It was at the time when the head of the board of NJSC Naftogaz of Ukraine was telling reporters about the achievements of the “new” management and profits of UAH 12 billion in 2021 that lobbyists and opponents of bill No. 7427 and several other related ones were breaking their spears in the Verkhovna Rada. Lobbyists won with the overall support of the votes of the Servant of the People: a bill on an unprecedented subsidy mainly to Naftogaz in the amount of UAH 264.3 billion ($8 billion).. ) passed by majority on first reading. It is highly likely that this bill will be adopted in general as a law one of these days..
However, not everything that benefits Naftogaz benefits Ukraine..
All the more relevant is the question: how did it get to this point And also what the results of the activities of NJSC Naftogaz of Ukraine and its report for 2021 compared to 2020 testify? A thorough analysis of the financial report of Naftogaz as a parent company explains a lot, in particular, what is behind the company’s UAH 12 billion profit and why this does not at all indicate a stable financial position of NAK and its subsidiaries.
Let me remind you that on April 28, 2021, the Cabinet of Ministers, as the founder and owner of NJSC Naftogaz of Ukraine, following the consideration of its annual report for 2020, dismissed the head of the company, Andriy Kobolev, recognizing his work as unsatisfactory, and the Supervisory Board in full force was dismissed after him.. Yuriy Vitrenko was appointed as the new leader, who was “technically” fired by Andrey Kobolev almost a year before.
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The official government portal noted: “The new head of the company has been tasked with systematically increasing Ukrainian gas production, as well as assisting in the formation of a full-fledged and fair gas market in Ukraine”.
At the time of the re-election and appointment of Yu. Vitrenko (26. 04. 2022) as the head of the board of NJSC Naftogaz of Ukraine, the Cabinet of Ministers did not consider, approve or evaluate the activities of the head of the board in fulfilling the tasks related to the systemic increase in production, and the main areas of the company's activities, determined by the government additionally for 2021, and also did not approve the annual.
At the same time, according to the analytical study “On the results of the work of NJSC Naftogaz of Ukraine in 2021”, published by the Energy Community Energy Club, none of the main directions approved by the government for 2021 have been implemented - neither in terms of the sufficiency of volumes to cover the selection of household consumers on non-discriminatory conditions.
Gas production: systemic decline.
The first and most important task is a systematic increase in gas production in Ukraine, which is the main activity of JSC " At the end of 2021, the volume of commercial natural gas production amounted to only 12.93 billion cubic meters, or 4% less compared to 2020.
A similar situation is observed in private mining companies in Ukraine, but the rate of decline is much lower. According to the consulting company ExPro, in 2021 gas production in Ukraine amounted to 19.79 billion cubic meters, which is 2.2% less than in 2020..
In the consolidated financial report of Naftogaz, as the parent company that controls all commodity and cash flows, for 2021, according to International Financial Reporting Standards, this is confirmed by the volume of investments: Naftogaz was able to finance only UAH 15.6 billion of capital investments, which corresponds to the level of 2020. Investing at the level of the year before last, one should not even expect a stop in the decline in production. And you should not write everything off for war without investing in production.
However, during a press conference on June 21, the head of the NAK tried to do just that: “We expect that this year, under the circumstances that we are now seeing, production in Ukraine will decrease by 5-10%. This is a non-critical decrease in production... the company has analyzed and can predict a drop at the level indicated above..
At the same time, Naftogaz emphasizes that the main area of \u200b\u200b\u200b\u200bactivity, and therefore the receipt of income in 2021, was the sale of gas, which NJSC imports, stores, and solely purchases from its “daughter” JSC “Ukrgasdobycha” and resells through other subsidiaries. And at the same time, they explain that a slight increase in income from the import, storage and sale of gas, and even the unprofitability of some areas of the company's activities, are due to the actions of the government and the National Commission, which carries out state regulation in the fields of energy and utilities.
gas release program.
The second task when appointing Yuriy Vitrenko as the head of the NJSC, the Cabinet of Ministers determined “the formation of a full-fledged and fair gas market in Ukraine”. A rather general wording, but Vitrenko himself specified it, while holding a position in. energy minister.
Two months before his appointment as the head of Naftogaz, he stated that the main volumes of gas were produced by the state-owned company Ukrgasdobycha, moreover, from wells transferred to it free of charge by the state. “But Ukrgasdobycha does not sell these volumes on the market. They are taken by Naftogaz of Ukraine. Thus, Naftogaz has a special position in the natural gas market, which is significantly different from the position of other companies. And the current state of affairs allows Naftogaz to manipulate prices on the gas market,” he noted..
According to Vitrenko, in order to " And also to oblige Ukrgasdobycha to sell 100% of its own gas from April 2021 to all consumers of natural gas on terms no worse than for Naftogaz.
It is these steps that will make it possible to implement the program for opening access to volumes of natural gas produced by state-owned companies (Gas release program), Yu. Vitrenko.
Since April 29, 2021, Yuriy Vitrenko has had every opportunity to put his initiatives into practice. But for some reason he didn't.. Despite the order of the Cabinet.
Real financial result - in the cash flow statement.
No matter how you choose the words, but at the end of 2021, there was no financial breakthrough at Naftogaz. And the practice of forming the net profit of the NJSC, given the numerous scandals, cannot be a criterion for evaluating the activities of the " But the financial statements of Naftogaz itself contain one report, according to which you can put the puzzle together - give a proper assessment of the activities of Naftogaz management. This is the “Consolidated Statement of Cash Flows” (using the indirect method), compiled solely on the basis of the financial report of Naftogaz.
It is in this document that all profit adjustments are reflected and the real financial result is shown.. And these results are comparable. Also, the specified report reflects the main indicators of changes in working capital (increase/decrease in liabilities), the main indicators of the investment and financial activities of the enterprise.
Thus, the data of the Consolidated Statement of Cash Flows indicate a deterioration in the activities of NJSC Naftogaz of Ukraine in 2021: profit before tax, excluding adjustments, amounted to UAH 58.4 billion, which is UAH 2.5 billion less by. And this is the data of Naftogaz itself.
If the financial results of Naftogaz before changes in working capital are comparable, then following the results of operating activities in 2021, Naftogaz formed a significant deficit of funds in the amount of UAH 24.4 billion. There was no deficit in 2020, on the contrary, Naftogaz had a net cash flow from operating activities of UAH 19.5 billion.
The main reason for the formation of a deficit of funds from operating activities in 2021 was an increase in trade receivables by UAH 34.7 billion, which is almost 5 times more than in 2020 (UAH 7.1 billion).
It was due to the formation of an increase in such receivables that Naftogaz did not have enough funds to purchase natural gas to increase its reserves in underground gas storage facilities (UAH 28.7 billion). The specified deficit of funds was covered by "
Since the net cash flow from operating activities was formed with a deficit of UAH 24.4 billion, capital investments were financed, in fact, only thanks to the sale of government bonds in the amount of UAH 11.4 billion and receipts from JSC Main Gas Pipelines on account of the purchase of LLC.
As for the financial activities of Naftogaz, its performance in 2021 is also not in favor of the new management. And the point is not that in 2020 UAH 39.6 billion of dividends were paid to the budget for the state share, but in comparing the total indicators of attracting and repaying loans. In 2020, the total value of attracting and repaying loans indicates a reduction in borrowing by UAH 4.7 billion, while in 2021 this reduction was only 1.1 billion, or four times less.
Taking into account the results of operating, investment and financial activities of Naftogaz, the balance of funds and their equivalents at the end of 2021 decreased by UAH 6.6 billion compared to the balances at the beginning of the year and amounted to UAH 30.5 billion.
It is strange when the head of Naftogaz reports an increase in net profit by UAH 31 billion in 2021, while the balance of funds at the end of the year is significantly reduced.
These conclusions of the analytical study, in fact, are confirmed by the report of an independent auditor.
Thus, according to the findings of the auditing company OOO AF Prai? WaterhouseCoopers, which audited the consolidated financial statements of NJSC Naftogaz of Ukraine for 2021, Naftogaz Group’s liquidity expectations are based on the following factors:.
the possibility of collecting receivables for natural gas;
the possibility of increasing the price of gas sold to DH companies starting from June 2022;
continued receipt of funds for the services of organizing the transit of gas and oil;
continued receipt of cash from compensation for lost income from gas transportation.
That is, without the ability of the Naftogaz Group to collect receivables for natural gas and without compensation for lost income from gas transportation, a gap in the liquidity of the company arises.
In the auditor's opinion, future events or conditions could cause the company to become incapable of continuing as a going concern..
Based on the results of the audit of financial statements in 2020, there were no such conclusions of the auditor. But even in the absence of such conclusions, the Cabinet of Ministers recognized the work of the board of NJSC Naftogaz of Ukraine as unsatisfactory.
In 2021, the auditor already had warnings about the liquidity and ability of the Naftogaz Group to continue its operations on an ongoing basis, which, in turn, indicates a deterioration in the financial position of NJSC Naftogaz of Ukraine.
Thus, at the end of 2021, Naftogaz significantly worsened its performance indicators, found itself on the verge of a liquidity gap and, according to the auditor’s conclusions, may lose the ability to continue its activities on a continuous basis. And we are told about UAH 12 billion in income....
Deputies of several parliamentary factions and groups turned to Prime Minister Denys Shmygal with deputy requests: how does the Cabinet of Ministers react to the warning of an independent auditor about the potential creation of a liquidity gap and the loss of the ability to continue its activities on an ongoing basis of the Naftogaz Group and how such warnings are taken into account when assessing the activities of the board?
Waiting for an answer!
Why NAC continues to receive funds for transit.
Only thanks to the “compensation for lost income from gas transportation” received in 2021 from LLC Gas Transportation System Operator of Ukraine in the amount of UAH 30 billion and UAH 4.7 billion in 2022, Naftogaz managed to stay afloat until the end of the heating season.
At the same time, the right to receive such compensation by Naftogaz, according to many experts, is very doubtful.. Without going into details, Naftogaz continues to receive income from transit, which is provided by OGTSU LLC, in accordance with an agreement with Ukrtransgaz. But, the auditor notes, NAC considers this not income, but a “contribution” from the government as a shareholder of both NAC and OGTSU. This is probably why, having received UAH 30 billion of “compensation”, the management of Naftogaz decided not to reflect them as income, respectively, proper tax charges and their payment to the budget were not carried out.
Despite the obligations of the Cabinet of Ministers to the IMF to suspend the further implementation of the agreement between OGTSU LLC and Ukrtransgaz JSC on reimbursement of the adjustment of the required income, this was not done. According to the auditor, after undertaking to suspend the agreement, Naftogaz continues to receive such compensation.. In particular, for four months of 2022 it amounted to UAH 4.7 billion.
Will it not happen that, saving Naftogaz at the expense of the income of the GTS Operator, it is the latter that will soon be on the verge of bankruptcy?
About “compensation to key management personnel”.
As noted in the above-mentioned analysis of the results of the NAC for 2021, against the background of the formation of a deficit of funds from operating activities in the amount of UAH 24.4 billion that year, an increase in wage payments to key management personnel looks too brazen and cynical. Thus, in the submitted report, we are talking about the following: “The leading management personnel during 2021 consisted of an average of five members of the board and 15 directors (in 2020 - five members of the board and 12 directors). Compensation to key management personnel included wages and additional current bonuses and amounted to UAH 911 million (UAH 672 million in 2020).”.
Of the indicated UAH 911 million, UAH 338 million were paid to Andrey Kobolev, the previous head of Naftogaz, who was fired in April 2021..
“Thus,” experts note, “in 2021, UAH 573 million was paid for four members of the board (excluding the head of the board) and 15 directors.. If we allow a certain gradation of wages between members of the board and directors, then the average salary of a member of the board of Naftogaz will be over UAH 4 million per month, and a director about UAH 2 million per month..
According to the data of the Naftogaz website, the salary of the current head of the board is about 50 thousand rubles.. UAH per month, in particular, in April 2022, he received UAH 50,727.92. (There seem to be no contracts with the rest of the "
The incident is how, with the salary of the head of the board of 50 thousand. UAH a member of the board can receive 80 times more, and a \? Is this why Naftogaz, under a far-fetched pretext, refuses to publish data on the amount of salaries of board members?
It is also logical to ask: why, against the backdrop of falling natural gas production and a galloping increase in receivables, increase the number of directors of Naftogaz from 13 to 15 people? This is probably a trifle for the NAC, given all of the above and on the eve of the decisive battles for the jackpot of $ 8 billion.. - "
It is not for nothing that Yuriy Vitrenko is preparing the ground: “We must now import gas, but the difficulty lies in the fact that this requires huge funds”. And he immediately adds: “Ukraine needs to accumulate 19 billion cubic meters of gas by the heating season - this is the position of the Ukrainian government, it (the government. - BUT. ) wants to create such a supply of gas to insure against various options in the winter. I asked the US government to join in helping Ukraine finance the purchase of these volumes of gas.”.
Vitrenko asks for an astronomical amount - $ 8 billion. , they say, it is necessary to import about 6 billion cubic meters of gas. Preferably on account of Lend-Lease and for some reason preferably with money, not gas, which would be logical. And for some reason, for the purchase of almost 6 billion cubic meters, although, according to various estimates, Ukraine will not need more than 2–2.5 billion cubic meters of imports even with a harsh winter. After all, gas consumption in Ukraine was gradually reduced even before a full-scale war with the Russian Federation, and now even more so.. Therefore, with savings in general, there will be enough gas produced in Ukraine, and not only by Ukrgasdobycha. Ukrnafta and private companies produced over 7.
5 billion cubic meters of gas last year.
Two and a half billion cubic meters of imports is already reinsurance. And the “saved” funds for not buying unnecessary gas at Naftogaz know where to send them - for bonuses to the administrative apparatus: “for savings” and personal contribution... to ensuring the energy security of not only Ukraine, but all of Europe. Like this!
God save Ukraine!
Read more articles by Alla Eremenko at the link.