– I am interested in your assessment. Is the influence of organizations and personally Ihor Valeriyovych Kolomoyskyi on the authorities significant or not?
– It is difficult for me to comment on it, since I‘m not in the government.
– And as an observer. You are monitoring this process, aren’t you?
– As an observer, I think that no one can influence the authorities, given the level of trust that President Zelensky has among the public today. How is it possible to influence a person who has more than 70% of support? I do not believe it.
– I also wanted to ask you about your company’s shareholder, Rinat Leonidovich Akhmetov. I wonder to what extent is he involved in your company’s operation? Point one. And, probably, tell us about lobbying for something in the government. Point two.
– Unfortunately, his participation consists in receiving from me not very good news about our company. Of course, we are discussing investment in Europe with him. This is what we have to discuss with him as an investor and as the owner of this company.
Of course, he is worried about what is happening in the market today. And I will tell you that I much appreciate DTEK’s traditions and values which were laid down by this company’s shareholder.
I quite often discuss and share my first steps at DTEK, when the shareholders wanted to create a team and build a European, transparent, open, and professional company. Perhaps, somewhere we were a little ahead of our time. We decided to build such a company, when, I think, the external environment, Ukraine, and the Ukrainian economy were not quite ready for this.
And at some point, we suffer from it. For example, when the reports on our financial performance that we publish are distorted in order to manipulate in the media space and accuse the company of what it did not do.
That is why, we communicate today. I remain a convinced supporter of the market that has been introduced. Even with all the negative factors that we face, we have open trade, market participants, and we are now thinking about forward contracts, so that we make this market more and more civilized. And I hope all the issues related to the growth and establishment of this market will be solved.
We will support it as much as possible with our knowledge and our suggestions. I hope that the time period between the development of ideas and their implementation will be reduced. This can be done only if we have mutual trust with the authorities.
– A little over a year ago, I recorded an interview with Ihor Kolomoyskyi and we discussed, among other things, business issues, company management issues, costs and relationships with the authorities. And Igor Valeriyovych gave illustrations, in particular, regarding the businesses of your shareholder Rinat Leonidovich, of some injustice that he saw in the ore pricing policy. At the same time, the situation at Ukrnafta was different.
As a matter of fact, I heard from Igor Valeriyovych quite similar thoughts about pricing being unfair in other sectors as well. Now, to be honest, to an outside observer, the situation in the energy sector reminds of a conflict of two financial and industrial groups. Don’t you think that current events are a relatively standard thing for Ukraine?
– You see, unfortunately, everything is simplified to a conflict between two financial and industrial groups. I fundamentally disagree with this. Let me explain why. Centrenergo says that the cost of electricity production is UAH 1.6. The average price on the market for the first six months of this year was UAH 1.24. Where is the conflict here? I do not understand.
It is a state-owned company. Perhaps, it has some links to certain circles. But their price amounts to UAH 1.6, and the market creates conditions where the price is UAH 1.24. I think there is no conflict here.
Let me give you an example. “Green” investors. We have a 22% market share. Nobody can say that we are monopolists. But “green” investors found themselves in the situation we are facing today. Where do you see the conflict of groups? And there are many such examples.
I believe that today we are having not a conflict of two groups, but a conflict of market players with unprofessionalism and irresponsibility. This is where the conflict is taking place. People who, based on their positions, should effectively manage the energy sector, turned out to be unprepared. And market players, trying to prove their case, again, mostly in public rhetoric, found themselves hostages of such lack of professionalism.
If only DTEK had problems and other companies were doing great on the market, only then, one could call it a conflict between business groups where one wins and the other loses. However, when all the energy industry is in the current situation, what kind of conflict of business groups can we talk about? The conflict between transparent and open market rules of the game with the desire to be at the driver’s seat, to be in charge. That is the conflict. But it is definitely not a conflict between business groups.
– While sitting here, thinking about it and listening to you, I understand that, probably, the crisis that you are talking about may be dictated by the desire of different financial and industrial business groups to gain control over different, let’s say, regulatory functions of the state, different departments responsible for the market regulation, which affect their lives. Which is, again, a long-standing practice in Ukraine. How do you think this can be avoided?
– By having “Rotterdam+” more often. I mean independent, unbiased, and unaffected by the administrative influence market rules. It works when the computer determines the price, when you look at the indices and no one influences them, and when the regulator has a minimal impact.
It is crucial for us to create a situation where the regulator influences 5-10% of the market and not 95%, as is the case in our country. When markets regulate themselves. When we actually have the market rules. When there is no talk about a monopolist and a company with 20%. Moreover, there can be no talk of monopoly here, especially in the new market model.
I believe that the only solution to this whole problem is to quickly solve all the problems related to the market operation, quickly organize new segments of this market, the ancillary services market, and the residual capacity market, and ensure it’s normal operation, and so on.
All these elements are clear, everybody knows them. And the regulator needs to move away from this process. And then no one will wait for the stimulus from the regulator, the Ministry, and so on. Plus, I would add the rapid privatization of a state-owned company operating in this sector. It is obvious to everyone that the state is not the best manager.
I hope that there will be conditions for more Western players to participate in this market. This is crucial. A year ago, we negotiated with one of the largest Western companies to enter our distribution market. It was before the pandemic. They say “You know, there’s no Ukraine on our map”. And this is the function of our state. It should bring and put Ukraine on the map of the largest companies and investment funds. And if Ukraine appears on the map, it will be a completely different situation.
Then we will have more players and more market rules; then the regulator will listen more, and not cover up its miscalculations and mistakes, accusing market players of lobbying, influencing and things like that. In Ukraine, we must stop, roughly speaking, destroying each other. This also applies to information wars, accusations, myths and so on.
In the end, I think we should take pause and understand what determines the future of the country and the future of its economy. Again, referring to the economy, the future depends on Ukraine building trust with investors.
– You mentioned Rotterdam+. NABU and SAPO continue their investigation into this case. Are there any questions for the company? Do you need to provide any documents associated with this case? Do you know the status of the case?
– The case is pending. The company answers all questions and provides information.
When a state-owned company signs a contract under the Rotterdam+ formula only because it has the lowest price, when the country signs a memorandum with the IMF – the President Zelensky, the Prime-Minister, the Minister of Finance, which established the same “Amsterdam+” as the formula for gas price, and when all markets and energy resources, namely, oil, oil products and gas, are focused on the imported alternative, then… Well, the only thing you can do is to throw up your hands.
I have always said that we must fight against corruption. Rotterdam+ is the most independent, fair, and anti-corruption formula. It is because not a single person, not a single official can influence its calculations.
This is one instance where myths, deception of people, the use of media resources for manipulations, and the desire to get some political dividends or build political career based on such a big deception and myth, are becoming nothing, an information bubble, something we have been talking about all along.
In 2015, we said that only time can tell the truth. And today we see where the truth is. I hope that all those involved in this case, I mean law enforcement agencies, will come to an objective and fair conclusion, and we will see how this whole story ends.