EBRD is helping Ukraine’s leading petrol retailers survive the financial crisis. The EBRD has purchased a stake worth US$ 50 million in OJSC Galnaftogaz, the company that operates the OKKO chain of petrol stations in Ukraine. The acquisition in 2009 was part of the EBRD’s response to the global financial crisis in Ukraine.
A chance to benefit from the crisis
Galnaftogaz represents about 7% of the Ukrainian petrol retail market by volume of fuel sold. This puts it among the top three players in a very fragmented industry, where the nine largest retailers control just over half of all petrol stations in the country. The remainder are operated by small networks or single-chain operators.
There is, therefore, plenty of opportunity for consolidation, especially during a financial crisis when many less successful operators are forced to sell. For a company with enough cash available to move quickly, this is a good opportunity.
How the project helps Galnaftogaz
This equity deal ensures that the company has enough financial flexibility to cope with the Ukrainian currency devaluation and sufficient funds to continue investing in the quality and efficiency of its operations.
Galnaftogaz has a good track record of high environmental and safety standards but it is using the proceeds from the EBRD’s equity contribution to complete an energy audit and further improve energy efficiency.
Good corporate governance
Part of the project also requires the company to implement a corporate governance plan – developed with the EBRD's input – that would put Galnaftogaz at the forefront of Ukrainian companies in terms of transparency. This will include the appointment of independent directors and the creation of an audit and compliance committee.
These improvements will help Galnaftogaz move closer to meeting the standards required for listing on a major international stock exchange.
