Is the President's Office going to use funds from the enterprises of Firtash and Kolomoiskyi?

Do the new beneficiaries have anti-corruption safeguards?

Literally these days, a historical turning point is taking place - gas distribution companies are really being taken away from Firtash. For how long, time will tell. However, it is a fact that they are being taken away.

So, the state decided to take the pipelines that deliver gas to the homes of Ukrainians from Firtash's gas distribution companies (and a number of other small players). Then it was agreed to put them into operation by Gas Distribution Networks of Ukraine LLC, which belongs to the state-owned Naftogaz of Ukraine. This is formalized by the Cabinet of Ministers Resolution No. 1335 of November 25, 2022.

All this happened because of the war and deep distrust of the pro-Russian oligarch, from whom blackmail can be expected at any moment. After all, he is going to be put in a US prison, so it is possible that he will cut off the gas in Ukraine in order to protect himself from the USA, so that Volodymyr Zelenskyy asks Joe Biden not to touch "our son of a bitch."

Therefore, everything seems to be logical and justified.

But for one thing.

Gas distribution companies have always profited from a simple scheme. For years, they did not pay the state "Gas Transmission System Operator of Ukraine" for gas, and collected money for it from consumers. Thus, debts were constantly accumulated, which from time to time were simply written off as a result of agreements with the authorities. As of now, such debts have reached 17 billion hryvnias.

The nuance is that gas distribution companies have only one option to repay these debts – to collect money from consumers for the delivery of gas through pipes. However, now, when the pipes are taken away from them, they automatically lose even the theoretical opportunity to pay their debts to the state. This means that this becomes a debt that is unlikely to be repaid and the state will never receive UAH 17 billion and will not be able to spend it on the repair of the gas transmission network and other energy security measures.

Such a decision seems illogical. After all, if the state's goal is to take the pipelines away from Firtash so that nothing bad happens to them, then why not work to repay the debt to the state company "GTSOU"? What difference does it make to the state in which of its spheres the revenue from gas distribution will go?

The difference may be as follows.

"GTSOU" has been in the focus of attention of international creditors in recent years, so it is especially difficult there now in terms of withdrawing money through tenders.

Furthermore, the withdrawal of money from the new LLC will be completely opaque. It will not tender in Prozorro at all, because our legislators have decreed this: if your founder is not the state, but a company owned by the state, then you are not considered a customer in the sense of the law. Apart from that, you can buy from whoever you want, what you want and for how much you want, and not even show your prices. In addition to this, it is possible to run Firtash schemes with accounting for gas supplies.

Therefore, the only thing that can stop this process is a political decision of the first persons of the state, which will be expressed in increased attention of law enforcement agencies. Also, another condition for the termination of the already mentioned action plan is a controlled and transparent withdrawal of money from the company. It is crucial to undertake such measures so that the head of Gas Distribution Networks of Ukraine LLC, Denys Myrhorodskyi, or the head of national joint stock company Naftogaz of Ukraine, Oleksiy Chernyshov, or the one who covers them up in the president's office, Andriy Yermak, cannot even look at these billions without the international partners and donors of Ukraine noticing.

Lawyer Denys Myrhorodskyi ("Dynasty" law firm) was appointed director of the LLC. He is a fairly well-known lawyer in Dnipro, who defended a large number of famous businessmen in local courts, including the companies of Vadym Yermolayev and Igor Nikonov. It seems that he entered the team of the president’s office to face a new challenge. Of course, his Dnipro origin gave rise to rumors that the gas distribution companies will be managed by a Kolomoiskyi's man.

However, this seems unlikely at the moment. There are already many signs that the gas distribution facilities of "Ukrnafta" will be “extorted” from the toxic oligarch. After Yermak's people entered the company's supervisory board, it was transferred to the Ministry of Defense, and they decided to dismiss the top managers who had been responsible for the enrichment of Kolomoiskyi for many years – Kartashov, Kushch, and Lunyov.

Scratch cards (coupons), “Avias” fuel cards and the Energy mobile application will also cease to be valid at "Ukrnafta" gas stations. All this is also part of Kolomoiskyi's cunning plans around the semi-state company.

Of course, all these things can be restored after the victory of Ukraine. It will be possible to return Kolomoiskyi's people to the management because they are not sent to prison but only released from office. Apart from that, it will also be feasible to return Kolomoiskyi's cards, because the program at gas stations is not being eliminated, but "temporarily suspended" (as the press release of the updated "Ukrnafta" company says). In addition, the return of the company from the Ministry of Defense to the old shareholders is also probable.

That is, we cannot rule out the scenario that after the war, the "Ukrnafta" company will be at least partially returned to Kolomoiskyi in a new format. With solved problems of criminal proceedings and cleared of debt obligations. However, one thing can be said at least today: Kolomoiskyi is losing control over the cash flows of "Ukrnafta" in the fuel sector right now.

Read this article in russian and Ukrainian.