Confiscation of Ukrnafta and Ukrtatnafta. What started the war between Zelensky and Kolomoyskyy?

In any case, Privat is now in a strategically bad position to start a campaign against the government.

When it comes to the relationship between Volodymyr Zelensky and Igor Kolomoysky, hasty conclusions are particularly unrealistic. These two people have a lot in common, so it is hard to believe that their relations can instantly disappear.

It is not surprising that the news about the confiscation by the government of two major assets controlled by Kolomoyskyy and her partners in the Privat group was initially met with scepticism. The official information was too thin and left room for fantasies, as Ukrnafta and Ukrtatnafta Confiscation writes Dsnews.

The National Commission for Securities and Stock Market announced, that in compliance with the decision of the meeting of the Supreme Head Commander of the Supreme Headquarters of the ZSU due to military necessity on the 6th of August, the shares of five strategically important companies, including PAT "Ukrnafta" and PAT "Ukrtatnafta", were taken into the possession of the state.including PAT Ukrnafta and PAT Ukrtatnafta. "The seized shares have acquired the status of military property, their management has been transferred to the Ministry of Defence of Ukraine. After the end of the military status, in accordance with the requirements of the law, the mentioned shares will either be returned to the owners or their value will be reduced," this was all the NCSPFM thought it was necessary to explain.

A contract?
Commentators on social networks were speculating on hypotheses. It was suggested that the confiscation of Ukrnafta and Ukrtatnafta could be twofold advantageous for Kolomoyskyy. First of all, he can get a refund of the value of the shares at a reduced price without the need to contribute to the renovation of the Kremenchutsk oil refinery, which was destroyed by Russian missile attacks. On the other hand, another disadvantage for him may be the fact that he is not included in the register of oligarchs. One of the criteria for the oligarch status is to be the ultimate beneficial owner of a business entity, which is a subject of natural monopolies or occupies a monopoly (home) position on the market, i.e. has a market share of over 35%. Ukrnafta's share in the total output of naphtha and gas condensate in Ukraine in 2021 was 62.7%. In 2021, Ukrtatnafta's Kremenchutsk refinery increased its share in the Ukrainian petrol market to 40%.

Another option was also discussed - that after the end of the war, the two companies will be returned to Kolomoyskyy together with the investments that the state will make in them. This is a clever way of financing the Privat Group's Naftobusiness from the state budget.

However, the development of events showed that there were no secret agreements here. On 10 October, Ukrnafta asked Zelenskyy to "get involved in the situation and stop the lawlessness that is taking place in Ukraine during the war". She said that her activity had been blocked for three days already by law enforcers of the Interior Ministry and the Security Service of Ukraine (SBU) without a court ruling, and her office was being searched.

"For the third week, the armoured persons are in the office of PAT "Ukrnafta", do not allow employees to work, block all operational activities of the company, hinder the execution of normal operational processes of production and refining. All bank accounts of PAT Ukrnafta have been blocked for the third day of the week, and the company's activity has been effectively suspended," the company said.

If there had been a contract, the transfer of the company's management to the new head of Ukrnafta's management board, Serhiy Koretskyy, who was appointed on 10 October, would have taken place quietly and peacefully. However, the office of the company was blocked by the SBU. The SBU said that its officers "are taking preventive measures to prevent the destabilisation of one of the largest oil refineries in Ukraine from working properly".

An even more serious circumstance is that a criminal case has been brought against the management of the company. This is definitely not included in any agreements. The SBU announced that it is preparing a notice of suspicion of the company's management for part 3 of article 212 of the Criminal Code. 3 of Article 212 of the Criminal Code (evasion of payment of taxes, duties, obligatory payments). According to the Ukrainian Bureau of Economic Security, the pre-trial investigation of this criminal offence is being carried out by BEB detectives under the procedural supervision of the Office of the Prosecutor General and in cooperation with the Security Service of Ukraine (SBU).

"BEB and SBU officers are checking information about tax evasion by the management of one of the largest oil refineries in Ukraine. A group of companies supplying oil pastilles is also involved in the anti-tax evasion scheme. The owner is one of the richest oligarchs in Ukraine," the BEB reported. It is not easy to decipher what Ukrtatnafta's refinery, Ukrnafta's petrol stations and Kolomoyskyy can be considered here.

As a result, it was found that in 2019-2022, the directors of several enterprises allegedly understated their tax obligations with regard to excise tax. In particular, they understated and did not reflect financial and business transactions in the tax and accounting statements. According to BEB, the tax evasion may amount to about UAH 700 million. "Sanctioned searches are carried out in office premises and the oil refinery in order to obtain documentary evidence and to prevent the destruction of items and documents that confirm tax evasion," the notice reads.

But not all the unpleasantness for Kolomoyskyy. Another reason for the rounds was the information about possible violations, skoenaeni for the purpose of increasing profits during the manufacture of palnoy. "Detectives are making a sampling of samples of palnoy for the appropriate forensics. The documents, objects and things that confirm the illegal activity of the above-mentioned enterprises will be recognised as evidence," the BEB said.

For the public, this is a stronger information bomb than the news about "only" tax evasion. They are talking about fuel oil refining, which, in particular, was supplied for the army's needs during the full-scale war. It should be noted that this story will be continued - at the moment the fuel has only been taken for forensic examination, and the results of the forensic examination will be presented to the investigators later.

War?
On 11 October, Ukrnafta announced that its new director Serhiy Koretskyy had started fulfilling his duties. According to him, the main task is to ensure uninterrupted work of the enterprise in the conditions of military status, to preserve stable volumes of carbohydrate output and fiscal discipline. At the same time law enforcement officers have completed investigative actions in the central office of the company. The work of the company was resumed.

Kolomoyskyy's Naftobusiness was taken away along with petrol stations. It is clear that the petrol stations here as a bonus took away the refineries, naphtha digestors and already produced naphtha, which is stored in the naphtha pipelines of Ukrtransnafta.

The plant in Kremenchutz is not working after the shelling, and it requires investments of about hundreds of millions of dollars to renovate it. But the country needs it, especially during the Great War. And the state has much more opportunities now, during the war, to find (i.e. borrow from the West) money to repair the refinery than private owners.

Without this, the work of Ukrnafta, which used to produce naphtha exclusively for the needs of the Kremenchutsk refinery, becomes useless. Currently, the company continues to produce naphtha, but this naphtha is not delivered anywhere, but is exported to the pipelines of the state operator Ukrtransnafta, where it is stored in anticipation of the customer.

Therefore, the government's intrusion was probably necessary. "Such strategic enterprises must work for Ukraine's victory," Prime Minister Denys Shmigal said.

It is likely that Ukrnafta and Ukrtatnafta were taken away from Kolomoyskyy for good. The argument for the favour of this version can be the fact that the two companies were acquired by Serhiy Koretskyy. "This is unprecedented! It looks like we have the beginning of the creation of a state-owned vertically integrated oil company," said Serhiy Kuyun, director of the A-95 consulting group.

It is known about Koretsky that at the end of the 1990s he joined the group "Continium", in 2013 he took over the WOG petrol station, and in Jovtni 2018 he resigned and started to develop his own cafe under the brand Idealist Coffee.

WOG has started to grow," Kuyun said. - The whole thing is interesting. All three top three WOG executives of that period, together with Koretsky, are now working in high government positions or in state companies. Denis Kudin, who told WOG about non-private trading and development, is now deputy minister of economy. Vlad Voytenko, WOG's head trader, is the first deputy director general at Ukrtransnafta. The two of them are doing well, and I hope their former boss will not let them down.

Let us assume the best, from the point of view of the state's interests, development of events. Kremenchuk refinery, as Shmigal promised,

It is likely that Ukrnafta and Ukrtatnafta were taken away from Kolomoyskyy for good. The argument for the favour of this version can be the fact that the two companies were acquired by Serhiy Koretskyy. "This is unprecedented! It looks like we have the beginning of the creation of a state-owned vertically integrated oil company," said Serhiy Kuyun, director of the A-95 consulting group.

It is known about Koretsky that at the end of the 1990s he joined the group "Continium", in 2013 he took over the WOG petrol station, and in Jovtni 2018 he resigned and started to develop his own cafe under the brand Idealist Coffee.

WOG has started to grow," Kuyun said. - The whole thing is interesting. All three top three WOG executives of that period, together with Koretsky, are now working in high government positions or in state companies. Denis Kudin, who told WOG about non-private trading and development, is now deputy minister of economy. Vlad Voytenko, WOG's head trader, is the first deputy director general at Ukrtransnafta. The two of them are doing well, and I hope their former boss will not let them down.

Let's assume the best, as far as the state's interests are concerned, development of events. The Kremenchuk oil refinery, as promised by Shmigal, will resume operations, and the fuel produced by it from Ukrnafta's naphtha will meet the needs of the army and the state. But what will happen to this vertically integrated company after the war? It is unlikely that the government will just give it to Privat Group. It is more likely that it will be put up for an open tender, and Kolomoyskyy will be paid in compensation.

From his side, Kolomoyskyy is hardly happy about all these approaches. However, it does not mean that he will do something against Zelensky right now. The main factor is the issue of compensation after the war. Even if the confiscation of two companies has become for Kolomoyskyy a complete impossibility, he will probably have the opportunity to negotiate with the representatives of Zelenskyy's command its amount and term of payment.

The law says that compensation for alienated property under the conditions of the legal regime of the state of war with the subsequent full reimbursement of its value is carried out during the next five budget periods at the expense of the state budget. So there is room for agreements. In addition, another subject for bargaining may be the share of criminal proceedings opened by the BEB.

In any case, Kolomoisky is now in a strategically bad position to launch a campaign against Zelensky. He can't even focus on 1+1, because there is a single telethon, and if he tries to make propaganda against the authorities, he will be threatened with being thrown off the TV.

That is why it is quite unlikely that there will be no further intensification of relations between the two countries, at least until the end of the conflict with Russia. And after that a lot of things can change. And who will play for or against whom - it is too early to predict.