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The unexpected move to fire Naftogaz CEO Andriy Kobolyev threatens to complicate Ukraine's efforts to access a $5-billion bailout from the International Monetary Fund.

The supervisory board of Ukraine's state-owned oil and gas company Naftogaz is resigning following the government's decision to replace the firm's CEO – a move that has raised concerns among Kyiv’s Western backers.

On April 28, the government announced the dismissal of Andriy Kobolyev, Naftogaz’s chief since 2014, citing the "unsatisfactory" results of the company’s operations last year, when it posted a loss of nearly $700 million.

The supervisory board, which was temporarily suspended in order to dismiss Kobolyev, issued a statement on April 30 saying that all its members were submitting notice of their resignations, effective from May 14.

"The Supervisory Board will use the coming two weeks of its notice period to help the Company as much as it can to deliver an orderly transition and will inform the Shareholder in detail early next week," the statement said.

The unexpected move to fire Kobolyev threatens to complicate talks to access a $5-billion bailout from the International Monetary Fund, with Ukraine’s international partners warning that integrity and transparency in such decisions were key to maintaining confidence in the country’s commitment to reform.

The European Union, the European Bank for Reconstruction and Development, the European Investment Bank, the World Bank, and the International Finance Corporation said in a joint statement on April 30 that they were "seriously concerned" about recent events at Naftogaz.

"We call upon the leadership of Ukraine to ensure that crucial management decisions at state-owned enterprises are taken in full accordance with the basic tenets of recognised corporate governance standards," they said.

The U.S. State Department earlier said that the "calculated move" showed "disregard for fair and transparent corporate governance practices."

The matter is set to be on the agenda when Secretary of State Antony Blinken visits Ukraine on May 5-6.

Ukraine’s western backers tied financial aid for the country to concrete steps to clean up state enterprises such as Naftogaz, one of the country's largest companies by revenue.

Naftogaz has long been the object of corruption schemes by officials and oligarchs, but the situation began to change after the 2014 upheaval that swept pro-Kremlin President Viktor Yanukovych from power.

Naftogaz’s new CEO, Yuriy Vitrenko, told reporters on April 30 that the concerns of international partners were "understandable" and "a number of problems needed to be resolved."

The company needed to return to profit, said Vitrenko, who was serving as acting energy minister before his appointment.

Naftogaz has said the 2020 loss reflected lower demand, lower gas prices, and provisions for bad debts.

Kobolyev's moves toward transparency won him support among Western investors and donors.

He was credited with overseeing an energy overhaul that helped Ukraine to narrow its budget deficit, and leading the former Soviet republic to a multibillion-dollar win in a legal dispute with Russian energy giant Gazprom in 2018.

He also faced criticism for increases in heating costs.

With reporting by Reuters
The Russian Foreign Ministry announced the move on April 30. (file photo)

Russia has barred eight officials from European Union countries from entering the country in retaliation for sanctions imposed on Russian citizens by Brussels -- a move to which the bloc said it "reserves the right" to respond.

The Russian Foreign Ministry said in a statement on April 30 that those banned included European Commission Vice President Vera Jourova, and David Sassoli, the president of the European parliament.

The EU imposed sanctions last month on two Russians accused of persecuting gay and lesbian people in the southern Russian region of Chechnya.

The EU also imposed sanctions on four senior Russian officials close to President Vladimir Putin the same month.

Russia once again criticized the bloc's punitive measures and accused it of fomenting anti-Russian "hysteria."

"The EU continues the policy of illegitimate unilateral sanctions against Russian citizens and organizations," the statement said.

"In March 2021, six Russians were subjected to unlawful EU restrictions. This practice contradicts the UN charter and the basic norms of international law. It is accompanied by anti-Russian hysteria, deliberately spread by the Western media," it said.

Berlin's chief state prosecutor Joerg Raupach is also on the list, an apparent tit-for-tat response to the bloc's decision last month to slap entry bans on high-ranking Russian officials for their role in the jailing of opposition leader Aleksei Navalny.

The other five Europeans on the list are Ivars Abolins, the head of Latvia's national council for electronic media; Maris Baltins, the director of Latvia's state language center; Jacques Maire, a member of the French delegation to the Parliamentary Assembly of the Council of Europe (PACE); Asa Scott, the head of the chemical, biological, radiation, and nuclear safety lab at the Swedish Total Defense Research Institute; and Ilmar Tomusk, the chief of the Language Department of Estonia.

The statement says that the actions of the bloc "leave no doubt that their true goal is to restrain the development of our country at any cost."

In response, the EU called the Russian move "unacceptable" and "entirely groundless" and condemned it "in the strongest possible terms" in a statement on April 30.

"This decision is the latest, striking demonstration of how the Russian Federation has chosen confrontation with the EU instead of agreeing to redress the negative trajectory of our bilateral relations," the statement said.

"The EU reserves the right to take appropriate measures in response to the Russian authorities' decision."

With reporting by AFP and Reuters

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