State-owned energy companies need operational autonomy – opinion

Even if the entire authorized capital of an energy company is owned by the state, its governing bodies should not automatically carry out the owner’s will. In particular, the supervisory board must prevent erroneous or unlawful interference in the company’s operations.

This was emphasized by chairman of the UNBA Committee on energy law Oleksandr Trokhymets during the forum «Corporate governance in the energy sector: from formal rules to real accountability», which was recently held in Kyiv.

The event concluded a three-month special project during which representatives of energy companies, supervisory boards, and the legal and expert communities discussed the state’s role as an owner, the division of powers, management accountability, and the implementation of international approaches to corporate governance.

In his presentation titled «The state and state-owned enterprises: where is the line?», O. Trokhymets noted that an enterprise cannot be equated with the state, even if the state owns its entire authorized capital. Similarly, a company is not identical to its shareholder, and the property transferred to its authorized capital or acquired in the course of its operations belongs to the legal entity itself.

Therefore, according to the advocate, management bodies should not mechanically carry out any decisions made by the owner. They must serve as a safeguard against erroneous or even illegal attempts by the owner to influence the company’s operations.

The speaker also focused on state-owned companies in the energy sector, some of which, by law, can only be state-owned. At the same time, in his opinion, the state should not shift the responsibility for fulfilling its own social functions onto these companies.

As an example, he cited the imposition of special obligations to ensure affordable electricity prices for the population. Such tasks, O. Trokhymets believes, should be financed from the budget, while state-owned enterprises should generate revenue from their economic activities and contribute to the budget through their profits.

The efficiency of state-owned and private companies, in his view, should be assessed using the same economic criteria, including profitability, market capitalization, and the value of fixed assets, among others.

During the forum, participants also discussed the role of supervisory boards, the transparency and accountability of state-owned energy companies, and the importance of a clear division of responsibilities in building investor confidence in the public sector.