INSTALLATION OF 3-RD AUTOTRANSFORMER

330/110/35 kV AT SUBSTATION 330 kV

“CHERNIVETSKA”

INFRASTRUCTURE PROJECTS

PROJECTS LIFE CYCLE ≈3-7 years and more1

REQUIRES A LOT OF INVESTMENTS.

ONE PROJECT USUALLY HAS SEVERAL SUBCONTRACTS:

CORRUPTION RISKS AND RISKS OF INEFFECTIVE MANAGEMENT

INCLUDES THE FOLLOWING STAGES:

1 Planning Designing2Performance of works

under contracts3 Technical maintenance4

Project Performance

of works

Лот#1

Лот#3

Лот#2

Technical

maintenance

Project

documentation

2

COMPLEXITY OF MONITORING

3

4

5

HOW COST WORKS

PROZORRO PROVIDES EVERYONE WITH A POSSIBILITY

TO FOLLOW EVERYTHING RELATED TO PROCUREMENT.

"DARK ZONES"

OF INFRASTRUCTURE:

- Planning

- Performance of works

- Quality control

About the project

Agreement on cooperation between the Ministry of Energy and Coal Industry of

Ukraine, Chernivtsi Regional State Administration and Chernivtsi Regional Council

regarding the development of fuel and energy complex and social infrastructure of

settlements of Chernivtsi region dated 22.03.2011.

Objective: to increase the substation’s capacity to provide the

consumers of Pivdenno-Zakhidna power system with electricity

The project is based on:

2011 Investment Program of

SE “NPC “Ukrenergo”

“Plans for the perspective development of Pivdenno-Zakhidna

PS for the period up to 2015 with prospects up to 2020.”

2 0 1 5

2 0 2 0

The project’s total value:

131.591 mln ₴The expected date of works completion:

01.07.2017

Project’s status:

In progress

Overload of existing grids

For a long period of time, the load of АТ in a usual mode has been exceeding

the standard level (70%) and amounting to 8 0 % and more, while in specific

years, it reached the level of 91.2% and 102 .3% respectively.

According to the existing draft, there are two autotransformers (АТ)

330/110/35 kV with the capacity of 200MVA installed at “Chernivetska”

substation

91.2% 102.3%

100

50

0

100

50

0

Ініціатива

з прозорості

інфраструктури

Parties to the project

Customer: General designer:

1.8 mln ₴

82.099 mln ₴

47.238 mln ₴

0.228 mln ₴

88.29 thous. ₴

PJSC “Zaporizhtransformator”

1 SE “NPC “Ukrenergo” 2 DPVNDI “UKRENERGOMEREZHPROEKT”

6 Supplier of the autotransformer:

5 Author’s supervision: LLC “SichEnergo”

4 Contractor: LLC “SichEnergo”

3 Adjustment of project documentation:PJSC “Kyivorgbud”

Project’s Life Cycle

01.04.2011

Approval of instructions

for the object’s draft

07.07.2011

Agreement for designing with

DPVNDI “Ukrenergomerezhproekt”

19.12.2012

Order of the CMU about

the project’s approval No. 1035-r

06.11.2015

Agreement for adjustment of the estimate

part of the project with “PTI “Kyivorgbud”

24.03.2016

Agreement for the supply of

an autotransformer from

PJSC “Zaporizhtransformator”

01.07.2016

Order of the Ministry of Energy and Coal Industry

N o . 4 2 1 on approval of the adjusted project

12.08.2016

Agreement for construction and installation

works with the supply of basic

equipment from LLC “Sichenergo”

18.11.2016

Договір на авторський нагляд за

будівництвом з ТОВ «СічЕнерго»

30.06.2017

Supplemental agreement No. 1 ,

prolongation of the term of performance

of works until 01.10.2017

04.10.2017

Supplemental agreement No. 2 , adjustment of the

volume of works, supply of equipment, terms for

performance of works prolonged until 30.09.2018

January 2018

Intention

to terminate the

agreement

3 months

3 years

1.5 years

4 months

4 months

42 days

3 months7 months

3 months 2 months

Ініціатива

з прозорості

інфраструктури

93% of information indicators

of the project

Transparency of the project

The Customer

independently disclosed

57 documents, including 4 (7 %)

available for free access

in the course of

preparing the

report, worked on

93% of requested data

was provided

The verification team received

responses to all appeals

The Contractor failed to provide full

information about subcontractors

Ініціатива

з прозорості

інфраструктури

19.12.2012

134.177mln ₴

Project’s planning. Estimated cost

The actual cost of the project is

lower that the estimated cost

The project’s estimated

cost was approved

335.866 mln ₴

01.07.2016

The project was not implemented

within 2.5 years

an increase in the cost of construction parts

led to adjustment of the project’s

estimated cost

2.5 times!

131.592 mln ₴Actual cost of the project

as of December 2017

2011: tender for choosing a designer

Participant

LLC “Kyivenergomerezhproekt,” affiliated company in Odesa

Tender 1: project documentation

DPVNDI “Ukrenergomerezhproekt,” affiliated company

in Lviv

on the date of signing the agreement (06.11.2015) the amount of the

agreement was reduced to 227 966.40 thous. ₴

The winner’s offer is by 42% lower than the competitor ’s one

2015 : tender for adjusting project documentation

Participant

LLC “Podilskyi enerhokonsaltynh”

PJSC PTI “Kyivorhbud”

3 126 648 ₴

1 799 687 ₴

₴ offers, UAH, VAT included

599 028₴

503 317 ₴

₴ offers, UAH, VAT included

Ініціатива

з прозорості

інфраструктури

The Customer purchased in a centralized manner

13 autotransformers, including for “Chernivetska” substation

The winner’s proposal is lower by 53% than the competitor’s one

The cost of 1 autotransformer

for “Chernivetska” substation amounts to 47 238 024 ₴

The term of delivery of equipment to the object – December 2016.

Participant

LLC “ABB LTD” (Switzerland)

PJSC “Zaporizhtransformator” (Ukraine)

Tender 2: supplier of an autotransformer

₴ offers, UAH, VAR included

1 084 061 ₴

571 408 ₴

Tender 3: construction and installation

works and supply of basic equipment

Expected value: 176 581 000 ₴

offers, UAH, VAT included

# Participant % from the expected cost of the purchase

Rejection

89,5%

50,8%

46,1%

46,5%

60,3%

50,8%

63,4%

Winner82 098 706 ₴

106 524 771 ₴

89 662 253 ₴

112 028 034 ₴

81 467 354 ₴

157 999 623 ₴

89 722 565 ₴

158 700 312 ₴ 89,9% Rejected1

2

3

4

5

6

7

8

PE “Donkom”

Rejected

Rejected

Rejected

LLC “Tekhnostar”

Collective Enterprise “Installation Administration

No.6 “Elektropivdenzakhidmontazh”

LLC “Kyivska enerhetychna budivelna kompaniia”

LLC “Zviazoktekhservis”

LLC “Pivdenna enerhetychna kompaniia”

“Corporation of Production and Commercial Enterprises “Soiuz”

The offer with the lowest cost was rejected due to the reasons not affecting the capability of performing a contract. The winner’s offer is lower than the expected cost by 46.5%.

LLC “Sich energo”

!

Equipment “ZZVA”

Is the Contractor able to ensure the performance of the agreement?

Paid

a failure to supply equipment “ZZVA” to the Contractor

In the amount of 18 mln UAH (paid as a prepayment 50%)

A failure in delivery terms

change of the

plant’s owner

1 8 mln UAH ₴ 2 2 % of the contract’s amount

Equipment “ZZVA”

Customer Contractor

Subcontractor

Supplier 1(“ZZVA”)

Supplier 2

Supplier 3

The necessity of full replacement of

equipment “ZZVA”

The total value of the agreement was reduced by 152 thous. ₴ (0.18%) at the expense of:

Provision by the Customer of 12 current transformers 110 kV of IMB 123 t ype .

Reduction in the value of commissioning and adjustment works.

Exclusion of the part of construction and installation works (motor roads, buildings and constructions)

To complete the project, the Customer decides to replace the part of the

equipment of KT “ZZVA” with similar equipment produced by other

manufacturers, to exclude some parts, to replace some parts from own stocks.

Replacement of equipment and

changes in the volume of works

Departure to the construction site (July 2017 )

In accordance with “the general register of work

performance,” works are performed at the object

starting from 18.11.2016, however,

the Contractor neither prepared nor

signed any acceptance acts

The updated schedule of performed works

failed to include a number of works,

specified in the agreement and the project

documentation.

Autotransformer ATZ installed at

the project site

A high level of openness of the Customer, CoST received responses to all appeals, all

requested materials were provided rapidly

The Customer expressed readiness to work with the Contractor,

acted comprehensively in an extraordinary situation

Problematic issues:

Inaccurate estimate documents, the project’s actual cost is 2.5 times

lower that the estimated cost

Rejection of offers in view of a formal characteristic, rejection of the most

economically beneficial offer

A failure to adhere to the delivery terms of KT “ZZVA” – extensive agreement regarding

the equipment to be replaced – prolongation of the time of the performance of works

The Contractor’s failure to meet the schedule of the performance of works not related to

the availability of equipment

A lengthy period of project implementation,

obsolete project documentation

Conclusions

Ініціатива

з прозорості

інфраструктури

The Customer should take organizational measures to ensure

quicker response to extraordinary situations

The Customer should make amendments to the terms of tenders about decreasing

rejections due to formal characteristics

The Contractor should take measures to adhere to

the schedules of the delivery of equipment

The Customer should pay attention to the determination of estimated cost of

construction at the stage of designing

The Customer should consider the possibility of defining the contractual price as

dynamic in order to exclude the part of works/replace equipment in the case of

unpredicted additional works

Recommendations

Thank you for your

attention!

СoST Ukraine

info@costukraine.org

costukraine.org

2018