September 19, 2017 / 4:51 PM / a month ago

Board of Ukraine's Naftogaz resigns, cites reform blockage by govt

KIEV, Sept 19 (Reuters) - Ukrainian state-run gas firm Naftogaz said on Tuesday the remaining members of its independent supervisory board had tendered their resignation in protest at what it called government obstruction of efforts to reform the company.

The move will add to speculation that the authorities lack commitment to eliminate the power of vested interests as promised to backers such as the International Monetary Fund (IMF) and the European Bank for Reconstruction and Development (EBRD).

In a statement, Naftogaz said the last two members of its independent supervisory board planned to resign due to “dismantling of reform by the government”.

It quoted board members Paul Warwick and Marcus Richards as saying no significant progress had been made on reforms over the past five months, despite assurances from the authorities.

“Not one of the actions that are under the government’s control have been carried out. On the contrary, the level of political meddling in Naftogaz’s work continues to grow and has become, unfortunately, an obvious norm,” Naftogaz quoted them as saying in their letter of resignation.

Their departure is part of an exodus of reformers who have given up posts in the government or state institutions in frustration at what they saw as the slow pace of change following the 2013-2014 pro-European Maidan uprising.

In April, the EBRD, whose loans help Naftogaz buy gas from Europe in winter, warned that the resignation of the independent board would threaten progress made towards modernising the company and undermine investor confidence.

Board members Charles Proctor and Yulia Kovaliv have already resigned.

The government has taken steps to improve Naftogaz’s finances and boost transparency in the graft-ridden energy sector.

A reform to bring Naftogaz’s prices in line with the market helped the firm to post profit in 2016 for the first time in five years.

But the EBRD and the IMF, which has propped up Ukraine with a $17.5 billion bailout, have repeatedly urged the authorities to speed up their promised drive to root out corruption and modernise the economy.

Naftogaz said it would hold a briefing on Wednesday concerning the board’s resignation. (Reporting by Alessandra Prentice; Editing by Dale Hudson)

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