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Bureaucracy preventing allocation of funding to protect Ukraine's energy infrastructure, media reports

by Elsa Court and The Kyiv Independent news desk July 4, 2024 7:40 PM 2 min read
A worker walks through a burned out control room at a power plant of energy provider DTEK, destroyed after an attack, in an undisclosed location in Ukraine on April 19, 2024, amid the Russian invasion of Ukraine. (Genya Savilov/AFP via Getty Images)
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Ukraine's government has not distributed EU funding for the reconstruction and protection of energy infrastructure worth 150 million euros ($162 million) for four months due to "bureaucratic obstacles," Ekonomichna Pravda (EP) reported on July 4, citing sources familiar with the situation.

Russia renewed its attacks on Ukraine's critical infrastructure in the spring, pushing the country's energy grid to breaking point. Ukraine's largest private energy company, DTEK, said at the end of June that it had lost nearly 90% of its energy generating capacity due to Russian attacks.

The government, in particular the Finance Ministry, has not made a decision on the allocation of 150 million euros  ($162 million) from the European Commission, which includes funding for the protection of energy infrastructure, EP said.

According to EP, the lack of a decision on the funds is also blocking the allocation of a grant for the repair of Ukraine's port infrastructure, worth 130 million euros ($141 million).

The government's inaction has meant that Ukraine's Agency for Restoration and Infrastructure Development is "unable to settle with the contractors and was forced to stop the reconstruction of dozens of sites," EP's sources said.

On some sites, stopping construction is impossible, so government contractors are spending their own capital to continue the work.

One contractor, MS Capital holding founder Maksym Shkil, told EP that Prime Minister Denys Shmyhal ignored President Volodymyr Zelensky's instructions, "effectively stopping all funding," including for the protection of energy facilities.

"We knew in advance about the shelling of the energy infrastructure, but practically nothing was done, only because of the lack of funding, all work was stopped. The result is a country without electricity," said Shkil.

The head of Ukraine's Agency for Restoration and Infrastructure Development, Mustafa Nayyem, resigned on June 10 after being prevented from attending the upcoming Ukraine Recovery Conference scheduled for June 11-12 in Berlin.

Nayyem told Bloomberg in an email that Shmyhal "personally rejected my request for this business trip to Berlin without giving reasons."

In a lengthy post on Facebook, Nayyem named a series of complaints about the "systemic obstacles" that have limited his ability to do his job, ultimately leading to his decision to resign.

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