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Ukraine picks new energy minister as Western allies warn on reforms

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By Reuters
Ukraine picks new energy minister as Western allies warn on reforms
Ukraine picks new energy minister as Western allies warn on reforms   -   Copyright  (c) Copyright Thomson Reuters 2021. Click For Restrictions -

By Natalia Zinets and Pavel Polityuk

KYIV (Reuters) – Ukraine named Herman Halushchenko as energy minister on Thursday in a shake-up after the sudden sacking of the head of state energy firm Naftogaz, which had sparked a stark warning from the country’s Western backers.

Andriy Kobolyev’s abrupt exit on Wednesday after seven years in charge of Naftogaz came as Ukraine tries to secure more loans from a $5 billion deal with the International Monetary Fund that has been derailed since last year over concerns about reforms.

Halushchenko replaces Yuriy Vitrenko, who was appointed to succeed Kobolyev at Naftogaz. The new minister was previously vice president of state nuclear power firm Energoatom.

Naftogaz, one of Ukraine’s biggest companies, said the move signalled “return to the practice of manual management of state-owned enterprises” that threatened to damage the company’s preparations for the winter heating season.

The government said Kobolyev was dismissed after the state-owned enterprise (SOE) reported a loss of 19 billion hryvnias ($684 million) for 2020.

Kobolyev’s sacking prompted a statement from the ambassadors from the Group of Seven nations.

“Effective management & governance of SOEs in Ukraine, free from political interference, is crucial to Ukraine’s competitiveness, prosperity, & Ukraine fulfilling its international commitments,” it said on Twitter.

The U.S. State Department’s spokesman Ned Price said integrity and transparency in making such appointments was “key to maintaining confidence in Ukraine’s commitment to reform.”

Cleaning up Naftogaz’s finances and tackling political influence was a milestone reform championed by Ukraine’s overseas backers since street protests in 2014 brought pro-Western political parties to power.

The IMF estimates that Naftogaz’s losses accounted for 1.9% of gross domestic product and about 60% of domestic government debt in 2013, a year before Kobolyev took charge.

The company became profitable in recent years and was one of the country’s main taxpayers.

(Editing by Matthias Williams and Alexander Smith)