Exiled Ukrainian oligarch Firtash stripped of gas distribution licenses in 3 more regions

State-owned energy firm Naftogaz has been granted distribution licenses for three major regions previously controlled by oligarch Dmytro Firtash's business empire. According to a resolution by energy regulators, Naftogaz received permits on September 1 to supply the oblasts of Kyiv, Zhytomyr and Lviv – territories where Firtash's company RGC had dominated distribution through regional subsidiaries.

With this decision, the regulator suspended the licenses of JSC Kyivoblgaz, JSC Zhytomyrgaz and JSC Lvivgaz and gave them to the company Gas Distribution Networks of Ukraine, which is part of the Naftogaz Group.

Now gas distribution services in these regions will be provided by the respective branches of Gas Distribution Networks of Ukraine LLC.

In addition, from September 1, the National Energy and Utilities Regulatory Commission (NEURC) established tariffs for natural gas distribution services for the Kyiv, Lviv, and Zhytomyr branches of the Gas Network – respectively, at the level of UAH 1.49 ($0.04), 1.69 ($0.046), and 1.70 ($0.046) per 1 cubic meter per month (without VAT).

Previously, Gas Networks received licensing within the Kirovohrad and Kharkiv oblasts with the city of Kharkiv and part of the Dnipropetrovsk Oblast (Dnipro and Kryvyi Rih). According to the Ministry of Energy, the number of customers of the national operator of gas distribution networks has reached 4 million subscribers.

In 2022, the corporate rights of companies from the Firtash group were seized as part of criminal proceedings regarding the free transfer of state-owned gas pipelines to private regional gas companies. At the end of June 2023, Kyivoblgaz, Zhytomyrgaz and Lvivgaz came under the state management of Naftogaz Group.

"Returning control over gas distribution networks to the state is a matter of national security. The state must ensure uninterrupted gas supply to citizens, especially during wartime, when challenges intensify. In addition, the process of returning networks to state management gives a start to solving the problems that arose after the privatization of regional gas companies. which took place more than 10 years ago," emphasized Energy Minister German Galushchenko.

According to the Ministry of Energy, the national operator ensured 100% of settlements with the state and partner companies, "which was not fully implemented by the previous operators of gas distribution networks for decades."

At the same time, for the benefit of the state, for the first half of 2023, Gas Networks paid UAH 25 million ($676,909) for the operation of state gas distribution systems and their components, as well as over UAH 89.6 million ($2.426 million) for natural gas to the gas supply company Naftogaz of Ukraine, UAH 3.2 million ($86,644) for transportation of gas to the Operator of the Gas Transit System.

On March 15, 2023, businessman Dmytro Firtash was charged within the scope of the case of allegedly causing losses to the state of more than UAH 18 billion ($487 million) with the help of regional gas companies of the RGC group.

For more than a year in the management of the Asset Recovery and Management Agency, 26 arrested regional gas companies did not bring a single penny to the budget.