Centrenergo, one of Ukraine’s largest power companies, has had a troubled history. The State Property Fund has faced multiple court obstacles to privatizing the enterprise.

Editor’s note: This story has been updated to include additional information.

The Kyiv Administrative Court on Feb. 28 blocked the Cabinet of Ministers’ plan to change the management at state energy company Centrenergo. 

Prime Minister Oleksiy Honcharuk announced on Feb. 26 that Centrenergo’s management would be replaced, as the company gears up for its long-delayed privatization. The company supplies 15 percent of Ukraine’s energy needs. The State Property Fund currently owns 78.3% of Centrenergo.

The unnamed plaintiff, who is a member of Centrenergo’s supervisory board, according to the court decision, filed a motion to halt the move following Honcharuk’s announcement.

The complaint stated that only the supervisory board has the right to dismiss the company’s management and the plaintiff was not part of any meetings concerning the change. 

The court partly satisfied the complaint, declaring that the State Property Fund cannot dismiss the directors of the company, including but not limited to executive director Volodymyr Potapenko. 

“There are reasons to believe that the decision… to replace management at OJSC Centrenergo may not correspond to the requirements of the law and the rules of the company charter,” the court wrote. “However, the court cannot speak of their apparent illegality, since there are no such decisions in this case.”

A preparatory hearing will take place on May 18.

Potapenko has been linked to billionaire oligarch Ihor Kolomoisky. After Potapenko became the executive director of Centrenergo last year, the company started to purchase coal from enterprises controlled by Kolomoisky. 

However, according to data provided by Andriy Gerus, the head of the parliamentary energy committee, Centrenergo significantly ramped up its purchase of coal from D.Trading around the start of the year. D.Trading is owned by oligarch Rinat Akhmetov, Ukraine’s wealthiest man and Kolomoisky’s frequent rival.

Kolomoisky relies on Centrenergo to supply inexpensive energy to his metallurgical plants — electricity is the most significant part of their cost structure. 

The oligarch had denied that Potapenko is under his control but has told media that Potapenko is a director he “understands.” 

The Cabinet of Ministers has not published its decision to change Centrenergo’s leadership on its website. A request by the Kyiv Post for the copy of the decision has not been answered. 

However, Honcharuk at a March 2 press briefing confirmed that “the decision has been made and it will be carried out.” The court decision blocking the move was published on the public registry on the same day. 

Several Ukrainian media outlets reported on Feb. 27 that people associated with Kolomoisky were blocking the entrance to Centrenergo to prevent the new leadership from entering the building and that the decision to change Centrenergo’s leadership was being rolled back, following a meeting between Kolomoisky and President Volodymyr Zelensky.

Ukrainian media also cited unnamed sources in reporting that Honcharuk’s possible pending dismissal might be connected to Kolomoisky’s ire.

The oligarch denied being involved.

Centrenergo owns three thermal power plants – Trypilska, Vuglegirska, and Zmiivska – and the repair service Remenergo. The company powers the vast Kyiv, Kharkiv and Donetsk oblasts.

The Ukrainian government wants to privatize as many state-owned companies as possible, including Centrenergo, as Ukrainian President Volodymyr Zelensky aims to bring more foreign investors to Ukraine. In November 2019, Honcharuk put Centrenergo on the top priority list for privatization.