The energy supply sector for budget institutions is facing increasing risks due to evolving judicial practices and procurement oversight. Suppliers report that many companies are withdrawing from this segment, citing the instability of current regulations as a significant barrier to fulfilling contracts.
A director from one such company stated, “The changing rules make it risky to engage with budget institutions. While others are stepping back, we are still striving to maintain our presence in this market, albeit with considerable difficulty.” This sentiment reflects a broader concern among suppliers regarding the unpredictability of procurement regulations.
Efforts are underway to challenge these changes in court, as suppliers argue that the continuous modification of procurement rules is detrimental to market stability. However, their arguments have yet to gain traction in judicial settings. “Proving to authorities that these regulatory changes are counterproductive is proving futile. Short-term budget fulfillment is jeopardizing the market’s integrity. We are actively pursuing legal action, but so far, it has yielded no results,” she added.
Christina Yan, another industry representative, indicated that her company is preparing a lawsuit aimed at invalidating specific provisions of Cabinet Resolution No. 1178, particularly those related to price adjustments in contracts. “We are currently preparing a lawsuit to annul parts of Resolution 1178 concerning price changes,” she noted.
Additionally, suppliers are encountering challenges when faced with lawsuits from the prosecutor’s office, which often present damage calculations that do not accurately reflect the pricing structure of electricity. Yan recounted a case where the prosecutor claimed damages of five million, based on a comparison of prices that lacked context. “We received a damage calculation of five million. The prosecutor stated that the market price was 5.40, while we sold at 8.32. When we inquired about the components of the final price, they were unable to provide clarity. They simply compared 5.40 to 8.32 without understanding the underlying factors, yet the courts accepted their claims,” she explained.
Yan emphasized that the existing regulations fail to consider the unique characteristics of the electricity market, where suppliers cannot secure resources for an entire year and are unable to anticipate sudden price fluctuations or regulatory decisions. “Committing to a 10% price increase essentially guarantees a future contract termination at a loss within months,” she concluded.
The energy supply market for budget institutions is increasingly precarious as suppliers face legal challenges and regulatory uncertainties. Many companies are opting out of this segment due to the instability of procurement rules, which they argue undermines market viability.