| KIEV, April 11
KIEV, April 11 Western-backed reforms at
Ukraine's state gas firm are in danger of unravelling, a
development that would damage international confidence in the
country, the European Bank for Reconstruction and Development
(EBRD) said in documents seen by Reuters.
The authorities have taken steps to improve Naftogaz's
finances and boost transparency in the graft-ridden energy
sector, but the EBRD, one of Ukraine's main creditors, said
there had been a string of "frustrating developments" that meant
Naftogaz's independent board were about resign.
It did not give details of those developments.
In a letter to President Petro Poroshenko and Prime Minister
Volodymyr Groysman, EBRD President Suma Chakrabarti said the
board's resignation would "severely damage Naftogaz at a time
when reforms were finally beginning to take hold."
"It would also shatter the international confidence in your
government's commitment to reform and restructure Naftogaz and
other state-owned enterprises," he said.
The EBRD, whose loans help Naftogaz buy gas from Europe in
winter, invested 581 million euros ($617 million) in Ukraine in
The EBRD and the International Monetary Fund, which has
propped up Ukraine with a $17.5 billion bailout, have repeatedly
urged Ukrainian authorities to speed up their promised drive to
root out corruption and modernise the economy.
In the letter, Chakrabarti also said legislative delays were
holding up Naftogaz reform and called for "resolute and rapid
action" by the government and parliament to resolve the board
In a separate letter to Groysman, Chakrabarti said the pace
of reform of the gas sector and also of the judiciary and civil
service appeared to have slowed in the past few months.
Asked to comment on the EBRD's warnings, Groysman played
down the risk posed to the reform process, but said keeping the
independence of Naftogaz's board was a priority.
"The process is ongoing, Naftogaz is not threatened by
anything," he told journalists. "I'd like Naftogaz reform to be
"I will hold a number of meetings in the coming days to find
the necessary solutions," he said.
The departure of Western-backed technocrats from public
office and the watering down of landmark anti-corruption laws
have also raised concerns about the commitment of Ukraine's
leaders to push for lasting change.
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
($1 = 0.9423 euros)
(Writing by Alessandra Prentice; Editing by Mark Potter)