Ukraine president dismisses powerful oligarch as regional governor

 Ukraine's president has dismissed one of the country's most controversial tycoons from his regional governor's post, his office said Wednesday, in a showdown baring the infighting between powerful oligarchs even as the country struggles to combat pro-Russian insurgents, AFP reports.

President Petro Poroshenko -- himself a billionaire magnate -- accepted Igor Kolomoisky's offer to step down as head of the strategic central Dnipropetrovsk region, the presidency said, after a dispute over control of the main state oil and gas firm descended into open confrontation.

"The president of Ukraine confirmed Igor Kolomoisky's request to resign" at a meeting between the two men in Kiev, the presidency said in a statement released overnight.

Banking billionaire Kolomoisky was appointed to the post after the ouster of Kremlin-backed president Viktor Yanukovych last year and has proved a staunch bulwark against a pro-Russian rebellion rocking neighbouring eastern regions. He funded a powerful volunteer militia group that has taken a leading role in fighting against the heavily armed insurgents.

Poroshenko insisted that maintaining stability in the key region remained a priority despite the influential oligarch leaving his post.

"We have to maintain peace, stability and calm. Dnipropetrovsk must remain a bastion of Ukraine in the east to defend the peace and calm of its citizens." Poroshenko said in the statement.

The end of Kolomoisky's tenure came after armed men suspected to be working on his orders barricaded themselves into the headquarters of the Ukrnafta energy firm, before leaving peacefully Tuesday after a tense two-day standoff.

Kolomoisky's Privat Group owns 43 percent of Ukrnafta. The show of force followed parliament's passing of a law that increases the state's control over public companies, weakening Kolomoisky's de-facto grip on the oil producer.

Kolomoisky -- who is estimated to be worth $2.4 billion (2.2 billion euros) -- is believed to have been angered by the sacking of his ally, UkrTransNafta chief executive Oleksandr Lazorko.

The occupation came just days after armed men also suspected of working for Kolomoisky briefly occupied the headquarters of Ukrnafta's pipeline management subsidiary, UkrTransNafta.

One of Ukraine's most controversial oligarchs, Kolomoisky gained in popularity after declaring his commitment to a united Ukraine at the start of the war a year ago. He is widely credited with helping halt the advance of rebels in the east by establishing the militias that fought alongside government forces to keep Dnipropetrovsk out of rebel hands.

The adoption of the new laws on state-owned companies have strained his alliance with Kiev, however.

Kolomoisky has often been accused of using threats of violence as he builds his empire, which stretches from the banking sector to metallurgy through aviation and media.