Energy Club Escalates Efforts to Address Critical Public Procurement Ruling Impacting Electricity Market

20.05.2025

Energy Club, the largest business community of energy companies in Ukraine, after two high-level online meetings on the Supreme Court’s decision, formulated its consolidated position and presented it in official appeals to key government agencies. These appeals address issues that threaten the stability of the Ukrainian electricity market.

The issue stems from a legal position of the Grand Chamber of the Supreme Court, detailed in its resolution from January 24, 2024 (case № 922/2321/22) and supported by a subsequent Supreme Court resolution on August 28, 2024 (case № 918/694/23). This interpretation restricts any change in the price of a public procurement contract, including for electricity, to a maximum of 10% of the initial contract price for its entire duration.

Energy Club argues that this rigid interpretation fails to acknowledge the significant and objective price volatility in the electricity market, which has often exceeded 10% annually and is further exacerbated by wartime conditions. Market participants and state bodies alike cannot reliably predict such fluctuations.

To address this critical situation, Energy Club held two online discussions:

1. “Legal consequences of the Resolution of the GC SCU dated 24.01.2024 in case No. 922/2321/22 for the electricity market” on April 9, 2025. This closed meeting for Energy Club members focused on analyzing the ruling’s impact and preparing a collective appeal to parliamentary committees.
2. “Public procurement of energy resources: How does the interpretation of the Law affect the market? Dialogue between government and business” on May 16, 2025. This open talk-show facilitated a dialogue between government officials, energy businesses, legal experts, and other stakeholders to collaboratively seek balanced solutions. Speakers included representatives from the Ministry of Economy, a judge from the Grand Chamber of the Supreme Court, and legal scholars.

Following these discussions, Energy Club, representing the consolidated position of market participants, has sent formal letters outlining their concerns and recommendations to:

Mr. Oleksiy Khomenko, First Deputy Prosecutor General: The appeal highlights the mass filing of lawsuits by prosecutor’s offices to invalidate supplementary agreements to contracts and recover funds based on the Supreme Court’s interpretation. It points to the apparent selectivity in these legal actions and inaccuracies in the amounts claimed for recovery. Furthermore, numerous criminal proceedings have been initiated against procurement officials and market participants solely based on exceeding the 10% price change limit, leading to conclusions of damages. Energy Club asserts this creates undue pressure on businesses, paralyzes operations, and leads to significant financial and reputational losses, ultimately undermining efforts to ensure stable energy supplies, especially during wartime. The Club has urged the Prosecutor General’s Office to:

• Consider the arguments that the current interpretation of the Public Procurement Law does not align with economic realities or the legislature’s intent.
• Analyze the justification for the widespread lawsuits and criminal proceedings that rely solely on a formal application of the court’s decisions without due consideration of market specifics and contract circumstances.
• Re-evaluate the approach to assessing the actions of market participants concerning contract price adjustments, factoring in objective market conditions.

Mr. Vitaliy Urkevych, Secretary of the Grand Chamber of the Supreme Court: The letter to the Supreme Court reiterates the profound impact of the ruling, emphasizing that the 10% cap ignores extreme price volatility, citing examples such as a 116% fluctuation between December and January in 2021 and 55% in 2024. It also notes that the specific case (№ 922/2321/22) reviewed by the Grand Chamber involved atypical circumstances (14 supplementary agreements, some dated the same day, leading to a 92% price increase in a short period) not representative of most market contracts. The appeal points out that before these rulings, the practice of adjusting contract prices by more than 10% was common and based on a different understanding of legislation, aligning with government and parliamentary intentions to remove such restrictions during wartime. Energy Club has requested the Secretariat of the Grand Chamber to:

• Acknowledge the presented arguments regarding the discrepancy between the legal interpretation and the economic realities of the electricity market.
• Consider clarifying the relevant legal conclusions to align them with the functional realities of the electricity market, actual legislative application practices, and to mitigate negative consequences for the sector.

Energy Club states that the current enforcement practices, based on a legal interpretation detached from economic realities, are precipitating an “existential crisis” in the energy market. This situation jeopardizes the reliability of electricity supply and erodes trust in state institutions.

The organization expresses hope for understanding and constructive dialogue to resolve this critical situation and ensure the stability of Ukraine’s energy sector. Energy Club has requested to be informed of the results of the review of these appeals within the legally prescribed timeframes.