The fortunes of Rinat Akhmetov, Ukraine’s richest man, look to have taken a turn for the better.
The Ukrainian oligarch, energy and industrial business mogul from Donetsk placed 439th in the latest Bloomberg Billionaires Index, published on Sept. 4. Akhmetov was worth $4.38 billion as of September, Bloomberg reckons.
That might sound a lot, but it’s less than a quarter of the fortune Akhmetov had amassed when his wealth peaked on Jan. 23, 2013, at $22.3 billion, according to Bloomberg data.
But that was before the start of EuroMaidan Revolution and the war in Donbas in late 2013 and early 2014. Akhmetov subsequently lost most of his assets due to Russia’s occupation of parts of the Donbas. In less than four years, the oligarch lost more than $18 billion.
However, in 2017 the oligarch has already managed to add more than $1 billion to his fortune. In March 2016 he was worth 3.37 billion, according to Bloomberg data, but by August 2017 his wealth had grown to $4.45 billion.
Although Akhmetov lost some $70 million in September, the oligarch is still among the top 500 of the world’s richest people, with a total fortune of $4.38 billion.
Akhmetov’s wealth started growing again in March 2016, the same month the controversial Rotterdam Plus energy tariff came into force. His wealth took another big hit in March 2017, falling by $1 billion when Ukraine imposed a trade blockade on the Russian-occupied Donbas, but it has been on the rise again since then.
Akhmetov has been reorganizing his assets in the energy sector.
On Aug. 31, the press service of Akhmetov’s SCM Group holding reported that its affiliated company Ornex had bought a 25 percent stake in DTEK Dniproenergo and DTEK Dniprooblenergo from the State Property Fund of Ukraine.
And earlier, Ornex bought a 25 percent stake in DTEK Donetskoblenergo for Hr 143.81 million, and 25 percent stakes in DTEK Zakhidenergo and Kyivenergo, for Hr 417.163 million and Hr 759.633 million respectively.
That makes Akhmetov a big shareholder in the public utility energy suppliers that provide electricity and heat in Kyiv (Kyivenergo), Dnipro (DTEK Dniproenergo), and in Donetsk and Dnipropetrovsk oblasts. And with energy prices on the rise, that’s good for Akhmetov.
Rotterdam plus
In March 2016, Ukraine’s National Energy and Utilities Regulation Commission, which is headed by former Roshen confectionery corporation manager Dmytro Vovk, ordered that electricity payments be calculated using a new method – dubbed the “Rotterdam Plus” electricity tariff formula.
According to the formula, the market price of electricity is based not only on the price of coal, but also the cost of transporting coal by sea (from the Dutch port of Rotterdam) to Ukraine, and loading and unloading it in ports.
The rationale for introducing the formula was that since Ukraine has lost access to its major coal mines (located in the Russian-occupied parts of Donetsk and Luhansk oblasts) and started buying coal from abroad (from South Africa, and even Russia) the extra costs had to be accounted for.
And after the Rotterdam Plus scheme came into force, Ukrainian energy suppliers like state-owned Tsentrenergo and Akhmetov’s DTEK energy company raised electricity prices for the population and business.
By April 2016, electricity prices had risen by 25 percent. Over a year, electricity prices increased by four times.
Ukraine’s Energy and Utilities National Regulation Commission insisted it launched Rotterdam Plus tariff to make electricity prices economically justified, and bring them into line with European market rates. However, the commission also included coal extracted in Ukraine’s Donetsk and Dnipropetrovsk oblast in the Rotterdam scheme, and that coal is much cheaper to produce and transport.
Akhmetov’s DTEK is the only coal mining company in Ukraine.
Ukrainska Pravda news website Chief Editor Sevgil Musayeva wrote in April 2016 that Akhmetov’s DTEK, a monopolist that sets coal prices in Ukraine, was the main beneficiary of the Rotterdam Plus tariff scheme – but not the only one.
Tsentrenergo, a state-owned energy company linked to Petro Poroshenko’s close ally Igor Kononenko, also increased its prices almost immediately.
“The new tariffs regulation formula (Rotterdam) will allow Donetsk oligarch and Poroshenko’s allies to earn more than $1 billion,” Musayeva wrote.
Investigation
In March 2017, the National Anti-Corruption Bureau of Ukraine or NABU started an investigation against Ukraine’s National Energy and Utilities Regulation Commission on suspicion of corrupt practices. According to the United Court Registry of Ukraine, the Anti-Corruption Bureau suspects commission head Vovk and commission members of colluding with energy companies to introduce the Rotterdam Plus pricing scheme.
“The national commission intentionally increased the market price of coal, and, as a result, the electricity price, in order to allow energy companies to earn abnormal profits,” reads the case statement in the court registry.
Solomiansky District Court of Kyiv in May ruled that NABU detectives could confiscate commission documents, including reports from Akhmetov’s energy companies.
Vovk later tried to cancel that decision in court, but failed.
On Aug. 17, after almost eight hours of searches of the commission’s offices, NABU detectives seized and confiscated documents for their investigation.
