Bankruptcy petition

3 September 2003

Ukraine's state-owned atomic energy producer Energoatom has been placed under control of a court-appointed receiver while a bankruptcy petition is undergoing litigation. It has also lost control of a surcharge intended to pay for the completion of two nuclear reactors, as its political role is debated.

The Kiev Economic Court appointed a receiver to control the company's assets, barring the company's top management from reorganising, paying dividends, or incurring debt without the receiver's permission. The order resulted from a lawsuit filed in February by seven creditors owed a total of $25 million who asked that Energoatom be forced into bankruptcy so they could be paid.

Energoatom has appealed the decision as violating its property rights and has asked that the order be suspended. The company said it has debts of some $900 million, but it is owed $1.635 billion, some $1.38 billion of that by the state-owned wholesale power market operator EnergoRynok. The order threatens the company's ability to attract funding to complete the Khmelnitski 2 and Rovno 4 (K2R4) units. The National Electricity Regulatory Commission of Ukraine (NKRE) has lowered the amount Energoatom is getting for its power by 5.7% to 6.4 kopeks (¢1.15), removing a surcharge intended to fund the completion of K2R4.

Meanwhile, tax police in Kiev have launched criminal proceedings related to tax evasion by Energoatom. "From the very beginning, certain Energoatom managers have been overstating the cost of the nuclear fuel used for producing electricity," according to the Kiev tax police. The company's gross expenditure has been overstated and the taxable income understated, which allowed the state company to save over $1.5 million.

After a thorough audit of Energoatom's activity, the tax police found that the company evaded income tax and VAT. Energoatom wrote off and sold as scrap certain hi-tech equipment to a Ukrainian company for $3750. Later, this company sold the equipment to one of the CIS countries for $20,000. Energoatom then decided that it needed such equipment and signed another agreement with a foreign company that imported the same equipment for $18 million. It is now sitting in the warehouse, because its technical specifications are not suitable. Kiev's tax police are making efforts to identify specific individuals who are believed to be driving the state company into bankruptcy.



Privacy Policy
We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.