20:49 26.12.2023

Ministry of Economy developing options for state to consolidate owner functions

4 min read
Ministry of Economy developing options for state to consolidate owner functions

The Ministry of Economy of Ukraine is studying the French experience and is collaborating with the French State Holding Agency to develop options for consolidating the functions of the owner, the department said in a press release on Tuesday.

"Difficulties in managing strategic state-owned enterprises are due to the fact that they are managed by 89 different government agencies. Their functions and responsibilities are often duplicated. Consolidation will help solve this and avoid excessive political interference," the Ministry of Economy said.

One of the necessary elements of the reform is the adoption of bill No. 5593-d, improving corporate governance, which is being considered by MPs and is almost ready for the second reading. According to the ministry, finalization of some proposals and amendments continues.

The Ministry of Economy said that for the transparent management and efficient operation of state-owned enterprises in 2023, it continued to introduce the best global practices in their management - the principles of corporate governance recommended by the Organization for Economic Co-operation and Development (OECD), of which Ukraine plans to become a member.

Ukraine has just applied for membership in this organization, but the Ministry of Economy has already filled out an OECD questionnaire regarding monitoring compliance with certain sections of the organization's Guidelines on Corporate Governance of State-Owned Enterprises.

Among the important achievements of the year, the press release says, is the improvement of the selection of members of supervisory boards and managers of the largest state-owned enterprises, including by government resolution No. 1282 of December 1, in particular, the inclusion of verification of business reputation and independence of candidates for positions, which was one of conditions for the implementation of the Memorandum with the European Union, to which macro-financial assistance of up to EUR 18 billion is tied.

"Clear and transparent governance influences an increase in investment due to increased confidence in state-owned companies. This is important in order to receive financial support in the reconstruction of the country. Therefore, a corporate governance system must be fully implemented in enterprises that remain state-owned," Deputy Minister of Economy Oleksiy Sobolev said.

He added that this will allow the state to make a profit from strategic enterprises that cannot be privatized, and the enterprises themselves will be able to attract finance on more favorable terms.

"In 2024, the Ministry of Economy will continue to work on introducing the principles of corporate governance in strategic state-owned enterprises. In particular, it will organize the selection of supervisory boards, approve the procedure for assessing their work and conduct such an assessment at several enterprises," the ministry said.

Among other key changes that were introduced in 2023 for better management of state-owned enterprises, the Ministry of Economy named the formation of the supervisory board of the Gas Transmission System Operator of Ukraine (GTSOU), whose members were elected through a transparent competition with the involvement of recruiters. The appointment of the supervisory board was one of the important conditions of the memorandum with the IMF; the government fulfilled it in due time, and this, among other things, allowed Ukraine to receive from the Fund the third tranche under the EFF Extended Fund Facility in the equivalent of $900 million in December, the ministry recalled.

The transformation of National Nuclear Generating Company Energoatom into a joint stock company is being completed and work has begun with a recruiter to prepare for the announcement of a competition for the selection of members of the supervisory board. These steps are important for the stable operation of the energy sector and will help attract investment in the energy sector, the Ministry of Economy said.

It added that the government also decided to announce a competition for the vacant position of an independent member of the supervisory board of NPC Ukrenergo, and the European Bank for Reconstruction and Development (EBRD) allocated a grant for the selection of a recruiter company that will search for a candidate.

"In 2023, the Ministry of Economy joined the formation of the supervisory boards of NJSC Naftogaz Ukrainy and JSC Ukrposhta. Their composition was approved by the government at the beginning of the year. During 2023, the appointment of independent members to the board of the Fund for Partial Credit Guarantee in Agriculture continued with the participation of personnel selection companies. The Fund's Supervisory Board became operational in the summer," the ministry said, listing other achievements in the press release.

According to the Ministry of Economy, an example of successful corporate governance is the stable operation of state-owned banks during the war, in particular, thanks to the supervisory boards of Ukreximbank and Sberbank renewed by the government this year.