Ukraine energy chief ousted in ‘politically motivated’ move

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Ukraine’s energy chief has been improperly ousted for “politically motivated” reasons, according to the company’s two foreign directors, in a move that has heightened fears over the country’s besieged electricity grid.

Volodymyr Kudrytskyi, who had led Ukrenergo since 2020, was a respected figure in the energy industry whose sudden departure has been sharply criticised by senior MPs and analysts for putting the electricity network’s resilience at risk.

Two board members resigned on Tuesday over his sacking, in a sign of potential unease among Kyiv’s allies. Peder Andreasen and Daniel Dobbeni were both former presidents of the European Network of Transmission System Operators for Electricity.

“We felt political pressure and observed constant attempts to bypass the competition to appoint people,” said Andreasen and Dobbeni in a statement.

“We do not see the possibility of continuing our work,” they said. “Violating the principles of corporate governance and making a decision to dismiss its manager without proof of improper management is unacceptable.”

Kudrytskyi said on Tuesday that there had been a “campaign to discredit Ukrenergo” and it was important that his successor was chosen in a transparent way so that the company would “not become a generator of cash flows” for corruption.

Lawmakers and analysts have interpreted the dismissal of Kudrytskyi as an attempt to centralise power by Kyiv’s presidential administration, threatening the country’s ability to generate power in the face of Russian attacks as winter looms.

Ukraine has imposed regular scheduled blackouts since spring when Russia began targeting its energy generation sector, levelling several thermal power plants and halving Kyiv’s ability to generate power.

Yaroslav Zhelezniak, an MP for the opposition party Holos, described the decision to dismiss Kudrytskyi as “absolutely idiotic”. He said some Ukrenergo board members had told him the energy minister and the presidential administration pressured them into voting for a change of leadership.

Ukraine’s energy ministry said the decision was made by the company’s independent board and the allegations were “part of a campaign to discredit” the ministry. Volodymyr Zelenskyy’s presidential administration did not reply to a request for comment. Ukrenergo declined to comment.

Energy experts said shortages have been well-managed in Ukraine by Ukrenergo, whose efforts have included importing electricity from the EU and reducing pressure on the grid by managing consumption.

In May, Kudrytskyi said the company had made $400mn in profits in 2023, versus a loss of $1.9bn in 2022, and had repaid $582mn of its debts.

Andriy Gerus, a member of Zelenskyy’s ruling party who chairs Ukraine’s parliamentary energy committee, praised Kudrytskyi, saying his company built more shelters for substations than all the other Ukrainian energy companies combined.

Gerus said Ukrenergo’s chief was ousted because the president’s administration “could not control Kudrytskyi”. He warned that the company’s fate could mirror that of Energoatom, Ukraine’s nuclear energy company, which has been plagued by allegations of corruption.

Ukraine is seeking additional investment to build gas-powered turbines and renewable energy sources in order to decentralise its energy generation and make it less vulnerable to Russian missiles.

Gerus emphasised that Kudrytskyi had managed the group using $500mn in grants, rather than taxpayer funds, and noted the $1bn in cheap loans Kudrytskyi’s team had attracted as well as donations of equipment worth $147mn.

Shortly before the dismissal on Monday, the European-Ukraine Energy Agency, an independent non-profit group that links Ukrainian energy companies with their EU counterparts, said on Facebook that Kudrytskyi’s dismissal would make Ukraine’s operating system more unstable and damage inward investment.

“The current team has gained strong trust from international financial organisations,” the agency said.

Dennis Sakva, an energy expert at leading Ukrainian investment firm Dragon Capital, said Kudrytskyi was never a person involved in investigations by anti-corruption journalists and “that says a lot”.

“We can see that the company under his management was very efficient at eliminating the consequences of Russian attacks,” said Sakva. “They managed to organise a constant inflow of new transformers [and] other necessary equipment . . . and were patching up the system quite effectively.”

Following news of the decision, Ukrainian energy expert Oleksandr Kharchenko said on social media that it had been a long time since the country’s energy experts had held “such a powerful [united] position”.