Water pipeline construction in Mykolaiv region: contractors with criminal backgrounds and budget billions

An investigation has revealed who is using billions of hryvnias to restore the water supply system in Mykolaiv region.

This was reported by the Center for Public Investigations.

As a result of the Russian aggression, in particular the explosion of the Kakhovka hydroelectric power plant, there was a need to build a new water supply system to provide drinking water to residents of Dnipro and Mykolaiv regions. Problems with the water supply in Mykolaiv began as early as the beginning of the full-scale invasion of the Russian Federation.

In April 2022, the city was left without water after the enemy destroyed the Dnipro-Mykolaiv water pipeline in Kherson Oblast. Since May of that year, Mykolaiv has been supplied with industrial water, but the issue of drinking water supply remains unresolved to this day.

On the Dream Recovery Project Portal, you can find dozens of projects related to water supply in Mykolaiv. According to the portal's statistics, water supply projects rank third among all recovery sectors - out of 275 projects, 40 or 14.5% are from the water management sector. There are currently 22 water supply projects under implementation. These include the reconstruction of water pipelines in the city itself, as well as the construction of a filtration system for sustainable water supply in Mykolaiv. A number of projects are funded by the Kingdom of Denmark.

Screenshot: Dream

In the spring of 2024, Borys Dudenko, director of Mykolaivvodokanal, assured that water supply problems were being addressed at the state level. In 2023, about UAH 1.2 billion was allocated from the state budget to restore the city's water supply systems. The Dream recovery platform has dozens of projects dedicated to the city's water supply. The water supply system from Nova Odesa worth almost 7.5 billion hryvnias is scheduled to be completed by the end of 2024, with a possible extension to 2025 now being predicted.

The construction work is being carried out by several companies that have previously received large-scale government contracts, including Avtostrada, Rostdorstroy, and Ukrtransmist. However, some contractors are subject to criminal proceedings concerning efficiency and transparency of spending.

Screenshot: Prozorro

Additional costs for the project are being raised from international partners, including the European Investment Bank, as well as from the state reserve fund.

Back on September 26, the Prime Minister of Ukraine Denys Shmyhal said after his visit to Mykolaiv that the sources of funding for the construction were only being identified. Initially, donors refused to finance the project under a simplified procedure, but in just a month the money was found.

However, there are still questions about the contractors. The companies were already involved in criminal proceedings during the full-scale war. But despite this background, these companies were entrusted with the construction of a critical infrastructure facility - a new water supply system - for billions of budget dollars.

The Mykolaiv Oblast Service for Infrastructure Restoration and Development reported that the contractors for the construction of the water pipeline were selected based on the results of reviewing proposals submitted by potential contractors at the request of the agency. When asked whether the service was aware of any open criminal proceedings involving the selected contractors, the agency said it was not the administrator of this information. In addition, the service acknowledged that the construction of the new water supply system will not be completed by December 25, 2024.

Screenshot: response to the CPR's request

All this is happening against the backdrop of questions about the process of selecting contractors and technical supervision for the project. Experts note the risks to the quality of work associated with the participation of companies in tenders with existing criminal proceedings.

The journalists also investigated who receives billion-dollar contracts for the restoration of Mykolaiv region. Four companies were identified as the region's favorites. Problems with transparency and equal access to contracts remain relevant. It is emphasized that most billion-dollar contracts are distributed among large companies, which raises doubts about their effectiveness for the budget.

Анна Бальчінос