Government allows NEC Ukrenergo to amend existing contracts to comply with international financial organizations’ rules

On September 25, the Cabinet of Ministers of Ukraine approved amendments to Clause 19 of the Specifics of Public Procurement During Martial Law and 90 Days After Its Termination.

From now on, NEC Ukrenergo can amend essential terms of existing procurement contracts if more than 75% of their cost is funded by grants, loans, or credits from international financial organizations. This decision also applies to contracts signed before April 9, 2024.

“This decision enables NEC Ukrenergo to adapt existing contracts to the rules of international organizations. It is a key condition for securing grants and loans from the World Bank, EBRD, and other institutions. This approach will allow Ukraine to complete the construction of protective facilities at substations, quickly restore damaged equipment, and bolster the energy system's stability despite wartime threats,” said Deputy Minister of Economy, Environment, and Agriculture Andrii Teliupa.

Previously, Ukrenergo applied international procurement rules only when a project was initially funded by an international organization. If a contract was signed under Ukrainian legislation and later received co-financing from the World Bank or EBRD, it was impossible to apply international procedures to that contract.

Since international financial organizations require that all procurements funded by their resources follow their procedures, there was a need for an additional mechanism. The new Government resolution allows international rules to be applied to existing contracts if more than 75% of their cost is covered by international partners’ funds.

This enables the attraction of resources from international financial organizations not only for new projects but also for ongoing Ukrenergo initiatives. In particular, this includes funding for the construction of protective structures for autotransformers under the Re-PoWER project, aimed to enhance the power system’s resilience and reduce the burden on consumer tariffs.

Background Information

NEC Ukrenergo is the sole operator of Ukraine’s electricity transmission system. The company is responsible for operating main and interstate power grids, balancing the unified energy system, and ensuring the stability of electricity supply in the country.