The Organisation for Economic Co-operation and Development (OECD) noted the progress of corporate governance reform of the state-owned enterprises (SOEs) sector and identified a set of detailed recommendations as priority areas for reform addressed to the state’s role as owner and shareholder in economically important SOEs and directly to one of the strategic state-owned enterprises Naftogaz of Ukraine.
OECD outlined its vision of the situation, including in the hydrocarbons sector in a special report submitted by the working group of the Organization.
The report identifies the main achievements of the reform of the state-owned enterprise reform, in particular, approval of the new legislation on privatization, approval of the basic principles of the implementation of property policy regarding public sector entities, as well as development and implementation of certain policies for 15 economically important SOEs. The special emphasis was placed on the renewal of the mechanism of the Appointment Committee and professional level of the nominees for the position of CEOs and members of supervisory boards. The OECD hails efforts made by the Government in creating supervisory boards and building a monitoring system for 100 largest state-owned enterprises. The exports also commended ambitious program for reforming the natural gas sector and adoption of an action plan for corporate governance of Naftogaz Ukraine, where an independent supervisory board operates.
"Ukraine confirms its commitment to the principles of the OECD and in the future will continue to adhere to the best practices of the member countries of OECD on the way of reforming SOEs", Minister of the Cabinet of Ministers of Ukraine Olexandr Saienko stressed, speaking at the presentation of the OECD report.
Recommendations addressed to the state as owner and shareholder of Naftogaz are to upgrade the legal and regulatory framework and address any inconsistencies, to establish a professionalised and coordinated state-ownership entity that can champion SOE, to strengthen the independence, professionalism and capacities of the ownership entity responsible for Naftogaz and to remove conflicts of interest in the ownership of SOEs in the hydrocarbons sector.
Recommendations on governance of the Naftogaz Group are the following to execute unbundling of the gas transmission activities as envisaged by the Natural Gas, to assign the necessary authority to the Supervisory Board to carry out core functions of hiring/firing of CEO, strategy, guidance and monitoring of management and to improve quality of financial and non-financial disclosure.
"We are pleased with the active involvement of Ukrainian government agencies in this assessment. We hope that OECD recommendations will serve as an inspiration for both Naftogaz of Ukraine and other state-owned companies that seek to implement corporate governance. I also hope that they will inspire state bodies that seek to develop competition in their markets, " Mr.Ole T.Horpestad, Ambassador Extraordinary and Plenipotentiary of Norway in Ukraine stated.
It should be noted that special attention was paid to the issue of limiting the maximum level of remuneration for heads and members of executive bodies of state companies and members of supervisory boards of SOEs, including Naftogaz of Ukraine