Shelter Arrangement in Kyiv: a Look at Prozorro

In May, russia intensified the shelling of Ukraine. It is increasingly using combined attacks — with drones and cruise (and sometimes ballistic) missiles at the same time. The capital remains one of the main targets during such attacks.

The death of people who could not get into shelter during the attack on the night of June 1, including one child, raised the question of access to places of protection and their availability even more acutely. A full inspection of shelters was carried out in the city.

Its results are interpreted slightly differently by the city authorities and the Minister of Strategic Industries Oleksandr Kamyshin, who was instructed by Volodymyr Zelenskyy to check the protective structures in the capital. Kamyshin says that 15% of shelters are suitable for use, while the Kyiv authorities report on 65%. Deputy Head of the Kyiv City State Administration Petro Panteleyev emphasizes that the mentioned 15% are shelters to which there are no comments at all, while most of the other structures can still be used by Kyiv residents.

Currently, the officials are trying to decide how many shelters meet the requirements and who will be responsible for their condition. Meanwhile, we analyzed what was purchased for shelters in Kyiv, how, and by whom, as well as who received all those orders.

General statistics

First of all, it should be noted that we do not see all procurement transactions of repairs and arrangement of shelters. They are allowed to be purchased directly, and the obligation to report on direct contracts in the electronic system immediately, and not after the end of martial law, was restored only in autumn 2022. In addition, sometimes procuring entities purchased repairs / arrangement of several protective structures at once, and put only one address in the system — so it is not possible to automatically extract data on the full list of shelters in such contracts. You need to open the scanned PDF files of the agreements and check everything manually.

We selected all Kyiv procurement transactions, where the name mentioned shelters, refuges, or protective structures. The following contracts worth UAH 687 mln are visible on Prozorro for 2022-2023:

• in 2022 — for UAH 245 mln. At the same time, according to the data published by Kyiv MP Kseniia Semenova in her Telegram channel, last year, UAH 323 mln was paid from the local budget for the repair of shelters.
• in 2023 — for UAH 442 mln. A number of tenders continue — for UAH 130 mln (we did not include them in the subsequent statistics).

The peak months for such tenders during the full-scale war were August 2022 — UAH 122 mln, May 2023 — UAH 110 mln, and November 2022 — UAH 103 mln.

For all this money, at least 1,515 shelters should be repaired and/or arranged in Kyiv. The amount included procurement at the expense of not only the local budget, but also the national budget — for example, for shelters at universities.

The largest share in the total amount is taken up by orders for major and current repairs — UAH 488 mln (71%). Another UAH 30 mln was spent on generators, almost UAH 17 mln was spent on various furniture for shelter arrangement, and UAH 12 mln was spent on the procurement of household and kitchen equipment.

Kyiv’s residents could notice how in recent years, the lighting of city streets, especially major highways, has been actively updated. With this important area of work, the city authorities are killing several birds with one stone: outdoor lighting networks are becoming more modern and convenient for road users, safety is improving, and an economic effect is achieved. It is not the repair itself that should help save money from the city budget (this is, of course, an expense), but the replacement of lamps with energy-saving ones — the old mercury and sodium ones with LED ones. Lanterns with LED elements shine better, last longer and, most importantly, significantly save electricity consumption.

As of now, activities in this area are regulated by the City target program of outdoor lighting in Kyiv for the period of 2019-2022. The four-year program budget is UAH 2.72 bln. Out of this amount, UAH 1.76 bln is allocated from the local budget, and UAH 0.96 bln accounts for other sources (national budget or loan). The program is implemented by the Department of Transport Infrastructure of the Kyiv City State Administration, to which ME Kyivmisksvitlo is subordinate. This company is the balance holder of all outdoor lighting networks in the city and, accordingly, the procuring entity of works on their renewal.

In February 2021, the specialized department reported to the MPs of the Kyiv City Council on the implementation of the program in 2020. And judging by the report, it is the major repairs of street lighting networks with the replacement of lamps that is the most successful area of work of Kyivmisksvitlo. Last year, works for UAH 326 mln were carried out instead of the planned UAH 146 mln.  If to count in the lamps, 6,515 were replaced instead of 2,666. Allegedly, there were even savings in this case: the planned cost of one lamp was UAH 55,000, and the actual cost was less than UAH 50,000.  

The ME compensated for these successes by not fulfilling other planned program items. The company did not replace lanterns in parks and garden squares at all, did not build lighting networks for highways, and did not carry out major repairs to architectural and decorative lighting networks. The outdoor territories were also almost untouched — 4 objects were worked on, 93 are in the plan.

Shortly after the report on the work of the ME, mayor Vitali Klitschko instructed to conduct an unscheduled audit of it. This is what the Department of Internal Financial Control and Audit did, which in a fairly short time — only a month and a half — prepared the “Assessment of the activity of ME Kyivmisksvitlo on compliance with the law during tender procedures and fulfillment of contractual obligations for 2019-2020.” 

Golden supports

In general, the inspectors who analyzed the work of Kyivmisksvitlo for 2019-2020, covered procurement transactions worth UAH 262.4 mln. Out of this money, the detected violations amounted to only UAH 0.5 mln of losses. At the same time, the auditors also recorded violations amounting to UAH 27 mln, which did not lead to losses. They also noted the inefficient use of funds with estimated losses of UAH 16.8 mln.

As far as the last point is concerned, the bureaucratic wording sounds much more neutral than the facts behind it. We are talking about an audit finding on the cost of lamp supports. For major repairs with replacement of lamps, which were discussed above, not only LED lamps are purchased, but also lamp supports. Kyivekspertyza specialists checked the cost of works on 31 major repairs (22 objects in 2019, 9 in 2020) and came to the conclusion that outdoor lighting supports with a height of 8-10 m were purchased at prices that are 46-60% higher than market prices.

According to experts, the total amount of losses in the procurement of supports was UAH 16.8 mln, or 9.9% of the cost of all inspected works.

To determine the market value of the supports, Kyivekspertyza sent requests for a commercial offer to five manufacturing enterprises: TOV Company Metal Invest, TOV Metalogalva, TOV Eurorize, TOV Dolight, BLAGOUST. Based on their responses, the auditors formed their own sample of prices. Moreover, experts note that they used not the average, but the highest values of offers. And still, the difference with the price that Kyivmisksvitlo put in the estimate was 60% for 8-meter supports and 46% for 10-meter supports (overestimation in ME). 

Kyivekspertyza also studied the websites of support manufacturers and suppliers. There, the cost of supports is also lower than the price that Kyivmisksvitlo paid for the supports in 2019-2020.

Moreover, even if you search for these supports on the internet, they are sold cheaper than what Kyivmisksvitlo paid. For example, the 8-meter 103/220 OVOG support (these are the ones that ME buys) is offered for UAH 15,440, and this includes VAT. Ten-meter ones can be found for UAH 16,500 apiece.

That is, probably, approximately UAH 7,000 was overpaid for each pole with a lantern.

ME representatives do not agree with the auditors’ conclusions. Director of Kyivmisksvitlo Volodymyr Krutsenko responds: to form the price of supports, the company sent requests for a commercial offer to three manufacturing plants in 2019 and four in 2020 (it also received three responses). ME formed estimates already on the basis of their price. And they, in turn, received positive reports from the SE Ukrderzhbudekspertyza.

Interestingly, the audit covered only approximately 16% of lighting repairs procurement in Kyiv (at the expected cost), which Kyivsvitlo conducted in 2019-2020. The Kyivaudit did not explain to us how procurement transactions were selected for inspections. However, procurement transactions with such prices for supports significantly exceed the 30 included in the audit. Accordingly, losses can be significantly higher than UAH 16.8 mln.

In addition, Kyivaudit found an overestimation of the cost of supports for procurement of Kyivmisksvitlo during its previous audit in 2019. Back then, it analyzed procurement transactions for 112 facilities for 2018. The auditors found that ME conducted a market assessment based on only two offers, made its own one by asking prices with five companies, and considered that Kyivmisksvitlo spent UAH 15.9 mln inefficiently. To correct this violation, ME undertook to identify the official responsible for analyzing current prices on the market when determining the cost of direct costs when drawing up estimate documentation.

Subtleties of power consumption

Another interesting finding of the auditors concerns not losses from inflating the price, but the so-called “lost profits” due to inefficient use of municipal resources.

In 2020, ME Kyivmisksvitlo purchased electricity for powering outdoor lighting networks for UAH 134.8 mln (62.3 mln kWh). The auditors found that 520 of the 1,485 connected facilities consume more than 50,000 kWh per year. They account for 60% of the total amount of the electricity used. The audit advises equipping these facilities with hourly electricity metering systems — ASKOE/LUZOD — to save on resource procurement in the future.

The fact is that there are now two types of non-household consumers — “A” and “B” on the electricity market, which in Ukraine is becoming more and more free and technologically advanced. “A” is a group of enterprises whose sites are equipped with automated systems for reading power consumption data. The most common of these systems is ASKOE, an automated system for commercial electricity metering. It records consumption indicators on an hourly basis and transmits data from the company’s meters to its own server and the power supply company’s server. Therefore, in the future, group “A” enterprises can consider hourly electricity prices, adjust their electricity costs, and receive more favorable tariffs. 

Group “B” includes all other consumers who are not equipped and, what is perhaps a little strange, Kyivmisksvitlo as well. 

Therefore, in their conclusions, the auditors advise the company to pay attention to this omission and give the following calculations:

The cost of equipment for ASKOE 520 points that consume 60% of electricity will amount to UAH 10.5 mln. Lights mostly work at night, and then the electricity tariff is cheaper. Therefore, if the ASKOE records the time of its consumption, it will be possible to reduce the cost of lighting. According to experts, these savings for Kyivmisksvitlo may amount to about 13% per year. In 2020, it would be UAH 8.1 mln. Therefore, the payback period for the arrangement of 520 facilities with ASKOE systems will be only 1.5 years.

ME representatives responded to this recommendation by stating that they were already saving budget funds by replacing mercury-sodium lamps. And this saved UAH 28 mln in 2017-2020. They are not sure about the conclusions on the effectiveness of the implementation of the ASKOE because they do not see the proof of the above calculations of the cost of equipment and its payback. However, perhaps they will address this issue. 

With onset of cold weather and new market prices for gas, people almost in every household think of how to make the house warmer and its maintenance cheaper. In those apartment buildings where residents thought about this even after the first wave of rising energy prices in 2014-15, they already had the opportunity to take advantage of state and local thermal modernization programs with the help of budget funds. How and for how much was it implemented in Kyiv — we’ll figure it out by example.

“Oberih” (Lucky charm) of the program

The building on Pozniaky, whose wall is decorated with solar power plant batteries, is noticeable from afar. A residential building on Bazhan Avenue, 16, appeared here in the line of buildings of a relatively new wave — in the first half of the 2000s. However, the spectacular and modern house was without insulation from the developer. Ten years later, a housing cooperative was established here, the chair of which actively began to search for ways to improve both the heating and payment systems. Housing cooperative “Oberih” in a matter of years implemented several projects of insulation and energy efficiency in partnership with the Kyiv city administration.

The 70/30 city program provides for competitive selection of housing cooperatives and other associations of residents of apartment buildings to co-finance thermal modernization measures. The main condition is the ability (supported by financial documents) and the desire of residents to pay 30% of the cost of insulation. The remaining funds will be provided by the city authorities. The offer is very attractive, moreover, the future result of such a rather modest investment of personal funds is savings on heat payments for years to come.

Housing cooperative “Oberih” has implemented three such system projects at once:

• 2017 — windows and doors were replaced, and the facade was insulated;
• 2018 — the heating and hot water supply system was reconstructed;
• 2019 — solar panels were installed to generate electricity.

Solar panels have become a particularly spectacular event because green energy is a global trend, and now it is finally supported in Kyiv, even at the level of such a socially oriented program.

The pace and frenzied success of this house was all over the news, the housing co-ops became the “showcase” of the city’s 70/30 program, and its chair Valerii Nikitchenko headed some associations of heads of co-ops, including the board of the Association of Cooperative Housings of Kyiv.

What else was done under the program?

According to information provided by the Department of Housing and Municipal Infrastructure of the Kyiv City State Administration, in recent years, approximately UAH 100 mln a year has been spent on projects of the competition for thermal modernization of the program. In 2021, the expected expenses may amount to UAH 155 mln. Let us remind you that this is 70% of the cost of projects, and another 30% is paid by co-ops.

Time frame	Budget funds of Kyiv (UAH mln)
2015	5.0
2016	20.0
2017	115.9
2018	98.2
2019	85.3
2020	126.5
2015-2020	450.9
2021	155.0 (planned)

 

What were these funds used for?

First of all, most often, houses are repaired, reconstructed, or new individual heating stations are installed. These are automated installations that transmit heat energy from external heating networks (boiler station) to the heating and hot water supply system. Insulation of facades, replacement of windows and doors in entrances are also performed quite often. It is also popular to install motion sensors that turn on/off lights in entrances and replace lamps there with energy-efficient ones. A little less often — new meters for hot water and heating are installed in houses, or roofs and basement floors are repaired and insulated. Even less often, the program is used to repair or re-equip electrical networks or reconstruct heating and hot water supply systems using renewable or alternative energy sources. It is for this purpose that “Oberih” installed solar panels.

General approach to thermal modernization:

1. Replacing windows and doors in common areas of buildings (elevators, stairs, halls), as well as repairing the roof and basement, if necessary.
2. Only then comes the insulation of the façade, if necessary.
3. And the next step is updating the internal networks, install modern meters, and change energy sources.

Since housing cooperation must also invest its funds — which means that these costs will be included in the tariff of the house or residents separately collect money for the project — the association must calculate its capacity and align its desires with opportunities.

No grand scale

The housing cooperative of the house next to “Oberih” — on Bazhan Avenue, 14, — decided to approach spending in moderation. They did not strive for solar panels, and most of the measures were taken within the usual tariff for the maintenance of the house territory, without an additional fund.

“We replaced windows under the 70/30 program, and now we are also replacing doors under it. This is about UAH 1.5 mln from the city. Thanks to these measures, we upgraded the heating station (at our expense), and also insulated the facade of one wall of the house, the coldest, under to the district 70/30 program. For this event, funds were raised specifically by residents of apartments in which this wall was located, and the co-op was a party to the transaction,” stated Viacheslav Masonskyi, the representative of the housing cooperation on Bazhan Avenue, 14. He also stressed that the members of the co-op introduced changes to the Charter of the Association, which forbade taking on loans. Therefore, those projects were chosen that co-op could realize on their own.

On grand scale

The example of the “Oberih” impresses not only with its scale, but also with its price. The total amount of projects implemented here reaches UAH 41 mln. The first project of facade insulation with the expected purchase cost of UAH 25 mln was won by the contractor with a price of UAH 20 mln, but then the procuring entity reduced the amount of work, and the price, respectively, decreased to UAH 14.1 mln. The second tender, with the expected cost of UAH 18 mln, was won by the same company with minimal savings. The procuring entity lawfully rejected more favorable bids. Payment for the works amounted to UAH 14.7 mln. The third tender — solar panels — with the expected cost of UAH 18 mln was won by the same supplier with savings of UAH 500 from the expected cost, the payment amount was UAH 12 mln.

Every year, the city spent 10-15% of the total budget of the 70/30 projects on the Oberih project. In total, in the energy efficiency of one house, USD 1.5 mln was invested.

The winner of all three tenders of this housing cooperative was the same company — TOV Universalbud 2000. It is registered at the same address as the house where it was a contractor — there’s nothing special about that. However, the fact that within the framework of the 70/30 project, this company was a contractor only for this object — is quite an important detail. Perhaps, this is somehow explained by the fact that at the time of the start of cooperation between “Oberih” and Universalbud 2000, the founder of this TOV was Valeriia Nikitchenko, the wife of the chair of the co-op, and Iryna Kalman, partner in his law firm.

It is also known that the housing cooperative “Oberih” took credit funds at 21% to participate in such large-scale modernization programs. Accordingly, residents still pay the loan and interest on it because even 30% of the contribution of the housing cooperative on tens of millions is still millions.

And that’s not all bad news. Special equipment for self-heating of the heat carrier and hot water to the network of the house (the second stage of the project) has not yet been put into operation. This is because the housing cooperative expected to heat water at night, at the cheapest tariff, but the conditions for energy supply changed before the equipment was ready, and there was no such tariff for co-ops. Therefore, the equipment is available, but it is located in basements, and the heat supply scheme had to be urgently changed. The situation with solar panels is also unclear. Now, according to the head of the housing cooperative, the energy they produce is used to light corridors and elevators. However, the housing cooperative no longer has the right to sell this electricity at the “green tariff” under the new market conditions.

That is, now the house has made thermal modernization, received good tariffs as for the city (data from the city’s specialized website, where you can view the cost of heating in city houses by month) and the quality of heat in apartments (reviews of residents). However, the budget paid more than UAH 30 mln for this, and residents of the housing cooperative are still paying their share of the loan.

Who are the contractors?

In fact, in addition to the “wow house,” there are hundreds of other co-ops that have successfully implemented much smaller programs and are happy with the result.

The procuring entity of all works under the 70/30 program since 2016 is a separate ME — “Implementation group of the energy saving project in administrative and public buildings of Kyiv.” Its procurement transactions are usually less large-scale than those described above, and range from UAH 0.5-1.5 mln. If you view the analysis of contractors of this ME, there are some leaders who take several dozen orders under the 70/30 program annually. Among them is TOV Energo-Invest, which actually works almost exclusively with procuring entities from the Department of Housing and Municipal Infrastructure of the Kyiv City State Administration (as well as with ME Kyivvodfond, ME Kyivteploenerho, ME Kyivkomuservice, ME Kyivzhylspetsexpluatatsiia). It is not possible to establish links between this enterprise and the KCSA, but the total amount for hundreds of contracts worth hundreds of millions is quite eloquent. Another similar leading contractor is TOV Building Technologies Systems, which also receives main orders from the Implementation group and Kyivteploenerho.

What happens next?

Good news for the mentioned contractors and for the residents of Kyiv as well — the 70/30 program is still in force, and this autumn, there is a competition for projects for thermal modernization.

In addition to it, the city has recently created another specialized ME — the municipal institution “Fund for modernization and development of the housing resources of Kyiv.” The KCSA made such a decision on October 7. UAH 400 mln was invested in the authorized capital of the new institution.

It will form a so-called revolving fund (repayable funds), which will provide loans to associations of co-owners of houses. The funds are promised to be lent at 3% per annum. The loan volume should not exceed 75% of the annual income of the housing cooperative, the loan amount will be multiplied by the number of years of repayment. That is, the city budget expands the possibilities of thermal modernization of houses, and will continue to moderate this process, but now not only on the basis of grant-in-aid, but also at the expense of house owners.

A month has passed, since Kyiv finally got rid of paper tickets in urban ground transport. Now, there are no conductors on trams, trolleybuses, and buses, and the driver also cannot charge the fare from those who remembered about it inside the transport. You can only pay using:

• the Kyivan card;
• the Kyiv Digital card;
• the Kyiv Digital app;
• a paper QR code.

The latter can be purchased in special terminals and T-kiosks.

Kyiv’s residents often complain that kiosks with tickets are not available at all stops, but they are gradually adapting to changes. However, for passengers who use public transport on an irregular basis, city guests, and especially foreign tourists, paying for ground transport has now become a real quest — the driver does not communicate, there is not always someone to ask, and it takes time and knowledge of the language to understand the app. It would be easier for such passengers to pay with a bank card using PayPass (a card, smartphone, or watch with Apple Pay or Google Pay). However, it is this opportunity that the “digitalized” public transport of Kyiv does not yet have.

Great promises

This causes some confusion. First of all, paying with PayPass in the subway has been possible for a long time, and this method has proven itself well: the number of transactions is growing, queues at ticket offices are being reduced, and now all new subway turnstiles are being equipped with terminals to pay with a bank card. Secondly, the KCSA repeatedly mentioned plans to introduce similar functionality in the ground transport.

Interestingly, just two years ago, the introduction of PayPass was promised to be realized “any minute now”: “the launch of the system is scheduled for November,” said Yurii Nazarov, the then director of the Department of Information and Communication Technologies, in 2019. “In the autumn of 2020, passengers will be able to pay the fare with bank cards,” promised mayor Vitali Klitschko last summer.

Apparently, this is why even now, after the cancellation of paper tickets, some media outlets still write that the updated payment system is incomplete, and soon it will be possible to pay with a bank card. However, we clarified this issue directly with the KCSA, and it turns out that there are no such plans yet.

“The possibility of paying for travel in ground public transport of Kyiv using a bank card has already been implemented. In particular, with the help of a bank card, a passenger using the mobile application Kyiv Digital can replenish the transport resource of the transport card of the automated fare accounting system in urban passenger transport, regardless of the form of ownership, or purchase a one-time electronic ticket, whose identifier is a QR code (on paper or in electronic form) and validate it on the ground transport or in the Kyiv Metro,” such was the answer of the Department of Information and Communication Technologies of the KCSA, which is responsible for the program of electronic payment for travel in Kyiv transport, at the request of DOZORRO.

“Moreover, the fare in the city train, funicular, and high-speed train can be paid with a bank card at the yellow turnstiles,” says the answer.

In other words, what we have now is an already implemented program. Kyiv Digital is for all types of transport and there is a possibility to pay by bank card in three of them. Regular trams, buses, and trolleybuses are not included in this list.

Even without considering the number of previous big words of city officials, you can find out that the possibility of paying with a bank card on public transport has existed for several years in other cities of Ukraine, with budgets far much smaller than that of the capital. Zhytomyr, Vinnytsia, Chernihiv, Ivano-Frankivsk, Drohobych — this is not a complete list of cities where you can pay with a bank card in a regular trolleybus or bus. These are the regions where the share of citizens with bank cards in their pockets should theoretically be less than in the capital, as well as the number of tourists.

How much has already been paid?

The transition of Kyiv public transport to new payment methods took place within the framework of the national program of the e-ticket introduction and the Electronic Capital Program. At the preparatory stage of the capital’s program, rolling stock was tooled up with equipment for accepting electronic payments. Looking ahead, we note that it was purchased, installed, and is now in service, but the e-ticket program has not been fully implemented: now validators on ground transport function with the Kyivan card, a QR code, and the Kyiv Digital card and application. However, they do not accept bank cards and an e-ticket (the latter because it has not been implemented yet).

The procurement of new equipment for Kyivpastrans with an expected cost of almost half a billion, namely UAH 460 mln, was announced in August 2017. Budget funds were used to buy “electronic equipment (hardware components of an automated fare payment system with installed software and their assembly)” — in general 1,500 sets. The set that each vehicle was supposed to be equipped with consisted of:

• on-board computer;
• validator/s (from one to six pieces, depending on the seating capacity);
• driver’s terminal;
• assembly set.

Five participants submitted their bids, but the procuring entity allowed only two of them to participate in the auction: TOV IT Solutions and TOV Amrita Integrated Solutions. At the bidding, both companies reduced the price by almost UAH 100 mln from the expected cost. And the winner, with the offer UAH 365 mln, became the company “Amrita Integrated Solutions.” After all, that’s exactly how much they paid under the contract.

We asked the KSCA contractor if it was possible to simply connect contactless payment by bank card to the functionality of existing validators, and what prevented this.

“Indeed, there is such a technical possibility. The equipment installed in ground transport of Kyiv (validators) envisages the possibility of accepting payments using the PayPass technology. However, to do this, the devices need to be retrofitted with the appropriate software. The developer of this system, an Estonian company Ridango, holds exclusive copyright to the hardware and software to it. Accordingly, additional funding is required to retrofit validators with additional software,” tells DOZORRO Oleksii Petrenko, head of Amrita Integrated Solutions.

Who do the changes depend on?

A representative of the supplier also confirmed that after the change of team in the relevant department of the KCSA, the issue of implementing PayPass was no longer raised at all.

The change of team is the dismissal of Yurii Nazarov from the post of head of the Department of Information and Communication Technologies of the KSCA, who is the ideologist of the large-scale and expensive Electronic Capital program. He was dismissed in the spring of 2020. Now, as we have written this year in January’s article “Who commissioned us for you?” the Department of Internal Financial Control and Audit of the KSCA controls the implementation of this program. However, the announcement of the audit results is delayed.

Bohdan Iskov, head of one of the administrations of the specialized department, confirmed to us that the issue of financing any steps to introduce bank card payment in ground transport is not currently discussed. The corresponding procurement is not planned to be conducted yet.

Oddly enough, but the pioneers of the introduction of such a payment method in land transport in Kyiv so far have become minibuses. In the autumn of 2020, one of the carriers that serves the route in the capital’s Pozniaky  equipped its buses with terminals to pay with a bank card. In the midst of quarantine and anti-epidemic measures, contactless payment came in handy. This made it possible to reduce the amount of money that wandered around the salon from hand to hand.

“If at first there were somewhere up to a hundred card payments per shift, now it is already up to three hundred transactions per working day. This is about a quarter of all payments,” tells us the driver of route No. 250 where the terminals are installed on all buses.

That is, there is no question that the service will not be in demand in Kyiv.

Meanwhile, in the KCSA only now, more than a year after the dismissal of Yurii Nazarov, a competition has been announced to fill the position of head of the Department of Information and Communication Technologies. The selection process is still ongoing. And, in fact, the vision of the future head of the specialized department may determine whether the introduction of such a familiar and convenient service as PayPass will be in the plans of the Kyiv authorities.

The municipal enterprise, which was accused of the cinema “Kyiv” takeover, guards schools on the left bank of the capital. What else does it do, and why is it being reorganized now?

The recent wave of high-profile searches at municipal enterprises in Kyiv has affected not only capital construction, “Zelenbud,” and education. Possible embezzlement of budget funds were detected even in an enterprise with a law enforcement function — “Municipal Guard.” It is known first of all because of being featured in the scandal with the cinema “Kyiv” in 2019.

We found out what else this relatively young Kyiv ME is doing, what principles it operates on, and how much it costs the city budget.

Who is it?

ME “Municipal Guard” appeared in Kyiv in 2017. By that time, similar structures were already functioning in Dnipro, Kharkiv, Odesa, and some other cities of Ukraine. In fact, municipal guards in the regions are a mixture of “public order volunteers” with a security company. They have no right to detain a person without police and do not carry weapons. A law that would regulate the activity of “local militia” was developed back in 2015, but never accepted. There are concerns that legitimized municipal security forces may become “local armies” of regional elites. This danger became especially obvious after 2014.

As for now, the ME “Municipal Guard” created in Kyiv looks relatively “light” — the company covers parks, fountains, and schools. During the pandemic, it was assigned additional responsibilities: to control quarantine measures in transport and on the streets, as well as to strengthen the protection of covid hospitals.

The Kyiv City Council at one time decided on the creation of this ME not without objections but still, in the fall of 2017, the session approved the relevant decision. Then the Kyiv mayor Vitali Klitschko assured that the new municipal enterprise would allow the city to save budget funds. “The city now pays almost UAH 300 mln a year for the protection of municipal property! This ME will help significantly reduce the expenses”, stressed Klitschko.

How does it work?

To start “reducing the expenses,” the Kyiv City Council created the authorized capital of the ME “Municipal Guard” in the amount of UAH 2.5 mln. Then there were many tranches from the budget for the procurement of workwear, means of restraint, equipment, software, and everything else that security cannot work without. Since 2017, the company has received approximately UAH 415 mln (according to the data provided by hromadske). These are funds that were used to ensure the functions of protecting municipal property (defined in the list). They were used for salary and current expenses. For example, in 2019, the ME received revenues from the budget amounting to UAH 78.2 mln, in 2020, the sum already amounted to UAH 148 mln, and in 2021, it plans to receive UAH 167.7 mln.

One of the main tasks of creating the ME was also to employ participants in hostilities in the east of Ukraine, who were just beginning to return en masse from service. At the beginning of the work, the company’s staff was quite modest — less than a hundred people. However, every year the number of employees increases, and now it is 486 people. According to the data the company provided us with, 249 people currently have the status of a participant in the ATO/JFO, and another 86 employees are waiting for this status.

The ME is subordinate to the Department of Municipal Guard of the KCSA, whose activity is coordinated by Deputy Mayor Petro Panteleyev.

The company owns one real estate object on Velyka Zhytomyrska Street and one land plot. The ME also has 23 cars: ten Renault Duster 2019 cars, as well as cars of various brands produced in the 2000s.

The company received a security license from the Ministry of Internal Affairs and a license from the State Emergency Service for the operation of notification systems. Both are issued indefinitely and do not need to be updated.

What are they guarding?

Objects that the “Municipal Guard” takes care of are determined in a rather strange way. This is not the choice of the market (participation in competitions), neither the protection of all municipal objects on turnkey basis. This is a certain list of objects, which is approved by the Kyiv City State Administration by a separate order. The version of the address list in force was adopted in 2019. It contains 239 objects, of which 163 are educational institutions, 26 are healthcare institutions, and 24 are city parks. The protection of these objects is financed directly from the city budget — by the line of financing the security ME.

It is also difficult to say by what principle the list itself is compiled because these are not all parks and not all medical institutions in the city. However, it still can be considered logical.  In hospitals, sometimes there are conflict situations, especially in ambulances. Parks also have problems with law and order, and some still require special protection of municipal property. However, with educational institutions, everything is complicated.

Now the ME guards 163 schools and kindergartens of one Dniprovskyi district and several other institutions of the Pecherskyi district (the figure is changing).

How does it work with schools?

In 2018, parents of 12 Kyiv schools created an initiative with a request to provide their institutions with protection at the expense of the local budget. The initiative was adopted and left to the mercy of commissions of the Kyiv City Council.

“This initiative passed through the Budget Commission. At the same time, our budget issues related to “Municipal Guard” were being resolved, and they offered it to us for protection. It was an interesting experiment for us to work out the specifics of working with schools. And such an experimental project was the protection of these schools at a local initiative plus all schools in the Dniprovskyi district”, Oleh Kuyavskyi, first deputy director of the Department of Municipal Guard of the KSCA, told DOZORRO.

Interestingly, at that time, the chair of the Budget Commission was MP Andrii Strannikov, who for many years have represented the Dniprovskyi district in the Kyiv City Council.

According to Kuyavskyi, for a year and a half of cooperation between the “Municipal Guard” and the district’s schools, the reviews were positive. Now they are considering expanding the project from one experimental district to the whole Kyiv.

“However, if to take on physical protection of all schools in Kyiv (this is 550 schools), when working for a day or three, it requires more than two thousand employees on the payroll only for the protection of schools. This will involve quite significant funds” Kuyavskyi emphasized.

Therefore, they are now considering a compromise option for expansion — “Municipal Guard’s” alarm buttons will be placed in schools of two more districts.

“Perhaps by the end of the year we will have covered the entire left bank of Kyiv. Now we are preparing to take on schools in the Darnytskyi district. For the fourth quarter we are applying for an increase in staff by 150 people, and then we will be able to protect schools in the Desnyanskyi district as well,” said Oleh Kuyavskyi.

The Department of Education of the Desnyanskyi District of Kyiv, where we asked about future cooperation with the “Municipal Guard,” has not yet heard anything about these prospects.

We also checked what the ME’s security looks like onsite. In the library and two schools of the Dniprovskyi district from the address list, there is indeed a sticker on the doors about protection from municipalities. Inside the room there is an alarm button for calling employees of the security ME. That is, “Municipal Guard” is not physically represented anywhere — it is only a call to the team when in need.

“The guys came, and more than once. There are, you know, some conflicts with students, or if someone breaks into the school without permission — then we call. They arrive, calm people down, if necessary, call the police, and monitor the situation until they arrive,” shared the on-service duty attendant of one of the schools.

However, in all these establishments there were also alarm buttons from a private security company known in the Kyiv market. The deputy director of one of the schools explained it this way: “The municipal one keeps order, if there are any conflicts, it should help, and that button is the protection of school property.”

So, the institutions that “Municipal Guard” deals with also turn to private firms for services. For example, Vasyl Sukhomlynskyi college spent UAH 20,000 this year for servicing the alarm button from private security guards. The Department of Culture of the Dniprovskyi Regional State Administration in 2020 acquired security of libraries for UAH 111,000. Oleksandrivska Hospital, which still remains under special attention of “Municipal Guard,” also buys other object security and alarm button services from the Kyiv Security Police Department (at its own expense).

That is, in fact, the promised budget savings, which Klitschko spoke about during the creation of the ME, means that several city facilities have received additional public order protection. However, it is not a matter of a complete refusal of security services provided by private firms.

Non-commercial, non-competitive, and with questions from the AMCU

ME “Municipal Guard’s” relations with the market of security services are not good at all. According to Kuyavskyi, the additional funds earned amount to approximately UAH 1-1.5 mln per year. For comparison, this year alone, the enterprise received approximately UAH 167 mln directly from the budget. Now the ME is in the state of reorganization, it will be turned into a municipal organization. In fact, this means that “Municipal Guard” will no longer be tasked with making money because the organization must be non-profitable. It will simply be a municipal structure that performs certain functions for a certain protected budget financing.

This happened for several reasons. The first one — complaints from the Anti-Monopoly Committee, or rather its Northern Territorial Department. The AMCU conducted a study and came to the conclusion that the Kyiv City Council must hold an open competition for security services providers for its institutions because the budget financing scheme itself creates competitive advantages for ME “Municipal Guard.”

‘The representatives of security companies that have never actually participated in similar competitions in Kyiv appealed to the AMCU with a statement about unfair competition, so, it was a little strange for us”, Oleh Kuyavskyi noted in a comment to DOZORRO.

However, the department was not only surprised by the attention of the AMCU, but also contested the decision of the Northern Territorial Department in court. In 2020, The Economic Court of Kyiv ruled in favor of the KCSA and invalidated AMCU’s decision. The Appeal supported this solution. However, the court of cassation in 2021 canceled the decision of previous instances and sent the case for a new hearing. In its opinion, previous instances incorrectly applied some legal norms.

The KCSA drew conclusions from this attention of the anti-monopoly authorities and, to permanently remove the issue of competition, will simply reorganize the ME into a MO.

The department also stresses that an important function of the former ME is the social adaptation of the ATO participants. In addition, all employees have an official salary (unlike many in the private sector), so, there is no real competition in the market. In addition, “Municipal Guard” already actually provides services exclusively to objects of municipal property. And the real state of affairs was made official.

Participation in tenders

Actually, for all the above reasons, it is practically impossible to track the true picture of cooperation between ME “Municipal Guard” as a service provider on Prozorro. The electronic system includes single contracts, mostly just reports, sometimes even for services for UAH 1.2.

Procurement

In total, during its existence, ME “Municipal Guard” conducted procurement transactions worth more than UAH 53 mln. These were procurement of notification systems (the very same alarm button), and licensed equipment, badge cameras, uniforms, and even expensive health insurance.

In addition, at the end of last year, the ME conducted a series of procurement transactions related to the use of weapons (of non-lethal action): pistols with rubber bullets for almost UAH 2 mln, workshop on use of these weapons, special furnishing of a storage room for weapons, all this despite the fact that as of now (July 2021, and procurement as of the end of 2020), ME employees do not yet have a special permit for the use of these weapons from the Ministry of Internal Affairs. As reported in the KCSA, now they are “at the stage of obtaining.”

One of the early procurement transactions of ME “Municipal Guard” became the subject of attention of law enforcement officers. Recently, Kyiv City Prosecutor’s Office has sent an indictment to the court concerning the ex-head of this enterprise regarding the misappropriation of funds in the amount of UAH 580,000.

According to the materials of the pre-trial investigation, ME “Municipal Guard” purchased professional training services. We are talking about two procurement transactions in 2019 — “professional training and advanced training of security guards,” for 300 and for 370 trainees, with the issuance of a state certificate. According to the prosecutor’s office, in fact, the training did not take place, but the funds were transferred to the enterprise. The accused is the first head of the ME, Aleksandr Katsubo. He was dismissed from his post back in 2020. After Katsubo, the company has already changed five managers.

Ethical issues

One way or another, “Municipal Guard” consists of almost half a thousand trained people (and before them twice as many colleagues from the CSO “Municipal Guard” who do not receive salaries, but partially are financed from the budget). All of them depend solely on the local authorities because it is they who pay these people. As we can see, they constantly come up with work for them — making up lists of objects for protecting or patrolling streets and parks. The same law enforcement officers are available for involvement by the city authorities in one-time actions: football matches, public events, rallies. It is difficult to determine where the line is between helping with public order and protecting the decisions and events that the city authorities need.

In particular, such a wake-up call was already noticed during events around the capital’s “Kyiv” cinema. Then the city authorities broke off lease relations with the management of the Cultural Center “Kyiv,” and it was the “Municipal Guard” fighters who helped evict the former tenant. Those events caused a very ambiguous attitude of the city’s public: the actions of the authorities were called a hostile takeover.

Then the Department of Municipal Property of Kyiv stated that the Cultural Center “Cinema ‘Kyiv’” was warned about the termination of the lease of premises, while the Center stressed that it was a hostile takeover. Recently, the court has had its say in this case and returned the premises of the cinema to the former tenants, the cultural center.

Let us remind you that the budget of the “Municipal Guard” is growing every year and is no longer estimated in millions, but in hundreds of millions of hryvnias. The material base of the ME is fully formed at the expense of the budget, but the company cannot compete in the market of specialized services. The work for “Municipal Guard” is formed by an address list, the mechanism of compilation of which is quite subjective. The institutions that the ME deals with often re-order security services on the market, offsetting the idea of savings. Thus, we have another fully subsidized ME, which operates under the KCSA just in case of a critical event.