The Energy Club is implementing a special project dedicated to corporate management of Ukraine’s energy sector — a topic, now directly related to trust in state-owned companies, the effectiveness of managerial decisions, transparency, responsibility and the ability of the industry to attract investments in recovery and development. As part of this special project, the Energy Club is conducting a series of interviews and expert discussions with representatives of energy companies, supervisory board members, lawyers, advisors and corporate management specialists on the new governance model in the Ukrainian energy sector in the context of war and post-war recovery.
Volodymyr Omelchenko, Razumkov Centre Energy Programmes Director, in an interview for the Energy Club journalist Olena Karpachova spoke about the main problems of corporate management in the state energy sector, the distinction between the role of the state as the owner and manual management, the lessons of NJSC Naftogaz of Ukraine for other state-owned companies, the impact of OECD standards on real management practices, the criteria of selecting supervisory board members and top managers, and why the quality of corporate management is becoming a key condition for raising international funds and investments in the restoration of Ukraine's energy sector.
— Mr. Omelchenko, for many years you have been monitoring the Ukrainian energy sector as a system — from state policy to the work of specific companies. If we talk about corporate management in the energy sector, where lies the main problem today: in legislation, in the role of the state as the owner, in the quality of supervisory boards, or in the management culture?
— The main problem is not in one element, but in the wrong model of the role of the state as the owner. Previously, the government used to formally cast off responsibility for state-owned companies, but retain opaque influence on personnel, financial and commercial decisions. This contradicts the logic of the OECD. The state should not hide behind supervisory boards, but honestly formulate its ownership policy, strategy, expected results and limits of responsibility.
— Ukraine is formally moving towards OECD standards in corporate management of state-owned companies. Do you think that these standards really change management practice in the energy sector, or they still largely remain a declaration?
— The OECD standards have already changed the vocabulary, but have not become a full-fledged practice yet. They are often mistakenly interpreted as the state’s withdrawal from management. In fact, the OECD requires something different: the state should act as a professional, transparent and accountable owner. Especially in strategic energy companies, it should exert decisive influence on strategy through legitimate representation mechanisms, not through backstage moves.
— You have previously critically assessed the corporate management model at NJSC Naftogaz of Ukraine, in particular, the role of the supervisory board as a link between the Cabinet of Ministers and the company’s board. What lessons should other state-owned energy companies learn from the history of Naftogaz?
— The lesson of Naftogaz is that the supervisory board should be neither a decorative intermediary nor an autonomous centre of power without political responsibility. It must ensure equilibrium between the state, as the owner, and the management. If the government does not formulate a strategy and the board does not have sufficient expertise or understanding of the Ukrainian market, a management vacuum arises. Independence of the board does not mean independence from the state policy.
— Where, in your opinion, should the line be drawn between the legitimate influence of the state as a shareholder and manual management of an energy company? What decisions should the state make as the owner, and which should remain the responsibility of the supervisory board and management?
— The distinction is simple: the state as the owner determines the strategy, financial plan, investment priorities, dividend policy, security objectives and expected KPIs. The supervisory board monitors the implementation and appoints/evaluates the management. Management is responsible for operational decisions. Manual management begins where officials informally interfere in procurements, appointments, commercial contracts or daily management.
— In the energy sector, state-owned companies often perform not only commercial but also social, security and political functions. How should this be reflected in the company’s strategy, management KPIs and the work of the supervisory board, so that they are not evaluated only on the basis of profits or losses?
— State-owned energy companies cannot be evaluated on the basis of profits alone. Their strategy should directly include social, security and crisis management functions: reliability of supply, infrastructure recovery, readiness for attacks, implementation of PSO, investments in resilience, financial discipline and fighting corruption. Then, losses and profits are assessed not in isolation, but in the context of the state mandate.
— During war, energy companies constantly operate under critical conditions: attacks on infrastructure, shortage of resources, quick decisions. May martial law serve as the basis for simplified or reduced corporate procedures, and where is the red line?
— Martial law can speed up procedures, but it cannot legalize non-transparency. The red line is in limited competitions without clearly set criteria, political appointments under the guise of anti-crisis decisions, procurement without audit, and hidden interference in management. In wartime, control should not be weaker, but smarter: quick decisions, written records, post-audit, and personal responsibility.
— How to correctly assess the effectiveness of supervisory boards at state-owned energy companies: by financial performence, energy security, ability to raise funds, fighting corruption, quality of management, or other indicators?
— The effectiveness of supervisory boards should be assessed comprehensively: financial stability, resilience to attacks, implementation of investment programs, quality of management, attraction of funds, risk management, anti-corruption safeguards, and trust of international partners. For a wartime energy sector, profit is important, but it is not the only criterion. The key question is whether the company has become more stable, manageable, and able to implement the state policy.
— One of the most sensitive issues is the selection of supervisory board members and top managers. What criteria should guide energy companies: international experience, knowledge of the Ukrainian market, independence, anti-crisis experience, technical expertise, reputation?
— Selection of supervisory board members and top managers should be strictly professional. Criteria: knowledge of the Ukrainian energy market, crisis experience, technical and financial competence, reputation, ability to work with MFIs, and understanding of security risks. International experience is useful, but in itself is not a guarantee of quality. The mistakes of past years included formal competitions, when people without sufficient industry weight got into the boards.
— The Ukrainian energy sector needs large investments in recovery, distributed generation, networks, BESS, and gas infrastructure. To what extent does the quality of corporate management actually influence the willingness of international financial institutions, donors and private investors to finance such projects?
— The quality of corporate management directly influences investments in restoration, networks, BESS, gas infrastructure and distributed generation. Donors, IFIs and private investors finance not just a project but also the risk management system. They need a transparent strategy, professional management, predictable owner decisions, protection from political interference and clear responsibility for the result.
— If you were to formulate three priority steps to improve corporate management in the state energy sector for the next 1–2 years, what are they: new supervisory boards, depoliticized management, a transparent KPI system, strengthening accountability, reforming the role of the state as the owner, or something else?
— The first step is to adopt a real state ownership policy for the energy sector: who is responsible for what, and how. The second is to audit supervisory boards and to replace weak members with professionals; in strategic companies, the state should have sufficient representation to implement the owner's mandate. The third is to introduce transparent KPIs, regular assessment of boards and management, and personal responsibility for financial, investment, and security results.
Corporate management in the energy sector today is no longer just a matter of formal reforms or implementation of international recommendations. Wartime resilience, trust of international partners, and the ability to attract resources for restoration and modernization of the industry depend on how transparent, professional, and responsible state-owned energy companies are. That is why the discussion of the role of the state as an owner, the quality of supervisory boards, management responsibility, and practical implementation of corporate management principles are gaining key importance for the future of the Ukrainian energy sector.
