PJSC “UKRTRANSGAZ” Trade Union Committees letter to Mr. Kubiv

19.09.
2016

First Vice-Premier Minister

for economic development and trade

of Ukraine

Mr. Sergiy Kubiv

Dear Mr. Kubiv!

PJSC “UKRTRANSGAZ” Trade Union Committee on behalf of many thousand collective appeals to you with a request to settle the overcomplicated situation, which appeared recently between PJSC “UKRTRANSGAZ” and NJSC “Naftogaz of Ukraine”.

The reasons for PJSC “UKRTRANSGAZ” concern are statements and actions of Iuriy Vitrenko - chief commercial director of “Group of NJSC “Naftogaz of Ukraine” and Sergiy Konovets – deputy Chairman of the Board of NJSC “Naftogaz of Ukraine” for financial-economical questions, who during their closed conference with journalists expressed acutely, unreasonably and disrespectfully to PJSC “UKRTRANSGAZ”. More of it, reforms suggested by mentioned NJSC “Naftogaz of Ukraine” managers, call the concern of working collective about their further work, especially on the eve of the heating season and at the same time ensuring reliable and uninterrupted operation of the gas transportation system of Ukraine.

We think that NJSC “Naftogaz of Ukraine” abuses its shareholder authority and conducts direct external control over gas transmission system, which breaks regulations. This became possible after the approval of new reaction of “Ukrtransgaz” charter in June 2016.

NJSC “Naftogaz of Ukraine” debts to PJSC “UKRTRANSGAZ” amount to UAH 6,4 billion. Such funds could be used as investments in modernization of gas transmission system of Ukraine. For example, the demand for investments for GTS and UGS objects in 2017 is UAH 14,5 billion. So UAH 6,4 billion is more than 45% of such demand.

Due to unknown reasons NJSC “Naftogaz of Ukraine” reforming actions aimed to maintain their monopoly and to strengthen vertically integrated company.

Also Board of Naftogaz realized an attempt to divide the gas transportation system into a system of pipelines and gas storage system, the latter of which would have to be part of a vertically integrated structure of NJSC "Naftogaz Ukraine". This would lead to the situation where a powerful system asset - a single technological GTS complex would be destroyed and would lose its value. Unided GTS is a key asset, both political and economic. This was done under public motto: easiest fundraising. Probably it is easier to sell, but how could it operate next? So you should ask a rhetorical question: to sell state assets or maintain and increase key Ukrainian asset, which helps to keep a decent geopolitical position.

An essential feature of Ukrtransgaz, unlike other NJSC “Naftogaz of Ukraine” companies is that all financial revenues and expenses of the independent TSO are regulated by the structure of regulated tariffs approved by the independent regulator NERC. So repeated (different from the structure of the approved tariff) change in the structure of revenues and expenditures of PJSC “UKRTRANSGAZ” (as did “Naftogaz of Ukraine”) is illogical and illegal.

Dear Mr. Kubiv! Working collective of PJSC “UKRTRANSGAZ” is concerned by public statements of Mr. Kobolev and Mr. Vitrenko, made in April 2014 about the expected income from the sale of Ukrtransgaz and Ukrgazvydobuvannya. It is not clear why at first stages of their work as top managers of NJSC “Naftogaz of Ukraine” positions were declared that do not fully reflect the public interest. It is disturbing that the leadership of Naftogaz for the second consecutive year sees company (NJSC “Naftogaz of Ukraine”) and its managed assets as an object of sale, and not as a national treasure. There is another interesting fact that in 2002 the Kobolyev-Vitrenko dealt with issues of corporate debt and Naftogaz corporate debt conversion into sovereign government debt. The first thing that was realized - is the first issue of Eurobonds in 2003, which were bought JSC "Gazprom". And this debt was repaid only last year by the International Monetary Fund.

The philosophy of Mr. Kobolev and Mr. Vitrenko professional points of view is a logic of investment bankers: to buy cheaper and to sell for more. A striking example of the actions of top managers Naftogaz in the field of investment banking is an attempt to purchase the debts of the enterprise "Coal of Ukraine", which was artificially brought to default via AYA Capital just for 30%. The case could not be realized only because of the Revolution of Dignity.

Turning our attention to the reforming of NJSC “Naftogaz of Ukraine” we want to remind, that starting from 01 April 2017 enters into force a part of company’s (NJSC “Naftogaz of Ukraine”) charter on the Supervisory Board and the Board, according to which top management change of NJSC “Naftogaz of Ukraine” is virtually impossible. So the state actually loses control over "Naftogaz of Ukraine", as all the basic organizational-structural, financial and economic issues will be resolved by the Supervisory Board, which at present is not independent, since all three foreign representatives are from the same parent company BP.

So actually Mr. Kobolev and Mr. Vitrenko, investment bankers by profession, obtained a concession of oil and gas sector of Ukraine. An analogy is appropriate with the situation around JSC "Gazprom" in 1993, when the enterprise was conceded to Rem Vyahirev and his team. As a result, almost all of Gazprom's shares at the time were distributed among obscure individuals and companies.

“UKRTRANSGAZ” Trade Union Committee and working collective of the Company, which now guards national security and energy independence of Ukraine, appeal to you to consider the issue of PJSC “UKRTRANSGAZ” reassigning to Ministry of Economic Development and Trade of Ukraine. Trade and gas production functions are left under NJSC “Naftogaz of Ukraine” control. Transportation is left under independent administration of PJSC “UKRTRANSGAZ”. That is the exact requirement of Third Energy Package.

At the same time we assure you, dear Mr. Kubiv, that many thousands of PJSC “UKRTRANSGAZ” workers provided, provide and are ready to comntinue providing reliable and uninterrupted operation on Ukrainian gas transmission system. Honest work and professional loyalty of all PJSC “UKRTRANSGAZ” employees is the best guaranty of this.

In passing, we want to mention that our employees in the 2014-2015 fought for freedom our people in the Revolution of Dignity. Now 256 Ukrtransgaz employees are Antiterrorist Operation soldiers, one of them - Roman Lagno - died defending his Motherland from invaders.

Our soul hurts for the fate of Ukraine and its gas transportation system.

On behalf of the working collective

With deepest respect

Chairman of Trade Union Council

Of PJSC “UKRTRANSGAZ” Sergii Turchak

Members of Trade Union Council of PJSC “UKRTRANSGAZ”:

PJSC “UKRTRANSGAZ” Victor Goncharov

“Kharkivtransgaz” Valeriy Rodin

“Kyivtransgaz” Yaroslav Marchuk

“Cherkasytransgaz” Oleg Omelchenko

“Prykarpattransgaz” Volodymyr Pryimak

“Ukrgazenergoservice” Pavlo Terentiev