With the onset of cold weather, Russia is deliberately attacking the power generation and supply facilities. The power system of Ukraine survived eight large-scale attacks of Russian missiles and drones. The November 23 attack was by far the most serious — then the vast majority of consumers were left without light. Some cities, including Kyiv, were without heat and water supply and mobile communication for a day.
The lack of electricity has greatly increased the demand for generators, charging stations, batteries, solar panels, power banks, and inverters. The shortage of these goods in Ukraine caused an increase in prices and an increase in imports, as most of them are imported from abroad.
In early November, the government adopted a resolution exempting from VAT and import duty imports of electric generators, transformers, batteries, and other energy equipment. According to MP Yaroslav Zheleznyak, in 3 weeks of the month, 82,000 generators worth UAH 690 mln were imported under the customs privilege.
And starting from December 13, they were exempted from VAT and import duty at the legislative level.
Procurement dynamics in Prozorro
According to our estimates, during 11 months of 2022, procuring entities bought more than 10,000 generators for UAH 1.5 billion. As in the commercial market, in Prozorro, the demand for generators increased significantly in October. At that time, 1,900 generators were purchased, which is 2.3 times more than in September. Further, the growing continued.
Before this surge, another small peak in demand was in March, when 358 devices were bought. And after a slowdown in the spring, from July onwards, the number of generators purchased began to rise slightly.
In addition, at the time of preparation of the material, in Prozorro, 190 procurement transactions of generators were still in progress with a total expected cost of UAH 227 million, which the procuring entities announced in November. In December, another 2,000 tenders have been announced worth UAH 910 mln.
Prices for generators in Prozorro
Prices vary depending on the type of generator, capacity, manufacturer’s brand, and other factors. For example, by type of fuel, generators can be gasoline, diesel, gas, and combined. Gasoline ones are among the cheapest, but they have higher fuel consumption compared to diesel ones. Diesel models are economical to consume, as well as the possibility of long uninterrupted operation, but they are much more expensive.
Gasoline generators with a capacity of up to 10 kW were purchased the most. Such generators were bought mainly for educational institutions, municipal enterprises, city councils, co-ops, for the arrangement of shelters and Unbreakable Points.
Generators with a capacity of more than 100 kW were mostly purchased to ensure the functioning of critical infrastructure and housing and utilities services.
The cost of generators that were purchased from Prozorro during the year increased 2-3 times:
- in Prozorro, gasoline generator “Centaur KBG258a” with a capacity of 2.5 kW cost UAH 6,400–7,800 in February, and in November — already UAH 15,900;
- diesel generator “Forte FGD6500E” with a capacity of 4.5 kW cost UAH 34,200 in February, and in November — UAH 99,500;
- gasoline generator “Dnipro-M GX-70E” with a capacity of 7.5 kW in February was bought for UAH 23,900–24,900, while in November — UAH 53,900.
In addition, the cost of the same generator can vary significantly depending on the supplier. For example, the Könner&Söhneb KS10000E gasoline generator was sold by individual entrepreneur Barchuk V. A. for UAH 72,000, while individual entrepreneur Krytiuk H. M. — for UAH 88,000. Energen EN7500 gasoline generator with a capacity of 7.5 kW was sold by Panio A. S. for UAH 48,500, and Zahura O. S. — for the price of UAH 57,000.
At the same time, prices in Prozorro are often at least several thousand hryvnias lower than in the commercial market. Thus, the Hyundai HY3100 gasoline generator with a capacity of 2.8 kW in November can be bought online at the price of UAH 28,000. In Prozorro, such generators were supplied for UAH 19,900 each. Atimax AG3500 gasoline generators with a capacity of 2.5 kW were sold on the commercial market at UAH 28,500–36,000, and on Prozorro — at UAH 24,500.
In summer, localization started working in public procurement — the requirement to buy some engineering goods only if they have a sufficient share of the Ukrainian component. Generators also fell under this limitation.
But already on November 14, due to a sharp increase in demand, localization was canceled for them. However, the government did so with the help of the Covid resolution. It exempted goods that were on the list of the necessary things to combat the coronavirus in 2020 from VAT, import duty, and localization in public procurement.
Because of this, procuring entities had a question — who can buy generators without the requirement of localization? Everyone or just hospitals? The Ministry of Economy adheres to the idea that everyone, but the position of the control bodies is still unknown. In the end, devices are needed urgently, so buyers are now ordering them without localization.
Procurement of generators in the regions
- Department of Municipal Security of the Kyiv City State Administration — 400 generators worth UAH 28.6 million
Here, 4 different types of generators were purchased with a capacity of 5.5 to 8.5 kW. The procurement was conducted outside Prozorro due to an urgent need, at the expense of the reserve fund of the local budget. Generators are needed for critical infrastructure facilities and those that ensure the livelihoods of Kyiv residents, such as municipal pharmacies and ASCs. The contract was concluded with LLC “Epicenter K.”
- Department of housing and municipal services of Bilotserkiv City Council — 85 generators for UAH 4.9 mln
The Department purchased 85 Feider FG7000-RE gasoline generators with a capacity of 6.5 kW to equip shelters. The procuring entity concluded two direct contacts: one with individual entrepreneur O. I. Kharchenko for the supply of 40 generators, the second with Kharchenko S.I. for the supply of 45 generators.
- SWMUC “Kyivvodfond”— 83 gasoline generators worth UAH 3.5 million
Open bidding was announced at the end of September, and in early November, a contract was signed with the Kyiv manufacturer “EKVIVES” LLC. The company must supply gasoline generators with a capacity of 7.5 kW by December 22, in particular, 21 EKV-TG-9000МЕ3 generators for UAH 35,600 each and 62 EKV-TG-9000ME generators for UAH 34,300 each.
Kyiv Oblast purchased significantly more generators compared to other regions, since there are many procuring entities in the capital who centrally procured devices for their regional units.
For example, JOINT STOCK COMPANY “UKRPOSHTA” purchased 81 generators for UAH 18.6 million. The enterprise purchased 40 diesel portable generators EKV-DS-7000ME/S with a capacity of 7 kW for UAH 42,800 each. (procurement 1, procurement 2). Contracts were concluded with the manufacturer of these generators — EKVIVES LLC. For another UAH 16.7 million, 41 WattStream diesel generators were bought, their power ranged from 16 kW to 100 kW. The contract was concluded with Highted Ukraine LLC. According to the company, these generators are already being used in oblasts.
Dnipropetrovsk Oblast comes second in terms of the number of the purchased generators, 860 devices worth UAH 196.6 million.
- The Executive Committee of the Kryvyi Rih City Council— 120 generators for UAH 5.5 million
The largest number of generators was supplied to the Executive Committee by Epicenter K LLC, which won in five simplified procurement transactions. The company sold 30 Greenmax (Compass) 6GF-ME diesel generators; 25 Vulkan SCD8000 diesel generators; 20 diesel generators Compass 6GF-ME and 1 EnerSol SKD-3B; 10 Fogo F3001IS inverter generators; 5 Fogo F3001IS inverter generators.
In September, the procuring entity purchased 5 Kraft&Dcle KD 194 gasoline generators. And in October, another 30 Genpower GBG15 gasoline generators with a capacity of 1.5 kW were purchased. In November, the procurement volume was reduced to 24 generators. The contract was concluded with the Kyiv LLC “M.B.”
- Regional branch “Prydniprovska Railway”— 64 devices worth UAH 3.2 million.
“Prydniprovska Railway” purchased 57 German Scheppach SG65OOX gasoline generators with a capacity of 6.4 kW for UAH 47,800 each and 7 Chinese EnerSol diesel generators with a capacity of 6.5 kW.
- Municipal enterprise “ENERHODIM” of the Dnipro City Council— 43 generators for UAH 3.9 million
At the end of November, the municipal company purchased 43 generators under direct contracts from local entrepreneurs. One contract for the supply of 34 KAMA 5.5-7.5 kW diesel generators was concluded with Ruslan Bondarenko. The second contract for the supply of 9 KAMA gasoline and diesel generators of various capacities was signed with Ihor Topolia. IE Topolia I.M. began to participate in public procurement in October 2022. During this time, the entrepreneur received 16 direct contracts for UAH 1.8 million.
Vinnytsia Oblast comes third in terms of the number of the purchased generators, with 784 devices for UAH 144 million.
- ME “Vinnytsiamiskteploenerho” — 247 generators worth UAH 62.4 million
ME “Vinnytsiamiskteploenerho” provides heat to about 80% of consumers in the city. The enterprise purchased212 generators of the Polish company “Fogo” with a capacity of 7.7 to 176 kW. A direct contract was signed with individual entrepreneur Lukyan M. F. The contract was signed in September, its initial amount was UAH 32.5 million. And in November, the amount of the contract was reduced by UAH 2.4 million because of the exemption from VAT and import duties.
ME “Vinnytsiamiskteploenerho” purchased another 32 generators of the same Polish company “Fogo” under the simplified procedure in August. The only participant in that procurement was also individual entrepreneur Lukyan M.F., and the price offer was only 2 kopecks lower than the expected cost and amounted to UAH 3.3 million.
The enterprise purchased 3 FG Wilson Perkins P900E1 generators with a capacity of 720 kW at the end of November. The cost of one such generator was UAH 9.6 million. Only IE Lukyan M.F. applied for open bidding again.
Individual entrepreneur Lukyan M.F. and his own LLC “COMPANY UKRSERVICE” were involved in the investigation of the Center for Investigative Journalism regarding the sale of electronic goods manufactured in the occupied Crimea.
- Education Department of Haisyn City Council — 27 generators for UAH 608,000
The department purchased 20 WERK WPG 3600 gasoline generators with a capacity of 2.8 kW. The cost of one was UAH 21,900. A direct contract was concluded with individual entrepreneur Lypach L.P. This entrepreneur supplied 6 more generators under two other contracts (first, second). In August, the department purchased another Forte generator for UAH 16,100.
- Cultural institution “Vinnytsia City Centralized Library System” — 20 generators for UAH 1.4 million
The institution purchased 20 gasoline generators of the Polish company “Fogo” with a capacity of 6.2 kW for UAH 69,900 each. A direct contract was concluded with the same IE Lukyan M. F.
In general, among the largest procuring entities in the regions are water utilities, heating providers, departments of housing and municipal services, large hospitals, and local councils. Thus, the Ternopil City Council purchased 65 generators for UAH 43.3 million. Cherkasyvodokanal bought 10 for almost UAH 15 million. In general, water utilities and heating providers account for almost a third of all generator costs.
Despite the fact that some of the spring procurement transactions probably have not yet been published, it is unlikely that the volume of procurement back then exceeded the autumn ones. Therefore, only certain institutions and state and municipal enterprises were preparing for blackouts in advance — this was not a mass phenomenon. Neither did MPs with the government prepare for an increase in the volume of generators procurement because of the blackout. This lesson needs to be learned; now, we need to review what other goods may be in short supply in public procurement in the coming months, and think about how to mitigate this deficit.
This publication was prepared with the financial support of the European Union. Its content is the sole responsibility of Transparency International Ukraine and does not necessarily reflect the views of the European Union.