempt to appoint a Mr. V Gaponov to this position. It was only an "attempt" to make this replacement because the meeting was attended by 2 people who had been appointed to the Board in violation of established procedures contained in the Law On Joint Stock Companies, in addition the “appointments” were not made publicly as a result of open competition. “This decision will therefore be appealed in court," the company statement continued.
The document states that 2 members of the Supervisory Board had resigned the day before of their own free will, and their replacements, according to applicable legislation, should only take place while they continue to exercise of their powers, which the SPF did not observe. The appointment of new Supervisory Board members is carried out on the basis of resolution №143 of the Cabinet of Ministers (dated 10.03.2017) wherein it is stated that such appointments can only be carried out on the basis of a competitive selection process, which was ignored.
Procedural violations aside, the SPF attempted replace the "retired" members (i.e. those who as of the date of receipt of notification from the SPF are no longer considered to be members of the Supervisory Board ) of the Supervisory Board "the SPF has no right to replace members of the Supervisory Board, and any attempt to do so is a gross violation of the Law of Ukraine On Joint Stock Companies" the management statement reads.
In addition, the company's management claims that no reason has ever been provided explaining the attempted change of the Company's head. At the same time, according to the company's economic performance, it is a leader among regional power companies that have a state share. To be specific, the net profit of JSC Khmelnytskoblenergo for 2019 amounted to UAH 85.711 million, which exceeds the profit of 4 other state oblenergos combined.
(Namely; JSC Kharkivoblenergo - UAH 1.139 million, JSC Zaporizhzhyaoblenergo - UAH 0.672 million, JSC Mykolaivoblenergo - UAH 30,440 million, OJSC Ternopiloblenergo - UAH 0.639 million.)
This year, according to the results of 2019, the Company plans to pay UAH 30 million to the state budget in dividends, while the state-owned Zaporizhzhyaoblenergo projects a payment of only 0.2 million UAH, Kharkivoblenergo 0.3 million UAH, and Cherkasyoblenergo 2.5 million UAH.
In addition, the statement says, "the actions of the SPF when attempting to change the heads of these state enterprises are not consistent with Cabinet of Ministers Resolution №256 of 25.03.2020, which recommends that public sector entities that are of strategic importance to the economy or security, including state-owned banks, to refrain from making personnel changes to governing bodies in order to ensure uninterrupted work in the established quarantine routines."
"There is a hypothesis that when Ukraine is in quarantine, an unidentified group of people with influence on the current SPF leadership or having shared interests with them try to illegally and unreasonably change the leadership of the Company and other state regional power companies in order to gain access to the financial resources of these successful enterprises," the management of the company said of the actions of officials of the SPF.
The management of Khmelnytskoblenerho are not holding on to their positions and are ready to leave, says Acting General Director Oleh Kozachuk, provided that transparent and legal procedures are followed not only for his own dismissal, but also for the appointment of a new management. Only in such conditions, "can we hope that the next management of this state company will continue the effective and profitable management of the enterprise as the incumbents and that they will also continue to provide work with decent conditions for the 3,500 employees of Khmelnytskoblenergo and guarantee energy security of all residents of Khmelnytsky region" the management statement also said.
Background:
JSC Khmelnytskoblenergo" provides transmission and supply of electricity in Khmelnitsky region and is Khmelnytsk region electricity distribution system operator (DSO). The company has a share of about 80% in the electricity market in the region. The company serves 550,310 domestic consumers and 20,170 commercial and industrial businesses. Retail, industrial and other commercial enterprises are the main customers, whose sales are 42% 13% and 11% respectively.
Installed transformation capacity stands at 3,341 MW-A (through 7,522 substations). PJSC Khmelnytskoblenergo additionally owns 33,000 km of overhead lines and 1,500 km of cable transmission lines. The company consists of approximately 3,560 employees.
