Attack on Ukrenergo in pursuit of billions // The autonomous regime envisioned the absence of power flows along the routes that existed before the invasion. After February 24, only Western vectors remained.
A group of energy workers controlled by Galushchenko's Office of the President is attacking state-owned Ukrenergo with a dubious audit. They were planning to extract a quarter of a billion hryvnias from a company affiliated with Shurma, according to reports. Our money.
Attack on Ukrenergo: An Invasion of the Energy Sector
On February 24, the day of the invasion, Ukrenergo disconnected our power grid from Russia and Belarus to test the stability of autonomous operation before connecting to the European grid. The final disconnection from Russia and reconnection to the EU was planned for 2023.
But when Russian troops invaded Ukraine, our specialists decided not to return to the Russian grid. For three weeks, the Ukrainian power grid demonstrated remarkable resilience under fire, which greatly surprised Europeans, as did the intransigence of the Ukrainian Armed Forces. And on March 16, 2022, the Ukrainian power grid was permanently connected to the European grid. Moreover, with unprecedented speed in integrating the two major power systems, Ukrenergo succeeded in opening electricity trade with the EU almost immediately after their physical connection.
So, in the spring, our electricity began flowing to Moldova. And in July, we began selling our first megawatts to the European Union. And this flow is increasing with each passing month, as European engineers and politicians confirm the reliability of our connections with Ukraine, even during a war.
This led to a number of consequences.
The state's billion-dollar profit on energy supplies to the EU
Despite the military's devastation of Ukraine's industry, energy companies continued to generate large flows. According to Ukrenergo CEO Viktor Kudrytsky, in the first two weeks of September, Ukraine set a trade record, exporting $131 million worth of electricity. Energy took second place in Ukraine's trade balance. And due to Putin's energy shortages, electricity in Europe has become three to four times more expensive than in our country.
The main beneficiary of this price differential is the state, represented by the power grid operator Ukrenergo. For Akhmetov or anyone else to sell cheap Ukrainian electricity abroad at a high price, they must purchase the right to access interstate transmission lines at Ukrenergo's auction. This auction is held because there are significantly fewer interconnectors between the countries than there are those willing to sell electricity to Europe. Similar to the auctions held by the gas transmission system operator, this is the right to pump their gas through the state pipeline.
As a result of Ukrenergo's competitive and open auctions, it emerged that the right to access the pipeline was being sold at almost the same price as the difference between Ukrainian and European energy. For example, if energy in Ukraine costs 3 hryvnias per MWh, and in Romania 11, our exporter would receive 8 hryvnias in delta. Of this, they would pay Ukrenergo 6-7 hryvnias for the right to export.
This is a huge amount of money. In the first week of exports, Ukrenergo received 100 million hryvnias in revenue. And it has grown steadily in line with Europe's increased capacity to receive our energy. Currently, Ukrenergo has collected almost 5 billion hryvnias in revenue from auctions.
This is truly a gigantic amount of cash for Ukraine, which is at war. Ukravtodor's asphalt pavers are idle. Ore mining is stalled because it can't be shipped through closed ports. Grain trucks are slowly leaving, but this is nothing like last year. Consequently, a stream of 100 million hryvnias of net margin per week has left some state energy managers dizzy.
How to divide billions?
The fact is that, by law, Ukrenergo must use the proceeds from auctions exclusively for modernizing existing networks or developing highways to Europe. And they began doing so immediately – in the summer, a project to restore the line from the Khmelnytskyi Nuclear Power Plant to Rzeszow, Poland (we'll return to this story later). However, it costs only a quarter of a billion hryvnias. And Ukrenergo collects that amount of money in two weeks. Where to spend the rest?
Parliament came up with a solution: half of this income would be given to suppliers from the balancing market (this would effectively subsidize crisis supplies, a reasonable measure for a country at war), and the other half would be given to producers of "green" energy to finance the "green" tariff and support decarbonized energy sources.
This decision turned out to be very difficult to steal. The money is being distributed for genuine needs. And not to a single recipient, but to many market participants. And not by the decision of some official, but by law. There's only one way to change this cash flow: parliament must pass amendments to the law, and Ukrenergo must also submit proposals for changes to other regulatory documents.
Attack on Ukrenergo // Vladimir Kudritsky
However, in recent years, Ukrenergo has employed a management team that has proven to international financial institutions its aversion to corruption-related "fixes." Its CEO, Vladimir Kudritsky, enjoys the trust of the World Bank, the EBRD, and the IBRD, which have provided financing for the modernization of our energy grids in recent years. Simply put, Kudritsky is one of the last top managers to enter government service on the wave of pro-Western reforms following the Revolution of Dignity.
Such trust can only be undermined by very serious accusations from a respected figure. And the Ministry of Energy, led by German Galushchenko, gathered compromising evidence to present to Volodymyr Zelenskyy, so that he could use his authority to convince everyone that Kudritsky must be removed.
The report in question is a 400-page audit report on Ukrenergo's operations for 2018-2022. It's clear that the president, immersed in war, won't read it. The commander-in-chief won't even read the report's two-page summary. He'll simply listen to Galushchenko, who will say briefly: "Kudritsky is incompetent—he caused 8 billion in damages. He's completely disloyal—he constantly speaks English to people who aren't our people. He's completely unnecessary—my team has a clear work plan."
And there's a high probability that Zelenskyy will readily believe it. Herman Galushchenko was previously part of the inner circle of the traitor Andriy Derkach, but now enjoys the unconditional trust of the deputy heads of the Presidential Office, Rostyslav Shurma and Oleh Tatarov, who enjoy the unconditional trust of the head of the Office, Andriy Yermak. And thanks to this trust, over the past year, he has completely re-staffed the leadership of Energoatom, the National Commission for State Regulation of Energy and Public Utilities, and all other major state-owned energy companies and agencies, except for Ukrenergo.
Consequently, Nashi Dengi analyzed the most striking accusations made by the Ministry of Energy auditors.
The transformer myth
Ukrenergo is accused of purchasing transformers and shunt reactors for 180 million hryvnias at inflated prices through intermediary firms in 2020-2021.
Similar power transformers cost millions of hryvnias.
"Nashi Dengi" studied these purchases (the first one и the second one). The winner of both bids was Soyuz Corporation, which is not a transformer manufacturer but has been a contractor for Ukrenergo for many years in the construction of power grids and the installation of these transformers. The only manufacturer of these transformers in Ukraine, Zaporizhtransformator, initiated its own in 2019. bankruptcy, and therefore could not have participated in the tender under any circumstances—this is directly prohibited by Ukrainian law. Therefore, the accusation of purchasing from intermediaries is laughable.
Now, about the inflated prices. For large transformers, there's a generalized indicator called the price per megavoltampere (MVA). Roughly speaking, all power transformers in the world should cost more or less the same if their price is divided by their capacity in MVA. So, in these Ukrenergo tenders, the price achieved was $10,6 per MVA for shunt reactors and $13,1 for autotransformers.
This is a very low price. For example, a couple of years before Ukrenergo's purchases, Sumyoblenergo was purchasing large transformers and reactors. It ordered them for $23 and $21,5 per MVA. One of the suppliers was EDS-Engineering (we'll return to it later in this article). Compared to Ukrenergo's price, everything is clear. Law enforcement officials realized the same thing and opened an investigation. criminal proceedings for embezzling 24 million hryvnias on these purchases. However, after the SBU received a court search warrant in October 2019, they somehow lost interest in the large-scale embezzlement.
So, it's clear that the Ministry of Energy auditors are particularly biased when they consider the price of $10,6-13,1 thousand per MVA to be inflated, while EDS-Engineering receives a contract for supplies worth more than $20 thousand, and no one is sent to prison for it.
The passion of state auditors can be explained in another way.
Conflict of interest of the ministerial auditor
During Yanukovych's time, one of the biggest winners of Ukrenergo tenders was Svyaztekhservis, a company from the group of then-Prime Minister Mykola Azarov. there were contracts worth 380 million hryvnias to connect the then Deputy Prime Minister's "Activ Solar" solar power plant to the network Andrey KlyuevAfter the Revolution of Dignity, Ukrenergo's management was in no hurry to pay off all outstanding contract debt, obviously aware of the margins that had been built into the company during the Yanukovych administration. However, Svyaztekhservice managed to win several lawsuits, and in 2016, it received a final ruling ordering the state-owned company to pay it 47 million hryvnias.
But imagine the energy industry's surprise when, immediately after the money was transferred, Ukrenergo received a lawsuit from I-Tek Ukraine, a subcontractor of Svyaztechservice. It turned out that even before Svyaztechservice finally won the case against Ukrenergo, it had surreptitiously assigned the debt to I-Tek. That's why I-Tek jumped out of the woodwork with the lawsuit: "You paid the wrong person! Now pay us too!"
Later, lawyer Maxim Ponomarev, who represented I-Tek in this lawsuit, turned out to be the head of the Ministry of Energy's audit team that audited Ukrenergo.
Once again, the accusation against Ukrenergo of causing 47 million rubles in damages was made by a lawyer who attempted to use a ploy in court to double-drain this amount from the state-owned company. This demonstrates not only a potential conflict of interest but also the quality of the accusation against Ukrenergo by Galushchenko's auditors.
Facepalm: How they came up with a treasonous plot to involve Tatarov's SBU
The most outrageous and costly accusation of this audit was the state's revenue shortfall of 8,1 billion hryvnias. Watch the hands closely.
In 2018-2019, Ukrenergo signed a €2,3 million agreement with foreign consulting companies to assess whether it was safe for Ukraine to join ENTSO-E (a network of transmission system operators from 39 European countries). The consultants determined that connection was possible in 2023, but they set a number of technical requirements to ensure the process would be completely safe, without blackouts for Ukraine and Europe. This required reconfiguring some electrical equipment in Ukraine and changing certain technological procedures.
As noted above, Putin's invasion ruined these plans. However, by February 2022, Ukrenergo specialists, together with the European energy community, fulfilled the basic technical requirements to connect Ukraine to Europe eighteen months ahead of schedule. Moreover, Ukrainian energy exports to Europe began two years ahead of the Europeans' planned deadline. Consequently, Ukraine began earning significant revenues, much needed during the war, two years earlier.
However, the Ministry of Energy auditors draw the following conclusion from all this:
“The opening of electricity exports of only 100 MW from June 30, 2022, indicates an unjustified delay on the part of NPC Ukrenergo in opening and expanding the possibilities of an interstate crossing for electricity exports to Europe (in the context of the energy crisis in Europe due to the restriction of consumption of Russian energy resources) to the loss of funds for the crossing by NPC Ukrenergo and the limitation of the opportunities of state-owned producers and their loss of income from electricity exports to Europe due to the limitation of the volume of exports of the interstate crossing. […] Trading at the auction for access to the interstate crossing between the IPS of Ukraine and ENTSO-E with a volume of 100 MW brings income to NPC Ukrenergo in the amount of 10 million hryvnias per dayIf NEC Ukrenergo were to increase the export volume of this interstate crossing to 800 MW, the company could earn 10 times more revenue, or 100 million hryvnias per day. The state-owned company's lost profit (loss of revenue) amounts to 90 million hryvnias per day, or 90 x 30 = 2,7 billion hryvnias per month.
Then, the lost profit of 2,7 billion hryvnias per month was multiplied by three (apparently, for some reason, they decided that Ukrenergo lost only three months, not two years, and now Ukrenergo is under attack), resulting in 8,1 billion hryvnias in lost profits for the state. Not the money happily earned from the early launch of exports, but lost revenue. And all because in the 2019-2021 study, the consultants failed to take into account that Putin would attack in 2022, and the connection to Euroset would go ahead of schedule.
Then comes a new low. Since the auditors' digging reached the figure of 8,1 billion hryvnias, these are already such large losses that the investigation into them should not be conducted by the NABU under the corruption article of Part 5 of Article 191 of the Criminal Code. This amount of lost profits was classified as treason under Article 111 and included in the case of the person under patronage of Tatarov's people SBUAnd now the SBU, not the NABU, has begun to investigate other aspects of Ukrenergo's operations to build an evidence base. Tellingly, they did not include their own data on the aforementioned transformers from EDS-Engineering in the case file, because by comparison, Ukrenergo's transformers represent a simply insane discount.
But the Chekists have launched other activities. And, unfortunately, in a completely different direction.
Attack on Ukrenergo. A quarter of a billion for Shurma's entourage.
We're talking about the reconstruction of the Khmelnitsky-Rzeszow high-voltage power line. This is an absolutely essential project for both Ukraine and Poland. It could export up to 24 MWh per day to Poland, which would ideally bring Ukraine approximately 40 million hryvnias in price differentials in just one (!) day.
Ukrenergo is currently holding a tender for the installation of transformers and relay equipment, with an expected cost of UAH 263,80 million. The intrigue surrounding the tender could have been quelled even before the auction.
Attack on Ukrenergo in pursuit of billions
The plan was as follows. Minister Galushchenko launched the development of the line to Rzeszów in the summer. Ukrenergo immediately began developing the design documentation. The contractor for the development was EDS-Proekt, a member of the same group.EDS", as the above-mentioned "EDS-Engineering".
In the lead-up to the selection of this contractor, some SBU representatives paid preventive visits to some market participants. As a result, the firms searched realized there was no point in interfering with someone else's success story. Those who did bid for the project were unable to compete with EDS's offer—neither in price, payment terms, nor in terms of completion time.
And thus, EDS gained a strategic advantage over everyone else. The problem is that verifying a designer's work requires practically repeating their entire work. For example, a builder receives a project that specifies that a specific drill bit should be used to drill a hole in a particular location because it's suitable for the soil. But what if, during drilling, it turns out that the soil there isn't suitable, and the builder scraps the planned drill bit and searches for a stronger one, disrupting the work schedule? Or the designer might specify that a QWERTY№;%:1234 relay is required in this location. But then it turns out that a QWERTY№;%:1235 was needed—and the contractor must run around again, searching for the right relay. And detecting such "changes" is almost impossible for the builder.
However, just a few hours before the auction began on September 16, the country's top leadership informed them of the circumstances of the tender. And EDS decided to withdraw its bid, out of deterrence. While EDS is a legitimate market participant, its close relationship with the Deputy Head of the Presidential Office is an aggravating circumstance.
Solarfield-2 Address // Attack on Ukrenergo
Solarfield-3 Address // Attack on Ukrenergo
Rostislav Shurma
For reference: The founder of EDS-Project and EDS-Engineering is entrepreneur Alexander Zapyshny. He also owns several solar energy companies (Fortis Solar, Eco Ray, Solarfield-3), registered in the village of Mezhova (Dnipropetrovsk region) at 4 Grushevsky Street.
Solarfield-2 LLC is also registered at the same address; its co-owner is Oleg Shurma, brother of Deputy Head of the Presidential Office Rostislav Shurma.
Rostislav Shurma was a member of the Party of Regions under Yanukovych and served as director of Rinat Akhmetov's Zaporizhstal. In 2019, he ran for the Verkhovna Rada as number six on the Opposition Bloc list, along with Evgeny Muraev, Alexander Vilkul, Gennady Kernes и Gennady TrukhanovHowever, he subsequently found common ground with Volodymyr Zelenskyy's team. In the spring of 2021, Rostyslav Shurma joined the supervisory board of the state-owned Ukroboronprom, and soon became deputy. Andrey Yermak specifically on issues of energy and industry.
Attack on Ukrenergo. Here's the situation.
If the rebels succeed in their plan to eliminate Vladimir Kudritsky's team from Ukrenergo, they will be able to:
- quickly change the rules for generating billion-dollar flows for electricity exports;
- to completely close the energy sector from Western eyes, which monitor how Ukraine spends foreign money.
Translation by Skelet.Org
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