30.06.2025 Tenders

How Energoatom steals public funds with the connivance of Minister Galushchenko

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The Minister of Energy of Ukraine Herman Galushchenko, who is supposed to be the guarantor of effective policy and control in the energy sector, has become the guarantor of corruption schemes that allow embezzling millions of hryvnias through manipulation of tenders and illegal alienation of state resources, including those belonging to Energoatom.

The analysis of data from the Prozorro system and other sources reveals a number of facts, including the use of discriminatory tender conditions and inflated estimates by YUZHENERGOBUD and EPB LLC to misappropriate budget funds. At the same time, Energoatom officials facilitate the illegal supply of electricity worth more than UAH 300 million without prepayment.

Why does the Minister responsible for the strategic sector allow such abuses? Is this the result of negligence or, perhaps, deliberate connivance with corruption schemes?

Manipulation of tenders – how Yuzhenergobud monopolizes procurement

In April 2025, PrJSC YUZHENERGOBUD entered into an agreement with JSC NNEGC Energoatom for construction works and routine maintenance in the amount of UAH 70,835,273.94. The analysis of the tender documents revealed a number of violations that indicate unfair competition and artificial restriction of participation of other companies.

Among the discriminatory tender conditions:

  1. Limitation of experience to work at NPPs
    The tender documentation requires documentary evidence of experience in performing similar contracts exclusively at nuclear power plants. Similarity of contracts should be determined by the type of work, not by the specifics of the customer. Such a requirement artificially narrows the range of participants, favoring companies that have already cooperated with Energoatom, and excludes bona fide contractors with experience in other areas, such as industrial energy or critical infrastructure. The Antimonopoly Committee of Ukraine recognizes such conditions as discriminatory.
  2. Approved technical specifications
    Tenderers were required to submit technical conditions, technical specifications or terms of reference already approved by Energoatom and the SNRIU. This makes it impossible for new suppliers with no previous experience of cooperation with Energoatom to participate. The procedure for approving technical specifications is lengthy and resource-consuming, available only to a limited number of companies. Such a requirement violates the principles of fair competition (Article 5 of the Law) and restricts competition, which is prohibited by part three of Article 22.
  3. Requirement “Decision on approval of the supplier”
    Tenderers had to provide an internal document of Energoatom – “Decision on approval of the supplier”. This requirement is an internal administrative act of the customer that is not provided for by the Law of Ukraine “On Public Procurement”. It restricts the participation of new companies, giving preference to those already included in the Energoatom’s supplier register.
  4. Monopolization in favor of Hochiki
    The technical specification and scope of work specify specific models of equipment of the Hochiki trademark (Japan): ALN-EN smoke detectors, YBN-R/3 bases, HCP-E (SCI) control modules, etc. At the same time, the phrase “or equivalent” is missing, which violates part three of Article 22 of the Law, which prohibits specifying a specific trademark without the possibility of submitting equivalent equipment. This monopolizes the procurement in favor of one manufacturer, limiting competition.

In addition, a comparative analysis of the prices in the contract estimate with market prices revealed a systematic overestimation of the cost of the equipment:

  • Smoke detector ALN-EN (Hochiki): the contract price is UAH 16,070/unit, the market price in the EU is UAH 1,753-2,505/unit (including VAT). The price is 6-9 times higher.
  • Base for YBN-R/3 detectors: contract price – 3,110 UAH/unit, market price – 121-1,063 UAH/unit (including VAT). The price is 3-25 times higher.
  • Pyro-Safe Flammoplast KS-1 fire retardant: the contract price is UAH 2,715/kg, the market price in the EU is UAH 700/kg. This is a 3.9-fold overcharge.

This overstatement has no technical and economic justification, as the products are mass-produced, mass-available, and not exclusively for nuclear power plants. Delivery or certification costs do not explain this price difference.

In addition, the contract provides for the use of a dynamic price with a deferred payment of up to six months without a clear indexation formula, which creates the possibility for unjustified price increases after the contract is concluded and can be used for additional misappropriation of funds.

EPB LLC and a tender for UAH 279 million

In January 2023, EPB LLC entered into an agreement with the Atomproektengineering Separate Subdivision of Energoatom JSC for construction and maintenance works worth UAH 279,287,998.92. The analysis revealed similar violations.

Among the discriminatory violations: In Annex 11 of the tender documentation, the customer demanded confirmation of experience in performing construction and installation works exclusively on electrical equipment in the areas of safety systems of NPP power units. This condition is excessively narrow, as it excludes companies with experience of similar works at other critical infrastructure facilities or nuclear power plants. For example, the installation of electrical equipment at nuclear research facilities is not taken into account, although it is technologically equivalent.

The estimate of the contract for the modernization of the safety systems of the power unit No. 3 of the PNPP provides for the supply of a 4×2.5 KVVGeng cable at a price of 403,327 UAH/km (403.33 UAH/m). A comparative analysis showed that at a similar tender held by Energoatom, this cable cost 173,502 UAH/km (173.50 UAH/m), which is 2.3 times cheaper. Odeskabel Trading House LLC offered the cable for 110,200 UAH/km (110.20 UAH/m), which is 3.6 times cheaper.

Such overpricing does not correspond to the market situation and indicates inefficient use of budget funds. The lack of competition (the only bidder won with a saving of 0.01%) raises suspicions of collusion between the customer and the supplier.

Illegal alienation of electricity worth UAH 300 million

In the period from April to November 2024, the branch “Separate Subdivision Energoatom-Trading” of JSC NNEGC Energoatom entered into an agreement with LLC Svetlo Group M for the supply of electricity worth more than UAH 300 million. The electricity was supplied without prepayment.

The general director of the branch, Volodymyr Matkin, signed the contract and authorized the supply of electricity without payment. This may indicate official negligence or intentional actions in favor of third parties. Jakob Hartmut, Vice President for Finance and Economics, could not have been unaware of a transaction of this magnitude, as it required approval of financial plans and accounting records.

The crime report was filed only in November 2024 with the district police department, not with the NABU, which looks like an attempt to avoid a real investigation. This may indicate systemic inaction or complicity in the scheme.

Conclusions: Corruption that threatens energy security

The analysis of the activities of PrJSC YUZHENERGOBUD and LLC EPB in Energoatom’s tenders revealed systemic violations: discriminatory conditions, monopolization of procurement, overpricing and possible corrupt arrangements. The scheme of illegal supply of electricity without prepayment for UAH 300 million only confirms the existence of an organized system of abuse involving Energoatom officials. The connivance of such schemes by Energy Minister Herman Galushchenko raises serious questions about his competence and responsibility for the strategic sector.

These actions not only lead to embezzlement of budget funds, but also threaten Ukraine’s energy security, as inefficient use of resources weakens a key player in the energy sector.

We have already submitted relevant materials to a number of law enforcement and regulatory authorities with demands to immediately launch an investigation into the facts.

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