7 Nov 2022 17:52

Ukraine expropriates Ukrnafta, Ukrtatnafta and Motor Sich shares

MOSCOW. Nov 7 (Interfax) - Ukraine has expropriated shares in five strategic enterprises, National Security and Defense Council Secretary Alexei Danilov said at a briefing.

The decision has been reached, he said.

A video clip of the briefing was posted on Prime Minister Denis Shmygal's telegram channel.

The five enterprises are Ukrnafta, Ukrtatnafta, Zaporozhtransformator, AvtoKrAZ and Motor Sich.

"The products of these enterprises are critical for our Armed Forces and the power sector. Therefore, they must provide for the state's defense needs [...]," according to the channel. "Enterprises that have already been working will receive more orders and more guarantees from the state for products. The work of enterprises that have not been functioning will resume. Workers will return to the production process," the channel said.

Naftogaz, the national oil and gas company, owns a controlling stake in Ukrnafta, while a minority stake of about 42% is owned by the Privat group of Igor Kolomoisky and Gennady Bogolyubov; the situation is reversed at Ukrtatnafta, or Kremenchug Oil Refinery.

All shares of the Motor Sich plant, the largest owner of which was the company's recently arrested president, Vyacheslav Boguslayev, have been frozen since April 2018 following the sale of a controlling stake to China's Skyrizon and related persons a year earlier.

AvtoKrAZ and Zaporozhtransformator, controlled by Konstantin Zhevago and Konstantin Grigorishin, respectively, have been in bankruptcy proceedings in recent years.

Danilov said at the briefing that assets seized had acquired the status of military property, and their management had been transferred to the Defense Ministry. "After martial law comes to an end, and in accordance with the law, these assets can be returned to their owners or appropriate compensation for their value [will be paid]," he said.

Asked about the possibility shares in other enterprises being expropriated, Danilov said: "It will depend how much they will influence the condition state in which our state finds itself."

Defense Minister Alexei Reznikov said at the same briefing that this was not nationalization. "This is not nationalization, don't use this term. This is the seizure of property during martial law, these are completely different legal forms," Reznikov said.

He said the Defense Ministry has already formed new supervisory boards at all five enterprises, but in conjunction with Naftogaz at Ukrnafta and Ukrtatnafta.

"General meetings [of shareholders] have taken place. Supervisory boards have been approved, and in accordance with the laws, corporate governance standards, these supervisory boards will appoint current management, that is, executive managers, and so on, so that the work of enterprises does not stop," he said.