How Much Margin Will Be Buried at Dnipro Airfield

How Much Margin Will Be Buried at Dnipro Airfield

Kubrakov tore up a cheap contract with Altis to build the Dnipro airfield for 4 billion and reannounced the tender for 6 billion UAH.

The state enterprise Funding for Infrastructure Projects terminated the agreement with Altis-Construction to build the runway at Dnipro International Airport for 3,95 billion UAH and announced a new tender for these works with an expected cost of 5,71 billion UAH. This is reported in the Prozorro system.

According to a source for Our Money, the new auction will end with a victory for Avtomagistral-Pivden or Onur at a price that will not differ much from the expected cost. Or, if the price falls significantly, additional negotiated contracts will later be signed for up to 50% of the original contract due to “the need to procure additional similar works or services from the same participant,” as often happens with this company.

Altis won the contract in a tender in February 2021. Then eight competitors were admitted to the bidding, with an expected value of 5,70 billion UAH, and the winner reduced its price by 31% to 3,95 billion UAH. The main competitors were favorites of Ukravtodor, who also cut their offers heavily but couldn’t catch up because Altis made the cheapest initial offer and then retained the right to make the last bid, already seeing what the competitors had offered. As a result, Altkom lost to Altis by 10 thousand UAH, and Avtomagistral-Pivden by 20 thousand UAH.

Our Money then analyzed the estimated prices in the February contract with Altis, which was 31% below the expected price — they corresponded to market levels.

After that, there was a change of power at the government level. Minister of Infrastructure Vladyslav Kryklii was dismissed and replaced by the head of Ukravtodor, Oleksandr Kubrakov. They represent different clans.

Kryklii had ties to Arsen Avakov and for some time was close to the head of the Verkhovna Rada transport committee, Yurii Kisil. However, he later positioned himself as an independent politician. Kisil is a president-aligned MP from Dnipropetrovsk region. His wife bought a house from Volodymyr Zelensky a year ago in Ivankovychi when he decided to move to the state dacha in Koncha-Zaspa. Kisil also has good relations with the president’s first assistant, Serhii Shefir.

Kubrakov represents a group of managers who were allocating budgets for the Great Construction initiative initially under Prime Minister Oleksii Honcharuk and Head of the President’s Office Andrii Bohdan. After their resignations, the formal leader of the Great Construction became Deputy Head of the Presidential Office Kyrylo Tymoshenko. Currently the group relies on the ability to present its point of view directly to Volodymyr Zelensky.

With Kryklii’s replacement, the head of Fininpro, Kyrylo Khomyakov, was also dismissed and replaced by Yurii Zhuravliov. Zhuravliov is a longtime personal acquaintance of Kubrakov. They worked together in the Kyiv City State Administration back in 2016, and when Kubrakov headed Ukravtodor — Zhuravliov led the Cherkasy Road Service, where, with Ukravtodor leadership’s agreement, he received some of the largest bonuses in the agency (he declared a bonus of 375 thousand UAH in January this year and had 598 thousand UAH in salary for the entire previous year).

The contact persons at Fininpro responsible for the airfield tender also changed. Initially the executor was Roman Subchak, now it is Ruslan Khordikov.

Formally, the reason given for terminating the contract with Altis was “non-performance or improper performance by the contractor of obligations provided for by the contract.” It was also announced that no funds had been paid to the contractor under this agreement at all.

Some media published data about the slow pace of construction. For example, in April they released photos that showed only preliminary earthworks.

There were several reasons. Among them were delays in developing working documentation, hold-ups by Dnipro land cadastre officials who for a time did not provide necessary documents, and lack of cooperation with Avtomagistral-Pivden. Last year that company won the tender for preparatory works on the airfield for 12 million UAH, but builders complained that the preparation remained unfinished.

But the biggest slowdown came from the Antimonopoly Committee’s decision to review this story for possible state aid. Olga Pishchanska’s agency, after negotiations with the President’s Office, allegedly on its own initiative in May began considering a case regarding 1,5 billion UAH that the government allocated to build the airport. The AMC called this money “illegal state aid,” and the consequence was an official ban on transferring funds to the contractor.

The AMC reviewed the case for two months and ultimately concluded that this was not illegal state aid. It provided recommendations that the state should not in the future grant certain preferences to individual airlines and that the procedure for selecting the future operator of Dnipro airport should be open and transparent. In other words, AMC expressed no objections specifically regarding the choice of the airport builder or the construction itself. But as Liga Antitrust predicted, the relationship with Altis was terminated and a new contractor was selected.

Altis carried out the work at its own expense the entire time. According to Our Money, the company completed work worth 40 million UAH, and Fininpro still owes it approximately the same amount as a deposit the company placed in state accounts at the start of construction as a guarantee of its performance. Currently Kubrakov–Zhuravliov’s Fininpro refuses to return the money to the former contractor.

And there is no doubt that Altis will not be allowed a second time to stage a discount festival at Kubrakov’s margin party. Procurement law allows the customer to exclude a participant from its tenders for three years if that participant “failed to fulfill its obligations under a previously concluded procurement contract with that same customer, which led to its early termination.”

Reference:

Avtomagistral-Pivden belongs to Odesa businessman Oleksandr Boiko. He is vice president of the National Association of Road Builders of Ukraine, which with the start of the Great Construction united Ukravtodor’s favorites. The NAdu executive director is former head of the Odesa SRS, Oleh Varyvoda, who is close to Oleksandr Kubrakov and to the Great Construction project consultant Yurii Holyk. Avtomagistral-Pivden is an unquestioned favorite of Ukravtodor and this year holds more than a quarter of all road repair contracts issued by the agency.

Onur belongs to a group of Turkish businessmen represented in Ukraine by Emre Karaahmetoglu. He has ties to Volodymyr Zelensky dating back to the Vechirniy Kvartal era, when the troupe toured Turkey and stayed at the Onur hotel.

Kyiv-based Altis-Construction is part of Altis-Holding, owned by Oleksandr Hlimbovskyi. The husband of Hlimbovskyi’s younger daughter is former head of the State Fiscal Service of Ukraine Roman Nasirov. The husband of the elder daughter is Andrii Hmyrin, who is linked to State Property Fund head Dmytro Sennychenko.

Yurii Nikolov, Our Money