Conflict lines of Ukrainian oligarchs before the opening of a new political season

 

After the parliamentary elections, political and economic contradictions began to rapidly escalate between Ukrainian oligarchs. The lack of a single arbitrator among the oligarchs and the weakness of President Zelenskyi are gradually plunging the country into the chaos of an oligarchic struggle for resources. Ihor Kolomoiskyi, Viktor Pinchuk and Arsen Avakov have the best representation in the new government and Parliament. Therefore, these businessmen may use their capabilities in the fight against Akhmetov, Firtash, Poroshenko and Medvedchuk.

 

Kolomoiskyi VS Akhmetov: the war for cheap electricity

Akhmetov and Kolomoiskyi are long-standing business partners and even have joint businesses in the field of oil and gas production. However, in the field of metal mining there has always been competition between these oligarchs. Kolomoiskyi owns Nikopol and Zaporizhzhia ferroalloy plants consuming a lot of electricity. As a result of the introduction of a free market for electricity, electricity prices for industrial enterprises will rise by at least 20% (Kolomoiskyi’s losses will amount to at least UAH 1.5 billion per year). The only way out of the situation for Kolomoiskyi was to put pressure on DTEK of Akhmetov whose enterprises produce 22-23% of all electricity in Ukraine.  At the end of July, Kolomoiskyi brought to Kyiv a strike of metallurgists from his enterprises. They regularly hold protests against Akhmetov and the National Energy and Utilities Regulatory Commission. The war between Kolomoiskyi and Akhmetov for cheap electricity will continue after the formation of a new government. If Kolomoiskyi manages to regain control over the economic bloc in government of Zelenskyi, then Akhmetov will face problems. At least, DTEK will have to create preferential conditions for the industry of Kolomoiskyi. Kolomoiskyi also remains the main lobbyist for the blockade of Donbas, so that Akhmetov does not receive coal from Russia and ORDLO for DTEK.

Medvedchuk VS Akhmetov: the war for coal and political influence in Donbas

The fierce confrontation between Akhmetov and Medvedchuk has begun since Akhmetov was included in the Kremlin’s sanctions lists in October 2018. Latent political competition ended in division of the Opposition Bloc into two groups of influence: Akhmetov’s group (Opposition Bloc) and Medvedchuk’s group (“Opposition Platfrom – For Life”). Both pro-Russian groups went to the presidential and parliamentary elections separately, which resulted in Medvedchuk being more successful and represented in Parliament by the second-largest faction “Opposition Platfrom – For Life”. Medvedchuk has been working hard to create problems for Akhmetov’s energy-generating business buying coal from Russia and occupied Donbas for “DTEK” company. Medvedchuk is actively lobbying the Kremlin to restrict and ban coal supplies from Russia to Ukraine to make Akhmetov’s thermal power stations switch to gas. This would increase profits of “Gazprom” as Ukraine would be forced to buy more Russian gas. Secondly, transition to gas would increase the price of heat and hot water for the population. Medvedchuk has already lobbied for a ban on the supply of Russian coal to Akhmetov’s Luhansk TPP. On August 1, Luhansk TPP switched to burning natural gas, which may lead to the increase in tariffs.

Kolomoiskyi VS Poroshenko: the desire for revenge

Ihor Kolomoiskyi and the lawyer Andriy Portnov seek political revenge. They are the main ideological instigators of the criminal prosecution against Petro Poroshenko. It is important for Kolomoiskyi to prosecute Poroshenko and share Poroshenko’s assets with other oligarchs if possible. Many experts believe that Poroshenko’s confectionery business will be difficult to take away as it is officially registered with the involvement of foreign companies. An informal political struggle will unfold for Poroshenko’s shadow assets in the oil and gas sector, as well as in the revenues from the Rotterdam+ formula and financial operations around the sale of the Lenin smithy. Likely, after Lutsenko’s resignation and establishment of full control over anti-corruption bodies by the new authorities, the pressure on Poroshenko will be intensified. This means that in conditions of mono-coalition of the “Sluha Narodu”, it will be very difficult for Petro Poroshenko to find allies and defend himself in Parliament.

Kolomoiskyi VS Medvedchuk: the war for diesel, gasoline and liquefied gas

During the presidency of Petro Poroshenko, Viktor Medvedchuk has become one of the most powerful players in the market for diesel, liquefied gas and gasoline. Viktor Medvedchuk is a direct competitor of Ihor Kolomoiskyi and his “Ukrnafta” group. Viktor Medvedchuk has established his dealer network of GLUSCO gas stations (in 2014-2015 merged with the Russian businesses TNK and LUKOIL) through Swiss intermediaries. According to various expert estimates, the GLUSCO Group controls almost 25% of the total fuel market in Ukraine. There are also illegal gas stations, which sell illegal Russian and Belarusian gasoline and diesel, as well as various concentrates of aviation fuel. Therefore, Kolomoiskyi has a number of serious reasons to attack Medvedchuk and his business, as well as to impose restrictions and sanctions on Russian energy supplies. The lawyers of Kolomoiskyi are currently seeking ways to create special conditions for “UKRNAFTA” and limit the supplies of Russian and Belarusian fuels and liquefied gas operated by Medvedchuk. In fact, this implies the formation of a monopoly of Kolomoiskyi. Medvedchuk is actively defending himself from attacks of Kolomoiskyi, and is actively seeking the support of Russian patrons and Western lobbyists working against Kolomoiskyi. As a preventative step to protect his business, Medvedchuk has already re-registered part of his business in Belarus.

Kolomoyskyi VS Avakov: the struggle for influence on President Zelenskyi

After parliamentary elections, relations between Ihor Kolomoiskyi and Interior Minister Arsen Avakov began to deteriorate. First, Kolomoiskyi and Avakov failed to share the very promising Dolphin gas field in the Black Sea. The Company of Kolomoiskyi “UkrNaftoBurinia” lost competition to “Trident Acquisitions Corp” Company, where Arsen Avakov is considered to be the real beneficiary (the formal head of the winning company is a former MP of the Russian Duma – Illia Ponomariov considered to be a political client of Arsen Avakov). Secondly, several weeks ago the program “Schemes” on the Radio “Svoboda” released a resonant story of journalist Tkach about secret meetings between oligarchs Pinchuk, Hroisman and Avakov (Kolomoiskyi has been collaborating with Tkach for a long time and has provided him with unique interviews and other insights). In parallel, 1+1 channel released few sharp stories in respect of Avakov. Third, Oleksandr Dubinskyi (member of Kolomoiskyi’s team) attacked the future leader of the faction David Arakhamia (leader of Avakov’s informal group in “Sluha Narodu”) in the media. In particular, the group of Kolomoiskyi began criticizing the group of Avakov for the fact that Arakhamia would curate land reform and land cadastre. A fresh exacerbation between Avakov and Kolomoiskyi occurred during the visit of President Zelenskyi to the Zhytomyr region, where the President accused the head of the regional police Viacheslav Pechenenko of amber corruption and called for his dismissal (Pechenko is in the orbit of Avakov’s influence). The new head of the Zhytomyr region Vitaliy Bunechko enters the orbit of the influence of the “Privat” group.

Pinchuk’s strategy and struggle for the legacy of Firtash

Viktor Pinchuk has no open conflicts with oligarchs yet. The old war and lawsuits against Kolomoiskyi are already left behind (at least until Kolomoiskyi makes new claims). Now Pinchuk steaks to the old strategy – minimum conflicts, maximum pragmatism with the authorities. Pinchuk has established good ties with the new Administration of Zelenskyi. Pinchuk’s proxy Volodymyr Borodianskyi is a current Assistant to the President on Media and Humanitarian Policy. Pinchuk and Kuchma play a very active role in the negotiation process with Russia, which in turn increases Pinchuk’s apparatus influence compared to other oligarchs. In addition, Pinchuk has his own parliamentary representation in all factions enabling him to understand very clearly the internal political situation and feel the balance of power.  According to own estimates, about 15-20 MPs from the “Sluha Narodu”, “European Solidarity”, “Holos”, “Batkivshchyna” and “Opposition Platform – For Life” will be targeted by Pinchuk. One of the most interesting trends will be the struggle for the legacy of Dmytro Firtash, claimed by Kolomoiskyi and Pinchuk.