12.06.2026
The quality of corporate governance today is one of the key factors determining the performance of state-owned energy companies, the level of investor confidence, and the sector’s ability to attract funding for recovery and development. This is why Energy Club is implementing a special project, “Corporate Governance in the Energy Sector: New Rules for Accountability, Trust, and Control”, which includes a series of interviews and expert discussions with representatives of the energy sector, supervisory boards, government authorities, consultants, and corporate governance experts.
Oleksandr Lysenko – Head of the Center for Corporate Governance at the Kyiv School of Public Administration and an independent corporate governance consultant – in an interview with Energy Club journalist Olena Karpachova, discussed the significance of Ukraine’s accession to the OECD Guidelines on Corporate Governance of State-Owned Enterprises, the main challenges of their practical implementation in the public sector, the role and responsibility of supervisory boards, lessons from high-profile cases in the energy sector, and the steps necessary to ensure that corporate governance reform delivers real changes in the operations of state-owned companies and strengthens the trust of international partners and investors.
– Oleksandr, Ukraine has officially joined the OECD (Organisation for Economic Co-operation and Development) Guidelines on Corporate Governance of State-Owned Enterprises. Without using general phrases, what does this decision actually change for state-owned companies, including those in the energy sector?
— This spring, Ukraine did indeed officially join the OECD Guidelines (hereinafter – the Guidelines). In this process, I had the honor of acting as an official OECD consultant. Together, we conducted a detailed review of both the legislative framework and corporate governance practices in state-owned enterprises (SOEs) to assess their compliance with the Guidelines and account for changes in Ukraine since the previous 2021 review.
The result was an analytical report assessing the corporate governance of SOEs against each of the eight principles. It was on this basis that the OECD decided to support Ukraine’s accession.
The main message of the report is: the legal framework of Ukrainian legislation for state-owned companies has been significantly improved and generally aligns with international OECD standards. However, almost every section contains an important caveat: despite a sound legislative framework, the practical implementation of new rules remains inconsistent. Put simply, the rules exist, but their execution still needs work. And this is the key problem regarding the quality of corporate governance in SOEs, particularly in energy.
The most recent example is Energoatom. Updated legislative requirements, including those regarding the construction of a proper internal control system, had been in effect there since March 2024. Yet, over a year and a half, they failed to create a system that would have prevented or at least detected the “barrier” scheme. The same goes for forming supervisory boards: there is a long-standing requirement for a majority of independent members and new norms on the timely launch of selection procedures to maintain board quorum. However, the previous composition of the Energoatom supervisory board was neither fully staffed nor did it have a majority of independent members.
Separately, it is worth mentioning two important legislative novelties – mandatory performance evaluations of supervisory boards and an exclusive list of grounds for the early termination of their members’ powers. These norms were intended to depoliticize the process: if an objective assessment showed the board’s ineffectiveness, the law would allow for its dismissal. But this did not work in the Energoatom case either.
I am convinced: if the current rules were followed properly, the consequences of the Energoatom case, as well as other negative stories in state-owned companies, could have been avoided. So, we have a clear signal: we need to focus on implementing legislative requirements.
– You have repeatedly emphasized that formal alignment with OECD standards does not mean high-quality corporate governance in practice. Which gaps between formal rules and real-world practice do you consider most dangerous today?
— The first is the performance evaluation of supervisory boards. The requirement exists, and the OECD highly welcomed its introduction. But did all companies conduct such assessments for 2025? The question is largely rhetorical. Not all did.
The second is the instrument for independent evaluation of supervisory boards of key SOEs, provided for by law, which is currently suspended by subordinate legislation. This refers to cases where the evaluation is conducted not by the board itself or the ministry, but by an independent authoritative expert, whose conclusions allow for an objective picture of the enterprise’s activities.
The third is information disclosure. There are many requirements, but there is a series of exceptions that, under martial law, sometimes allow for the complete exemption of a company from disclosing any data. Five years into the full-scale war, the government, together with the security and defense bloc, should have already analyzed and determined which specific information disclosure truly threatens national security. Currently, we have a total “carve-out” – most state-owned enterprises have either very limited disclosure practices or publish nothing at all.
A telling example: Ukrenergo, having the right at that time, did not publish an annual report according to the requirements of the National Securities and Stock Market Commission. This is a large volume of financial and non-financial information. However, since part of the company’s bonds are listed on international stock markets, identical data for the same year was disclosed publicly – just in English. Such cases only confirm that disclosing this information poses no threat, but its absence clearly complicates the oversight of SOE activities.
And finally – the formation of supervisory boards. Until May 2026, a transparent selection process existed in only 12 state-owned companies. In the spring, the government initiated its own selection procedures for some companies, including Centrenergo and ECU. And only after the boards were chosen in this way were they brought under the general procedure in May. Constant exceptions and exclusions do not add trust to the process.
– After the renewal of supervisory boards in key SOEs, the topic of corporate governance is back in the spotlight. In your opinion, what is the main test that new board compositions must pass to prove their effectiveness—not on paper, but in real work?
— The appointment of a supervisory board as a key element of corporate governance should lead to concrete results—improving company performance indicators, eradicating improper practices and schemes, and attracting investment.
State-owned banks are a telling example. Most notably, Ukreximbank, which was for a long time, to put it mildly, the “semi-official wallet” of the ruling political force. After the corporate governance reform of state-owned banks in 2018–2019 and the formation of the first independent supervisory boards, the bank finally became profitable, and completely different processes began to work there.
I have an article in which I analyzed what has changed in the management of key SOEs, mostly energy ones, over the last 10 years. Corporate governance reform in Ukraine began in 2015–2016 with legislative changes that provided for the creation of independent supervisory boards.
But we see that for 10 years, the supervisory boards of key state-owned companies have mostly just reappointed management previously chosen by the government. Of course, replacing management is not an end in itself for a supervisory board. But if the reform was intended to change the unsatisfactory state of affairs in SOEs, then the absence of any changes after the board’s appointment looks strange, to say the least. This applies to more than one company—suffice it to recall the appointment of the head of Naftogaz from 2014 to 2022 and Ukrhydroenergo in 2019.
– If we talk specifically about energy, where is the most complex boundary between the state as an owner, the supervisory board as an oversight body, and management as an executive body?
— The state here is not only an owner but also a regulator and policy maker. And energy is an extremely sensitive area for the whole society: tariffs affect every household and every business. Therefore, achieving a balance between political, social, and business interests is extremely difficult.
The state sets subsidized tariffs for the population—the company starts operating on non-market terms through PSO (Public Service Obligation) and becomes loss-making. In a normal model, such obligations should be compensated by the state—and this is exactly where we have a problem. The political factor adds tension: raising tariffs is an unpopular step. At the same time, the state wants to receive dividends as part of fiscal policy, and management is interested in reinvesting funds in development. The conflict is classic for any company, but it is especially sensitive in energy.
On the other hand, it is energy companies that suffer most from corrupt pressure—often through political interference. A proper corporate governance system is designed to cut off the ability of politicians to influence operational decisions. Secondly, fair rules of the game must be in place, along with a clear distinction between business logic and social goals defined in advance. Because currently, state-owned companies are expected to be profitable, yet tariffs are left unchanged and the difference is not compensated.
– You participated in the development and analysis of systemic changes in the corporate governance of state-owned enterprises. Which three things do you think Ukraine has already done correctly, and which three questions still remain unresolved?
— At the system level, we have introduced very correct mechanisms.
First: the performance evaluation of supervisory boards as a key element of the corporate governance system. Second: requirements for creating an internal control system have been introduced, and the Ministry of Economy has already issued relevant recommendations for state-owned companies. Third: nomination processes have been improved, particularly the selection of supervisory boards. I hope the next step will be extending these procedures to all companies.
Now, about the unresolved issues.
First: the procedure for selecting the executive body. Yes, supervisory boards have received the right to independently determine the rules for such selections. But I would like these procedures to actually exist and be open and understandable—especially for the most important state-owned enterprises, among which energy companies constitute a significant share. This minimizes cases where we learn from public sources or journalistic investigations that a ministry or other management entity used the supervisory board to push through a loyal candidate, and the board responded: “These are our powers, we chose them.” This can only be avoided when procedures are defined in advance and are understood by all stakeholders.
Second: succession policy. In our country, executives are mostly sought externally, which looks strange. Preparing and developing talent within the company should be a priority. Changing leadership is a very sensitive issue for both external stakeholders and the company itself. Even the best newly appointed executive needs time to get up to speed.
Third: management at the level of holding structures. It is time to define this model at a systemic level. Today, holding structures are effectively not provided for in legislation, but they exist—first of all, we are talking about Naftogaz here; yes, there is outdated regulation, but it is ineffective.
And, in my opinion, most importantly: it is necessary to create a coordination center that will ensure the fulfillment of existing rules. Ukraine needs an independent regulator in the field of corporate governance that will be trusted and will be able to control how state-owned enterprises comply with established norms. By the way, this also follows from OECD recommendations.
– Recent events surrounding certain state-owned companies have shown that even the existence of a supervisory board does not automatically guarantee high-quality management. In your view, what is most often the real cause of failures: weak institutions, political interference, or insufficient professionalism of the management bodies themselves?
— Depending on the case, it is a combination of all three factors. There are few examples in Ukraine yet that prove that the reform has really started working and produced quality results. Although corporate governance reform itself is time-tested and based on the experience of many countries—it is a tool that definitely improves company performance. The problem is that in our country, there is a constant search for ways to bypass rules or postpone their implementation.
It is necessary for all key stakeholders to agree to follow corporate governance procedures and rules. Otherwise, it will not work.
– You have publicly called the Energoatom case a major blow to the entire corporate governance reform. What is the main lesson from this story that the state should learn if it truly wants to maintain trust in the reform?
— The key is that even in a crisis period, corporate governance must remain about predictability, clarity, and transparency of procedures. As soon as the situation starts to be corrected with half-measures and temporary solutions, it is no longer proper corporate governance, no matter how politically correct or argued these goals might seem.
In Energoatom, there are questions specifically about the procedure for terminating the powers of supervisory board members. Adherence to procedures is fundamental because stakeholders think simply: if one board can be removed against the law, it means the same can be done with any other.
Corporate governance is about transparent, predefined procedures. Their execution is a necessary condition for the system’s predictability.
– To what extent is the role of an independent member of a supervisory board correctly understood in Ukraine today? What is often mistakenly expected of them?
— I think the general public is skeptical about supervisory boards—both regarding state representatives and independent members. Although the expectations themselves are quite justified: if serious, professional people are appointed and paid market compensation, it should positively affect the company’s work. If there is no result, nor any clear explanation why, trust disappears. The situation will only change when the formation of supervisory boards leads to real improvements in company performance.
– It is often argued that corporate governance in state-owned companies is primarily a requirement of international partners. To what extent is this a false or simplified perception?
— As an active participant in this reform, I can say: the vast majority of significant changes, including the last 2024 reform, were implemented thanks to international partners—the IMF, EU, World Bank, EBRD. I simply do not recall serious legislative initiatives implemented to improve SOE corporate governance that were not driven by international obligations.
– If we look at the energy sector as a future target for large investments in recovery, which elements of corporate governance do investors assess most strictly in the first place?
— They look at the procedures for electing management and supervisory boards, the functioning of the internal control system, and the transparency and quality of financial and non-financial reporting. At the same time, all these elements of a proper corporate governance system are in our legislation—the question is in the execution of the rules. The investor must be sure that they will be followed. And someone must guarantee this trust.
The investor sees scandals and deviations from procedures—and understands that they have no levers of influence. Everything looks okay on paper, but there is a lack of confidence that it will be so in practice.
– Can it be said today that a more or less mature culture of supervisory board work has formed in Ukraine, or are we still at the stage of institutional formation?
— I believe we are still at the stage of formation.
– Speaking specifically about energy companies working in wartime conditions, does the corporate governance model need certain adaptations, or should the basic principles remain unchanged even in a crisis period?
— Adaptation is needed—that’s a fact. That is exactly why I say there may be exceptions regarding the disclosure of some information if it can truly be used by the enemy to create threats to national security. But for this, it is necessary to clearly define exactly what information is being discussed.
At the beginning of the full-scale invasion in 2022, when there was no understanding of what would happen next, I personally initiated the cancellation or simplification of some requirements regarding corporate governance, decision-making procedures, and nomination procedures. At that time, decisions had to be made very quickly, and there was simply no time to follow all the formalities.
However, the situation is different now. Ukrainians and businesses have been living in the conditions of a full-scale war for the fifth year—the cancellation of most rules no longer seems obvious. Adaptation may be needed, but we must clearly understand the grounds for this: why is the supervisory board at Naftogaz elected through a transparent competition, but not at Ukroboronprom; why did Naftogaz start disclosing information, while some other energy companies did not?
– What steps, in your opinion, should be taken in the coming year so that the topic of corporate governance in energy moves from the plane of declarations to the plane of real results?
— A year is a very short timeframe. But strategically speaking: until there is an institutional subject that will actually guarantee the fulfillment of corporate governance rules by all key stakeholders—the executive body, supervisory boards, ministries, and the government as an owner—and until we find a way to ensure the strict adherence to the rules by each of these elements of the system, it will be very difficult to claim a transition from declarations to real results.
Thus, the main challenge for Ukraine today lies not in creating new corporate governance rules, but in their consistent execution. It is the state’s ability to ensure transparency, accountability, and the consistency of procedures that will determine investor confidence, the efficiency of state-owned companies, and the success of the further transformation of the energy sector.
According to Oleksandr Lysenko, the Ukrainian corporate governance system has already received the necessary rules and tools. The next and most important stage should be their real implementation, because it is the execution of procedures, not their declaration, that forms trust in state-owned companies and the entire reform.
Corporate governance begins where rules become mandatory for everyone. And as long as their strict fulfillment is not guaranteed in Ukraine, the reform will remain a subject of discussion rather than a success story.
