Ukraine seeks three independent directors for gas transmission operator

Ukraine is seeking three independent members for the supervisory board of state-owned Gas Transmission System Operator of Ukraine LLC (GTSOU), a notice on the Ministry of Economy's website said on 6 October. Applications are open until 18:00 Kyiv time on 30 October.

The charter sets the board at three independent members and two state representatives, so the vacancies match the number of independent seats (notice). GTSOU is the operator of the country's gas pipeline network. The notice said the Ministry of Energy announced the competition by Order No. 394 of 20 August and represents the state as GTSOU's single participant.

GTSOU was established in 2019 under Ukraine's Energy Community commitments on unbundling and has operated as the certified transmission system operator since 1 January 2020, the notice said. The notice lists compliance with the unbundling and independence requirements among the board's tasks.

Who can apply

The notice sets mandatory qualifications and independence tests. They include:

• Experience: at least 15 years of professional experience, and at least seven years in senior management or in civil service or equivalent managerial or strategic roles (notice).
• Time: at least 36 working days a year, including travel to Ukraine (notice).
• Limits: candidates may not sit on the boards of more than five legal entities at the same time, or be citizens of a state the Verkhovna Rada has recognised as an aggressor (notice).
• Independence: candidates cannot be civil servants or state representatives, hold 5 per cent or more of the company's share capital, or have served on its supervisory board for more than 12 years in aggregate (notice).

Collectively, the three independents must cover three competency profiles: strategic management, operations and large-scale business transformation; finance, audit and investments; and gas transmission. One member can satisfy more than one profile, the notice said. The gas transmission profile calls for knowledge of the European gas market model, the Third Energy Package and network codes, and for an understanding of how to adapt the operating model to changes in gas volumes and flow directions (notice).

How the selection works

The notice names Talent Advisors LLC (Odgers) as the executive search adviser. The adviser interviews candidates and prepares a shortlist and a report, which the Nomination Committee must approve before it interviews the shortlisted candidates and selects the successful ones. The Cabinet of Ministers then approves the appointments, the notice said. Results are to be published on the state property management authority's website within two working days of an appointment or election.

Independent members are to receive pay "in an amount determined in accordance with the procedure prescribed by the legislation of Ukraine", the notice said, and it gives no figure. The general meeting approves the terms of each member's civil-law agreement (notice). The notice does not give a term of office, say why the seats are open or set dates for interviews or appointments.

Ukrhydroenergo and the reform debate

A separate notice published on 31 August opened a competition for four independent seats on the supervisory board of Ukrhydroenergo, the state-owned hydropower generator, under Cabinet Order No. 450-r of 13 May. Applications were accepted until 18:00 Kyiv time on 24 September. It names the same executive search adviser and cites the same selection procedure, Cabinet Resolution No. 142 of 10 March 2017.

Ukrhydroenergo's board comprises four independent members and three state representatives, and the notice asks independents to commit at least 48 working days a year, compared with 36 at GTSOU (notice). Its four competency profiles repeat the first two used at GTSOU, replace gas transmission with energy markets and generation asset management, and add legal and regulatory environment, compliance and risk management. The notice also said access to the company's financial statements is restricted under security measures imposed by the Cabinet of Ministers, the National Security and Defence Council and other authorities, and that the information will be disclosed after martial law is lifted (notice).

Viesturs Liegis, managing partner of the executive search firm Amrop for the Baltics and Ukraine, said in an interview published by Interfax-Ukraine on 22 September that the practice of renewing a state company's supervisory board in full every three years should end, because a new board may need six months or more to become effective. He said renewal should be staggered and called for an annual self-assessment and an independent evaluation every three years. Liegis said Amrop has completed 11 supervisory board selection projects for Ukrainian state companies (Interfax-Ukraine). Neither the GTSOU notice nor the Ukrhydroenergo notice names Amrop as its adviser.

He also said he would set a goal that around half of all independent supervisory board members should be Ukrainians within three to five years, and cited about 50 days a year as the time commitment at Sense Bank, a lender owned by the Ministry of Finance (Interfax-Ukraine). The notices ask for at least 36 working days a year at GTSOU and 48 at Ukrhydroenergo (GTSOU, Ukrhydroenergo).