Ukrainian defence consortium saves $1.4m in electricity bills

The Ukrainian Defence Industry, a Ukrainian defence conglomerate formerly known as Ukroboronpom, has managed to save UAH 50 million (USD 1.35 million) on the joint purchase of electricity.

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The conglomerate struck contracts through the Prozorro public procurement system for about 60 of its enterprises, with the total cost of UAH 1 billion (USD 27 million), it said in a statement.

Six electricity suppliers, both state-owned and private, took part in the auction, which was held in three lots. The winner was the Energy Company of Ukraine (ECU), a state-owned energy trader.

"We are changing the procurement system of Ukroboronprom. The savings are very important for us, as they can be used to develop the production potential of enterprises," the Ukrainian Defence Industry’s CEO Herman Smetanin was quoted as saying.

In 2022, Ukroboronprom did not make any centralised electricity purchases.

According to Vitalii Butenko, CEO of ECU, winning such an important auction confirms the state’s competitiveness in the energy trading segment.

"Increased competition due to the entry of a state-owned energy trader into the market gives a win-win result. On the one hand, it means a significant reduction in the costs of state-owned companies in electricity procurement," he said.

On the other hand, it means an increase in state revenues from trade in those segments of the energy market where it was almost absent before."

Ukroboronprom was finally reformed into a joint-stock company in June in an effort to ramp up the effectiveness of the industry amid Russia’s full-scale invasion.

Its CEO is Herman Smetanin, who previously headed the Malyshev factory in Kharkiv.

The corporatisation of Ukroboronprom, envisaged by a law passed back in 2021, means the company will act as a corporate centre responsible for transforming its member companies and attracting investment.

In March, the government made a formal decision to transform Ukroboronprom into a joint-stock company.