Government electricity procurement is leaving institutions without suppliers
Due to current public electricity procurement regulations, some government and municipal agencies have been unable to find a supplier for several months. Experts say that strict tender restrictions and price caps are effectively “driving suppliers out of the market.” As a result, there are disruptions and risks to the stable energy supply for budgetary institutions. This is according to a statement by Oleksandr Kudym, director of Euro Trade Energy LLC.
Problems in the field of public electricity procurement are increasingly becoming a real obstacle to the work of state and municipal institutions, as they find themselves in a situation where tenders yield no results and suppliers simply do not participate in the bidding process.
This was stated by Oleksandr Kudym, director of Euro Trade Energy LLC, explaining that current market rules and contractual restrictions create conditions under which it becomes unprofitable for businesses to participate in procurement, while some customers remain without a designated supplier for months. “As part of our work writing articles and submitting petitions together with ‘Energy Club,’ we have repeatedly sent requests to ‘Ukrenergo’ for the relevant data. They did not provide it to us,” said Kudym, adding that access to complete statistics remains limited even for analysts and civic initiatives.
According to him, the situation in the first quarter showed a sharp increase in the number of consumers who switched to the supplier of last resort, indicating market instability, especially during transition periods when the load on the system is at its peak.
Separately, the expert drew attention to data from the SmartTender analytics platform, which recorded cases where, after tenders were held, customers never received a winner and were unable to find a supplier for the next three months. “We happened to come across statistics on the number of customers who conducted procurements, did not get a winner, and were unable to find a supplier for the next three months. These are shocking figures,” Kudym noted.
He emphasized that this situation is not isolated and is directly linked to restrictions on contract price adjustments, which allow electricity prices to be adjusted by no more than 10%. In a volatile market, this makes participating in tenders risky for suppliers.
The expert noted that similar problems began to emerge as early as 2021, when the market saw a sharp rise in prices, yet strict rules for government procurement remained in place, failing to adapt to the new economic realities.
According to Kudym and other market participants, such conditions are gradually creating systemic risks for the supply of electricity to budgetary institutions, as the market becomes less predictable and the number of suppliers willing to operate under these conditions decreases.
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