On April 4, 2018, a presentation of the verification report of the Construction Sector Transparency Initiative (CoST) on monitoring the project “Installation of the third autotransformer 330/110/35 kV at substation “Chernivetska” implemented by SE “NPC “Ukrenergo,” was held in Kyiv. This is the first object having passed the CoST monitoring in the energy sector not only in Ukraine but also in all 16 countries where the Initiative operates.
The purpose of CoST projects is to create practical opportunities for providing transparent and accurate information, public control and verification of data in the field of infrastructure.
The CoST Initiative acknowledged the transparency and openness of Ukrenergo being a customer in a construction project as unprecedented in the organization’s practice: the company provided 93% of the information on the project implementation. None of the CoST information requests was left without consideration, while all necessary information was presented.
“We were surprised that the Customer (Ukrenergo) was ready to cooperate with the contractor and took all measures to help the contractor complete the project,” said Director of the CoST National Secretariat Nataliia Forsiuk. “Its reputation, in our opinion, is very high,” she said.
“Ukrenergo successfully passed a transparency test. 93% of openness is a great indicator,” said Viktor Nestulia, Director of Innovation Projects Program at Transparency International Ukraine. “But we have a bitter example of cooperation with Ukravtodor, which in 2016 showed a lower level of transparency (70%) and refused to cooperate in 2017 despite the fact that the Ministry of Infrastructure supports the implementation of the CoST standards. But openness is only the first, the simplest step. We need to work on the recommendations expressed by public monitoring in order to make real changes. Transparency alone is not enough.”
Deputy Business Ombudsman Tetiana Korotka noted that the Business Ombudsman Council welcomed the accession of SE “NPC “Ukrenergo” to CoST because “ensuring the transparency of projects implemented by this powerful state company will give a positive signal to other market participants and increase the investment attractiveness of the entire sector.”
The reconstruction of substation “Chernivetska” was started in order to increase the substation’s capacity to fully provide the consumers of Pivdenno-Zakhidna Power System with electricity. The substation was built in the 60’s of the 20th century. Its capacities were not sufficient in modern conditions, so it was decided to install a new autotransformer. Independent monitoring of the project’s implementation was conducted on the basis of the Memorandum of Cooperation among SE NPC “Ukrenergo,” Transparency International and CoST.
In the course of preparing the verification report, the CoST experts processed 62 documents and made a departure to the construction site. The project’s actual cost was 2.5 times lower than the estimated cost. The report recommends that changes be made to amend tender conditions to reduce deviations based on formal characteristics, to determine the contract price as dynamic, to take measures to comply with schedules for the supply of equipment, to respond more quickly to extraordinary situations. Nataliia Farsiuk assessed the pilot project with SE NPC “Ukrenergo” as successful and pointed to the unprecedented level of openness on the part of the company as well as prompt provision of information in response to the CoST requests.
Vsevolod Kovalchuk, CEO at SE “NPC “Ukrenergo,” also noted that the company intended to expand cooperation with the CoST Initiative to cover other construction projects.
“We are very pleased that CoST supported our proposal to expand cooperation. Next year, Electricity Transmission Project – 2 for the reconstruction of six substations will be monitored within this framework. It is funded at the expense of the World Bank loans, and its value is about 5 billion USD. Moreover, we will increase the level of disclosure of unilateral information about the projects not covered by monitoring of the CoST Initiative, at a level that will eliminate all possible issues regarding our transparency,” Vsevolod Kovalchuk said.
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CoST (Construction Sector Transparency Initiative) is a voluntary international initiative uniting governments, public and business representatives in 16 countries with the purpose of ensuring transparency and accountability for publicly funded infrastructure construction. In Ukraine, the CoST initiative started its operation in 2015 with the support of the World Bank and the assistance of the Government of Ukraine. The Initiatives website is http://costukraine.org.
A Memorandum of Cooperation among State Enterprise “NPC “Ukrenergo” and international non-governmental organizations “Construction Transparency Initiative” (CoST) in Ukraine and Transparency International Ukraine was signed on October 27, 2016, to increase the efficiency of investment activities and control over construction.
The Memorandum of Cooperation provides for the disclosure of information on the following projects of SE “NEC “Ukrenergo”: installation of the third autotransformer 330/110/35 kV at substation “Chernivetska”; technical re-equipment of 330 kV SS “Zhytomyrska”; technical re-equipment of 330 kV SS “Cherkaska”; technical re-equipment of 330 kV SS “Sumy; technical re-equipment of 330 kV SS “Kremenchuk”; technical re-equipment of 330 kV SS “Novokyivska”; technical re-equipment of 330 kV SS “Zhovtneva.”