Recent developments in the legal framework governing public procurement of electricity have raised significant concerns regarding the stability of supply for state institutions. The implementation of a pricing cap in contracts has led to an increase in criminal investigations involving suppliers and managers of budget organizations.
Directors of schools, hospitals, and water utilities are among those under scrutiny, even when decisions were made to ensure uninterrupted electricity supply. This scrutiny stems from a new practice that restricts price increases in procurement contracts to a maximum of 10% of the initial contract value, a measure introduced during a period of sharp market fluctuations.
“This decision potentially creates conditions for administrative and criminal prosecutions of all procurers and market participants. It is not limited to the electricity market; it affects the natural gas market and any other markets,” said Roman Zhuk, director of Gazenergo Trade.
Simultaneously, the energy system is operating under conditions of scarcity, with a portion of generation capacity lost and electricity imports—now critically important—being significantly more expensive and unstable. In this context, market prices for electricity can rise by tens of percent, while the terms of contracts with state procurers remain rigidly constrained.
This situation forces suppliers to purchase electricity at much higher market prices but sell it under terms that do not cover their costs. Consequently, businesses are incurring direct losses and are compelled to reassess their participation in public procurement.
Market participants estimate that many companies are already opting out of new contracts, reducing their involvement in tenders, or terminating existing agreements. This trend is gradually diminishing competition and increasing the risk of supply disruptions.
Ultimately, this issue transcends legal discussions and directly impacts energy security. If the current practices persist, the provision of electricity to the public sector may become increasingly unstable.
The legal changes in electricity procurement are leading to increased scrutiny of public institutions and suppliers, raising concerns over energy supply stability. As companies withdraw from contracts, the risk of disruptions grows, posing a threat to energy security.