Legal developments in Ukraine’s electricity procurement sector are causing some suppliers to distance themselves from government and municipal contracts. Vitaliy Bulat, a partner at the law firm FEDOTOV & PARTNERS, highlighted these issues in a recent statement.
Bulat noted that an influx of lawsuits from the prosecutor’s office regarding additional agreements in electricity procurement is generating significant legal risks and uncertainty for businesses. He remarked, “We are witnessing a considerable number of legal entities that are categorically refusing to participate in public procurements. This is absurd and abnormal.”
According to Bulat, courts frequently side with prosecutor claims without considering the unique characteristics of the energy market and the mechanisms behind electricity pricing. He expressed concern that when a prosecutor’s claim is filed, it seems to carry an assumption of validity in the eyes of the court.
One of the primary issues, as Bulat pointed out, is the imposition of strict regulations in a market where electricity prices can fluctuate significantly due to shortages, imports, and the impacts of attacks on infrastructure.
Market participants warn that the diminishing number of suppliers in public procurement is gradually eroding competition, which poses risks to the stable supply of electricity to the budget sector.
Previously, industry stakeholders have described working with government entities as risky due to the scrutiny surrounding procurement processes. Experts have indicated that the current judicial practices in electricity procurement are leading to the criminalization of market activities, reduced competition, and increased risks for the stable supply of electricity to public institutions.
For instance, Oleksandr Kudym, director of Euro Energy Trade, stated that the legal and enforcement practices in public electricity procurement are altering market behavior and creating risks for the reliable supply to government entities. Similarly, Roman Zhuk, director of Gazenergo Trade, has asserted that such practices pose systemic risks to the provision of services to state institutions.
Additionally, the debts in Ukraine’s electricity market have reached critical levels, totaling approximately 70 billion UAH. Since the beginning of 2026, the debt of Ukrenergo to participants in the balancing market has reached 30.9 billion UAH, marking a 40% increase.
Legal challenges in Ukraine's electricity procurement are driving suppliers away from government contracts, raising concerns about competition and stable supply. The situation is exacerbated by significant market debts and judicial practices that may criminalize procurement activities.