Ukraine's "coal" wars: When officials cannot divide their billions

Author : Dmytro Ryasnyi

Source : 112 Ukraine

Head of Ukraine's Ministry of Energy and Coal Industry Igor Nasalyk has declared war against unofficial curator of the coal industry
20:30, 21 June 2017

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Recently, the Cabinet of Ministers adopted the "Plan of Reforming and Development of the Coal Industry". The document is intended to become a road map for the development of the public sector mines with an emphasis on the increase in production of "gas" coal - an alternative to the scarce anthracite from occupied Donbas.

For these purposes, the country is ready to spend 2 billion UAH. However, the closer is the launch of the project, the tougher are tensions between the managers of this impressive amount - the head of the Ministry of Energy Igor Nasalyk and the unofficial curator of the coal industry Vitaly Kropachov.

Recently the tension between them has reached its climax: the minister began to openly accuse the opponent's team of corruption, and he, without hesitation, called the head of the Ministry of Energy a dilettante.

"Plan of Reforming and Development of the Coal Industry" consists of 13 pages, the first half of which is devoted to the deplorable situation in the industry, and second deals with resolving this situation.

Related: Ukraine’s runaway oligarch sells coal of occupied Donbas to Turkey

Shortly, the resuscitation plan is as follows: the state allocates 1.8 billion UAH for the technical re-equipment of state mines. Half of this amount will come from the state budget, the other half would be borrowed from foreign companies producing equipment under state guarantees.

The task of the plan is to help the state mines to increase the extraction of so-called gas ("G") coal.

As you know, after the occupation of Donbas and the termination of trade relations with this territory, domestic thermal generation has remained without the main resource - anthracite.

The last six months of energy experts are trying to solve this problem by importing anthracite, but, as DTEK's experience has shown, it is cheaper to invest in reorienting TPPs to available in Ukraine gas brands of coal than transporting the anthracite.

"Implementation of the measures envisaged by the Plan will allow to increase the production of coal by 2018 to 8.7 million tons (from 5.8 million tons produced in 2016 – Ed.)," Nasalyk said in May at a Cabinet meeting, when this Plan was adopted.

Related: Coal from militant-held areas of Donbas to be sezied upon entering Ukraine-held areas

According to the sources of EP, at the mentioned meeting of the government, the minister has introduced the issue of adopting an order, which provides for the establishment of the National Coal Company (NCC). It is planned to include 28 liquid mines of state jurisdiction, which are part of nine coal companies. Thus, the NCC will become an enterprise through which those 1.8 billion UAH, intended for the development of state seamounts, will be developed.

However, it was not possible to implement the plan conceived by the head of the Ministry of Energy.

"During that meeting of the Cabinet, someone told Groisman that the idea of creating this company requires additional consultations with the public. As a result, the Cabinet decided to create a coordinating council that will deal with this issue," says our source in the government.

According to the interlocutor, the function of creating the coordination council and management is entrusted to Deputy Energy Minister Anatoly Korzun, an ally of the unspoken curator of the coal industry Vitaly Kropachov, who is in tough opposition to Nasalyk.

Related: Ukraine received 1.7 million tons of coal from occupied territories since year’s start

"With the help of the Coordination Council, Kropachov wants to delay the creation of the National Coal Company until he gets a guarantee of appointing his director," the source said.

According to him, the closest circle of Kropachov wants to see in the chair of NCC director the head of the department of the coal-industrial complex (at the Ministry of Energy) Olexander Vladychenko.

Nasalyk does not agree with this selection: his favorite is the head of the state enterprise "Ukruglerestrukturizatsiya" Maksym Fedotov. The Minister can appoint him as the head of the NCC by his order after the establishment of this company.

In the middle of 2000s, Fedotov headed Kyiv branch of the association "Donbas Settlement and Financial Center" of Olexander Yanukovych. In 2008, he was among the founders of Donbas Enrichment Plant, which was later named Krasnaya Zvezda Enrichment Factory, as one of the enterprises transferred to the management of the DFTS.

Related: Life without coal: How city near Kyiv lives without hot water and with outages of electricity

The plans of Nasalyk and Kropachov depend on the decision of the prime minister, so each of them tries to present the opponent in an unfavorable light. So far, it is better for the minister.

A year ago, in an interview with the EP, the minister positively spoke about the Donetsk businessman.

Over the past six months, the team of the coal industry "watcher" managed to compromise himself on the purchase of equipment.

In 2016, when Kropachov became the unofficial curator of the coal industry, Krasnoarmeiskugol and Selidovugol became the main customers of Komsomolskaya, Ukrayina and Rossia concentrators that Kropachov has bought from Olexander Yanukovych.

"From the beginning of 2017, coal mining enterprises have signed 334 contracts for a total of 44.2 million UAH, by dividing the subject of purchases into sub-threshold amounts (less than 200 thousand UAH – Ed.), in order to avoid open public auctions. In particular, Selidovugol signed 131 contracts without holding public tenders for a total amount of UAH 21 million, Krasnoarmeyskugol - 127 contracts for 13 million UAH," our source has noted, referring to the documents of the State Audit Service.

The materials also indicate that coal associations were involved in "wasting money".

For example, Selidovugol has bought timber at 1 533 UAH per cubic meter, and "Krasnoarmeyskugol" - at 1,292 UAH per cubic meter. At the same time, the average price of a cubic meter of timber in Sumy region did not exceed 655 UAH, in Rivne - 685 UAH , in Poltava - 881 UAH.

Related: Ukraine’s Ministry of Energy and Coal Mining proposes to ban steam coal import from Russia

"We decided to send all the materials of the State Audit Service to the law enforcement bodies," Nasalyk said.

In addition to these episodes, Kropachov also has "more promising plans": "the watcher" wants to establish artisanal repairs and the production of mining equipment.

A month ago, the opponent of the minister called the top managers of the industry "amateurs". In addition, according to one of the officials of the Ministry of Energy, Kropachov's team is busy with collecting dirt on Nasalyk.

This "folder with compromising evidence" already contains an episode with the Minister's petition to change the purpose of the grant of the Japanese company Sanyo in the amount of $ 60 million.

So far, everything is in favor of Kropachov. Last week, the Cabinet revised the financial plan of "Centrenergo", in which the company's capital expenditures for 2017 were approved in the amount of UAH 487 million. This is almost four times more than in 2016.

Related: Donbas blockade HQ issues another ultimatum demanding to cease coal supply from Russia

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