Orlov pushed Kropachov away from enrichment

Orlov pushed Kropachov away from enrichment

Ex-Regionalist Andriy Orlov Replaces Vitaliy Kropachov in the Coal Processing Market of State Mines

On January 24, the state enterprise "Myrnohradvuhillya" announced its intention to sign a contract for coal processing services worth 101.25 million UAH. The tender was conducted using a negotiation procedure. LLC "Industrial Group ’Zbagachuvach’" was selected as the service provider. This company, registered in Kyiv, is owned by Anatoliy Pidopryhora, who was a representative of LLC "Energoimpex" a few years ago. Both structures are considered part of the group associated with ex-MP from the Party of Regions Andriy Orlov, which also includes the Selydivska Coal Processing Plant and the Toretsk branch of the Shcherbynivska Coal Processing Plant (LLC "Donintervuhillya"). These are the factories where coal processing under the contract with "IG ’Zbagachuvach’" will take place.

This is the first major tender for Orlov’s group after being effectively ousted from the state mines’ coal processing market a few years ago (the first small orders worth several million UAH were received by the company at the end of 2019).

How did the ex-regionalist, who had settled in the USA since the Yanukovych era, manage to return to the large enrichment business, and what does the change in oversight of the coal industry by the new authorities have to do with it?

Orlov’s structures were actively operating in the enrichment market until 2016, as evidenced by the case materials of criminal proceedings №42016050000001179, previously opened by the SSU. "In 2015-2016... a number of commercial structures controlled by the former MP from the Party of Regions (referring to Andriy Orlov – ed.) were involved, including LLC ’Industrial Group ’Zbagachuvach’’ and LLC ’Energoimpex’... to perform work on the enrichment of extracted coal and divert state funds into the shadow economy” –  investigators claimed.

Vitaliy Kropachov

This criminal case was being investigated amid the changing of oversight in the coal industry and the "appointment" of ex-deputy of the Donetsk Regional Council Vitaliy Kropachov to this informal position. Competitors called him a subordinate of ex-first deputy head of the BPP faction Ihor Kononenko, who oversaw the entire energy sector in Poroshenko’s team. During Poroshenko’s rule, three coal processing factories of Oleksandr Yanukovych – "Ukraine," "Russia," and "Myrnohradska" – were brought under the control of Kropachov’s "Ukrdoninvest." In 2017-2018, they became monopolists in providing coal processing services for coal extracted from state mines in Donbas.

The coal industry has long learned to "legally" circumvent the Prozorro system, through which state mines conduct relevant tenders. In the case of coal processing, there were their own "tricks" that facilitated the right choice of winner. For example, in 2019, SE "Myrnohradvuhillya" required the work to be completed within 1-2 days, resulting in only the "Myrnohradska Coal Processing Plant" being able to submit a bid – practically just a formality. It was also the choice of state enterprise management as a supplier through the negotiation procedure. Meanwhile, the price of Kropachov’s factory services spiked nearly one and a half times compared to the previous period. In the spring of 2019, the enrichment of run-of-mine coal cost several coal state enterprises 145 UAH per ton.

Since mid-2019, the coal industry has had a new overseer. He was named Vitaliy Bilyakov from Donetsk, who during Viktor Yanukovych’s time headed the "Donetsk Calculation and Financial Center," LLC "DRFC," and the "Komsomolska" coal processing plant – key coal assets of the former president’s older son Oleksandr Yanukovych during his business’s heyday. According to media reports, Bilyakov has new patrons: allegedly, his appointment was facilitated by Ihor Kolomoiskyi.

For Kropachov, this marked two major problems. The first was the dismissal of "Centrenergo" chairman Oleh Kozemko and the appointment of Volodymyr Potapenko, who was more "understandable" to Kolomoiskyi, as head of the company. The oligarch’s structures began supplying coal to the generating company and buying its electricity at a lower price. "Centrenergo" ceased settlements with Kropachov, leading him to demand 1.4 billion UAH in debts for shipped coal in court.

The second problem has now fully emerged – after the replacement of the management of state coal enterprises since the summer of 2019, new favorites have appeared in coal processing tenders. The mentioned "Myrnohradvuhillya" tender for 101.25 million UAH is the first such significant procurement since the summer of 2019. Formally, "Myrnohradvuhiliya" simplified last year’s tender documentation for it, but reduced the expected cost from 145 to 125 UAH per ton. After two unsuccessful tenders (№ UA-2019-11-15-000769-a and № UA-2019-11-27-000514-a), which were canceled in December 2019 due to lack of bidders, SE "Myrnohradvuhillya" conducted its traditional negotiation procedure, choosing a provider from Orlov’s orbit. At the last moment, the price of enriching a ton of coal was raised to 135 UAH/tonne including VAT.

oligarh