Tender worth 40 million USD or why halting the power supply from Ukraine to LPR was stalled for three years

Author: Dmytro Snegiryov, Head of Prava Sprava public initiative.

On 25 April, 2017, the power supply from the part of the Luhansk region controlled by the Ukrainian government to the uncontrolled part of the region was suspended.

Electricity was halted in accordance with the demands of the Energorynok State Enterprise following "The order of the implementation of measures for partial or complete cessation of power supply through its metering points" approved by the Ministry of Energy and Coal Mining of Ukraine issued on 10 June, 2015. The suspension is the result of the long-term failure to pay for power delivered and consumed in the uncontrolled territory.

According to the press service of the Luhansk Energy Association, consumers in general owe the company around 5.5 billion hryvnia (207 million USD), of which 4.9 billion hryvnia (184 million USD) is from consumers in the uncontrolled territories.

The head of the National Power Company, Ukrenergo, Vsevolod Kovalchuk, said that the energy needs of the Ukraine-controlled part of Luhansk, with the exception of four areas near Trokhizbenka, are provided for through the Luhansk TPP - Lysychansk power station. According to Kovalchuk, specialists from the Northern Electrical Power System of NPC Ukrenergo, LLC, the Luhansk Energy Association, and DTEK Luhanska TPP, are taking all necessary measures to synchronize DTEK Luhanska TPP with the national power grid of Ukraine through a 110 kV network in order to ensure the reliable operation of Luhanska TPP.

It is noteworthy that the power supply to the Donetsk region, unlike Luhansk, will not be cut off until the construction of a new power line to Avdiivka is completed. "The decision to terminate the power supply will not be made as long as electric service to the city of Avdiivka remains unresolved. In the near future, the construction of a new section of a 110 kV power line by DTEK Power should be completed, which will provide another power source for the city of Avdiivka. At that time the issue of continuation or discontinuation of the power supply to the separatist areas of the Donetsk region will arise," the head of Ukrenergo, Kovalchuk, said.

On January 30, 2017, in an interview with Dzerkalo Tyzhnia newspaper, the Minister of the Temporarily Occupied Territories and Internally Displaced Persons, Vadym Chernysh, said that the temporarily uncontrolled territories of the Donbas cannot be disconnected from the power grid as the network in the controlled and uncontrolled territories is unified. "The controlled territories depend on the uncontrolled ones. The power system is designed in such a way that it connects these areas, makes them interdependent," the Minister stated.

In order to minimize the risks associated with the restriction of the power supply to the Novoaidar district, which is located near the line separating the controlled territories from the uncontrolled ones, the decision was made to build new power lines. The launch is scheduled before the end of 2017. On 10 February, 2017, the Deputy Chairman of the Luhansk Military and Civil Administration, Yuriy Klymenko, held a meeting to determine the route for the new overhead power lines to provide power to Trokhizbenka and other areas in the Novoaidar district in the Ukraine-controlled part of the region.

As a positive example of mitigating risks associated with the restriction of the power supply to areas which are located in the controlled part of the Luhansk region, there could be a successful implementation of the construction of 35 kV overhead power lines. When the newest branch of the power grid was connected to the 110 kV Stanytsia Luhanska substation, by branching out of the 35 kV Hreblia-Komyshne line, it provided energy to the Stanychno-Luhansk district.

It should be noted that the construction of a new power line branching out of the 35 kV Hreblia-Komyshne line to the Stanytsia Luhanska substation was being conducted throughout 2016. The total length of the constructed line is a bit more than 13 kilometers and 100 electricity pylons were installed. Issues over the construction of this line arose urgently in late 2014, when the temporarily uncontrolled territories decided to use the power switch as an instrument of political pressure.

On March 22, 2016, the acting head of the state company Ukrenergo, Vsevolod Kovalchuk, in an interview with UNIAN, said that power continues to be transmitted to the uncontrolled territories of the Luhansk and Donetsk regions under contracts signed by the Luhansk and Donetsk regional energy companies in accordance with the decision of the Cabinet. However, in the Luhansk region, power is provided only by the Luhansk TPP, which operates as an island and is not synchronized with the national power grid.

To solve this issue and ensure a reliable energy supply for the region (the controlled areas of the Luhansk region) the Cabinet considered a proposal made by the Luhansk Military and Civil Administration on the construction of a new 500 kV substation near the city of Kreminna and a 220 kV power line which will connect this station to the city of Sievierodonetsk. According to Kovalchuk, the construction of the substation should have begun in the second half of 2016 to be completed before the end of 2017.

The construction of the station near Kreminna did not begin in 2016. However, in January 2017, NPC Ukrenergo released a request for proposals for the construction of a 500 kV substation near Kreminska which would be connected to two high voltage power lines, the 500 kV Donbaska - Don and the 200 kV Kreminska - Yuvileina. The estimated cost of this construction is 1.08 billion hryvnia (40 million USD) excluding VAT. The station must be built during 2017-2018. The completion of the Kreminska substation and launching its operation in 2018 will allow for the synchronization of the power system in the northern part of the Donbas with the national power grid of Ukraine, which currently operates on the Luhansk TPP ‘island’ system which generates a lower power supply.

The contract announced by NPC Ukrenergo for the construction of the Kreminska 500 kV station in the Luhansk region was awarded to the Kyiv Energy Construction Company, LLC (KEBK, Ivano-Frankivsk). KEBK submitted a bid through ProZorro system offering to perform construction work for 1,060,656,000 hryvnia (40 million USD), while the expected cost of the construction of the substation was declared at 1,083,333,000 hryvnia (40.8 million USD), without VAT. The bid includes the development of design and working documentation which must achieve a positive assessment by the experts, construction work, and the cost of Ukrainian and foreign equipment. The general contractor must perform all necessary work before the end of 2018.

According to the results of the tender process held by NPC Ukrenergo, the general contractor must conduct all work between now and 2018 as it necessary for the further synchronization of the power grid in the northern part of the Donbas with the national grid of Ukraine, which is currently operating on the ‘island’ system.

However, the Minister of Energy and Coal Mining of Ukraine, Ihor Nasalyk, said that since April, on the order of Prime Minister Volodymyr Groysman and the President of Ukraine, Petro Poroshenko, the Ukrainian power grid was prepared to operate "without the uncontrolled zones" as well. "We have created a number of technical and scientific solutions that make it possible to provide the controlled areas of the Luhansk and Donetsk regions with full power, regardless of events in the uncontrolled area," Nasalyk said.

On April 26, 2017, the Ministry of the Temporarily Occupied Territories and Internally Displaced Persons stated that the National Energy Company Ukrenergo has synchronized the operation of the Luhansk TPP (Shchastya, in the Luhansk region, is covered by DTEK Vostokenergo) with the national power grid of Ukraine. "The connection of the power lines on the controlled part of Luhansk with the goal of synchronizing the TPP (Luhansk) with the power grid of Ukraine has been completed," the statement says.

A logical question arises here: If as of April, on the orders of the Prime Minister, Volodymyr Groysman, and the President of Ukraine, Petro Poroshenko, Ukraine's power grid was able to work “without the uncontrolled zones" and, as a result of this work, in one night it was possible to cut off the temporarily uncontrolled territories from the power supply and synchronize the operation of the TPP with Ukraine's power grid, then why there was a need to announce a tender worth 1 billion Hryvnia (40 million USD) to build a substation in the vicinity of Kreminna, with the goal of synchronizing the power grid in the northern Donbas with the national power grid?

This question must be answered by the NABU (National Anti-Corruption Bureau of Ukraine).

The views expressed in this article are the author's own and do not necessarily reflect those of UAWire. The article has been published with the permission of the author.

  Ukraine, LPR