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Economy 2020-09-25T04:03:55+03:00
Ukrainian news
Ukrenergo procurements in 2018-2019 were twice cheaper than the same procurements made by Energoatom, Ukrhydro

Ukrenergo procurements in 2018-2019 were twice cheaper than the same procurements made by Energoatom, Ukrhydroenergo and Tsentrenergo – a survey

Ukrenergo, Energoatom, Ukrhydroenergo, Tsentrenergo
Ukrenergo. Photo by slovoidilo.ua
Ukrenergo. Photo by slovoidilo.ua

Ukrenergo procures the same equipment, including fireextinguishers, roofing felt, Internet access and other populargoods and services, at a price 1,4 -2.1 times cheaper than Energoatom, Ukrhydroenergo, Tsentrenergo and distribution system operators, according to a survey titled Ukrenergo case: Successful Corporate Experience VS Political Accusations, which was carried out by ExPro, a specialized publication on the energy sector.

ExPro reported that in April 2018, CoST (Construction Sector Transparency Initiative) recognized the level of openness of information on the NPC procurements as unprecedented. The company provided 93% of the information in response to CoST requests. Ukrenergo also received the same evaluation from Transparency International.

The most known case for Ukrenergo is the story of the so-called "Hryhoryshyn’s transformers". As a reminder, after the investment program was approved, the regional energy systems of Ukrenergo announced tenders for the purchase of transformers. As Nashi Hroshi newspaper reported, the South-Western Energy System, for example, planned to purchase 2 transformers at a price of $26,000/MVA, in some tenders the price reached $35,000/MVA, whereas the global prices for similar transformers at that time amounted to $ 10,000-15,000/MVA. However, the decision of the Antimonopoly Committee prevented the acceptance of ZTR’s proposal and payment of the advance in the amount of 50% of the order value to the manufacturer. In addition, the Security Service of Ukraine (SBU) intervened, with its representatives claimingthat the price of transformers was overstated by 40% during the first tender. Yuriy Kasich, Head of Ukrenergo, wasdismissed amid the corruption scandal.

On October 2, 2015, Ukrenergo, now led by the new Head Vsevolod Kovalchuk, announced a new tender for the purchase of 22 transformers at the expected total price of UAH 2.05 billion. The new team changed the requirements for the manufacturers and engaged many equipment suppliers. Foreign manufacturers, including Siemens, ABB, Daewoo International Corporation and Hyundai participated in the new tender, as well as ZTR. As a result of transparent and competitive procurement, the cost of the transformers decreased by more than 2 times – from the starting value of UAH 2 billion to UAH 928.6 million. The most interesting part is that the same ZTR became the winner, but this time it dropped its price to the market level.

The procurement of Hryhoryshyn’s transformers at market prices was the first successful case for the new Ukrenergo team. According to the data of the Prozorro public procurement system, if we compare the procurement of similar goods or services by Ukrenergo and other energy companies, we can see that Ukrenergo buys at much cheaperprices than other players in the market. For example, in May 2017, Energoatom purchased a BRDLW-800/1000-3 high-voltage bushing for UAH 7.4 million, and NPC bought the same product in August 2019 at UAH 3.9 million, which is almost 2 times cheaper. In addition, in December 2017, Ukrenergo purchased an oil shunt reactor for UAH 24.9 million, and in September 2019, Energoatom purchased the same reactor at twice that price – UAH 52 million. Comparing tenders held by the nuclear company and Ukrenergo, one can discover the difference in price for the same product exceeding 2 times, for example the purchase of a 330 kV surge suppresser, which was purchased by Energoatom in August 2019 for UAH 216,300, while Ukrenergo bought the same suppresser in September 2017 for UAH 69,800 thousand.

It is also interesting to compare Ukrenergo and Ukrhydroenergo in terms of procurements. The latter, for example, purchased a 330 kV high-voltage transformer bushing for UAH 2.8 million in the same period as Ukrenergo (in November 2018), while Ukrenergo paid UAH 1.2 millionfor the same purchase. In addition, in October 2018, Ukrhydroenergo bought a cable with a cross section of 14x2.5 mm KVVGeng for UAH 187,500, which is 2 times more expensive than the same purchase by Ukrenergo (UAH 96,800 thousand) in August 2018. A similar situation took place at tenders of distribution companies, for example, Odessaoblenergo in the same period as NPC (in July 2019) purchased a wire with a cross-section of 70 sq mm MG for UAH 247,900 thousand, which is 1.7 times more expensive than purchase of the same wire by the system operator. In August 2019, Kharkivoblenergo bought a high-voltage automated AC bridge of the CA7100-3 type at a price 1.7 times higher than Ukrenergo.

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