Kyiv has warned it would take more companies under state control if they did not fully back the war effort, after the government invoked the conflict against Russia to commandeer five industrial groups.
The companies Kyiv has taken over include Ukraine’s largest oil producer Ukrnafta and the largest oil refiner Ukrtatnafta, which are both controlled by oligarch Igor Kolomoisky. The billionaire backed Volodymyr Zelenskyy’s 2019 presidential bid before becoming embroiled in an investigation into the bankruptcy of PrivatBank, which he previously owned.
German Galushchenko, Ukraine’s energy minister, said the government was monitoring whether private companies and their management were entirely focused on supporting the country’s military and the economy.
Asked whether more takeovers could follow, he said: “We need to survive . . . that is the common task for everyone. If the state would see that someone is trying to play some games separately not to achieve this goal to protect against Russia, of course I am sure there would be some decisions.”
Galushchenko insisted the measures were not nationalisations because state control would be temporary and is designed to support the wartime economy battered by Russia’s military assaults. The owners would either see the assets returned to them or receive compensation, he said.
Also under state control are aeroplane turbine and helicopter engine maker Motor Sich, truck manufacturer AvtoKraz, and Zaporizhtransformator, which produces parts for the electricity grid. All were at some point owned by Ukrainian oligarchs.
Vyacheslav Boguslaev, Motor Sich’s former owner and president, was arrested last month on treason charges. Local prosecutors allege he breached sanctions by selling helicopter engines to Moscow. Both Kolomoisky and Boguslaev have denied wrongdoing.
Kyiv has released little details on its decision process leading to the takeovers or on financial compensation for the private shareholders. The seizures follow legislation passed last year meant to curb the influence of Ukraine’s wealthiest businessmen. Kolomoisky and Boguslaev have not commented on the state grabs.
Yuriy Ryzhenkov, chief executive of Ukraine’s largest steel producer, Metinvest, which is owned by the country’s richest man Rinat Akhmetov, said the government’s decision caught him off guard.
“I would expect that to happen earlier (in the war) rather than later if it’s really for the military,” Ryzhenkov said in an interview in London. “If it is something else, like sanctions or something, then I understand, but let’s not kid ourselves. Let’s say loud and clear that these are sanctions because of the individuals that own those companies and because of their doings.”
Zelenskyy on Monday said some of the companies now under state control “hardly worked.” “Now all of them will work for defence,” he said, adding that they will aid the repair and production of military equipment, supply defence forces and fix Ukrainian infrastructure.
The government would strive to turn them around financially, Galushchenko said. “I hope as quickly as we can, we can see the results,” he said.
Ukrtatnafta halted operations after being hit by Russian missile strikes in the first months of Moscow’s full-scale invasion of Ukraine. Exiled Ukrainian oligarch Kostyantyn Zhevago previously owned truck manufacturer AvtoKraz and Zaporizhtransformator was previously owned by businessmen including Kostyantyn Grigorishin. Production at both AvtoKraz and Zaporizhtransformator has ground to a halt.
Ryzhenkov said the government had not discussed taking control of the steelmaker Metinvest, which is still making a profit despite the damage inflicted by the war. The company is not a military supplier but has sought to help out by making bullet proof vests and armoured bunkers, he said. It has also provided excavators and trucks to build defence lines.
“If they want an effective management of the company and help with the war effort, then that is what we do already,” Ryzhenkov said. “So let’s wait and see what will be happening with those few companies and we will understand the rationale for the nationalisations.”
Akhmetov also owns DTEK, Ukraine’s largest thermoelectric power producer. A person close to the business said there have been no signs of government plans to take control of DTEK as well. They are “managed professionally, and have been co-operative and supportive of the war effort,” the person added.