The Capital's Construction Boom. Kyiv Is the Undisputed Leader of Ukraine in Construction Tenders

A strange repair of a completely decent section of the Stolychne highway, a new two-petal interchange on Poliarna and Bohatyrska streets, repainting of the 2019-painted kindergartens, laying new tiles and curbs instead of the previous ones, which still look quite good, installing new benches thus replacing the old ones, which don't look old yet, creating kilometers of new bike paths from nowhere to nowhere. It is not that such changes are happening in Kyiv for the first time, but the ongoing war is greatly changing the attitude towards irrational spending, and therefore, forcing us to take a closer look at the capital’s spending in general.

The structures of the Kyiv City Hall and other capital organizations in 2024 held tenders for construction and repair worth more than UAH 30 billion. Even state all-Ukrainian structures did not reach such a result, not to mention the rest of the regions.

An analysis of construction contracts in the electronic public procurement system “Prozorro” showed that during the war, spending on construction decreased compared to the legendary era of “Great Construction” and remained at approximately the same level, taking into account the devaluation of the hryvnia exchange rate (see Table 1). The modest jump in construction orders in 2023 is explained by the fact that then the State Reconstruction Service concluded agreements worth almost UAH 50 billion for the construction of protection for Ukrenergo electrical substations and water pipelines in the Dnipropetrovsk region.

Table 1. Volumes of construction contracts

*Smaller contracts do not make a significant contribution to the overall picture in terms of the amount of money, it is only a few percent.

Source: Prozorro.

The decline in construction enthusiasm was explained by the large-scale redistribution of cash flows on the ground. Meanwhile, the capital region was strikingly different from the rest of Ukraine (red bars in the figure).

In the last year before the invasion, the Dnipropetrovsk region was leading by a significant margin from the rest of the regions (2021 in blue in the figure). Such leadership was ensured by the fact that half of the 50 billion UAH under the sensitive leadership of the coordinator of “Great Construction” Yurii Nikolov and Governor Valentyn Reznichenko went to five large facilities, namely four roads and a local airport.

At the beginning of the invasion, the situation changed dramatically.

In 2022 (yellow in the figure), the leaders were all-Ukrainian contractors — State Enterprise National Nuclear Energy Generating Company "Energoatom", PJSC «Ukrhydroenergo», PrJSC National Energy Company Ukrenergo and other structures, which, although they have their main offices in Kyiv, order construction throughout Ukraine. Vinnytsia region suddenly jumped to second place. However, this happened only because in the last week before the invasion, the local branch of the State Service of Special Communications and Information Protection of Ukraine (Ukravtodor) has allocated UAH 15 billion for road repairs as part of the "Great Construction". But the work under those contracts was not actually performed, and the validity of the contracts was simply extended without funding. In 2023 (green), the Kyiv region, together with the capital, became the leader for the first time (unfortunately, the electronic public procurement system “Prozorro” does not automatically separate the capital from the region). Unfortunately, only part of the jump is explained by reconstruction in the deoccupied Kyiv region. In the top ten largest tenders, only two are related to shelling, and both are at the bottom of the table — the repair of the combined heat and power station No. 6 and the construction of housing in Irpin (see Table 2). The rest are simply related to the reconstruction of peaceful, non-urgent roads in the rear and other repairs.

Table 2. The largest tenders in Kyiv and Kyiv region in 2023

Source: Prozorro.

In 2024 (red), the gap of the capital region increased significantly. This happened because in other regions they no longer ordered the construction of electrical substation protection. In Kyiv, on the contrary, a decisive step forward was taken: in addition to the repair of the capital's roads, the construction of the metro line to Vynohradar for UAH 14 billion was added. Also, the top ten construction customers this year included the education departments of the Darnytskyi, Holosiivskyi and Dniprovskyi districts of Kyiv, which ordered repairs of schools and kindergartens for UAH 3.2 billion.

Well, maybe the reason is that the capital's budget is the largest, which is why we have such a result. Unfortunately, this is not the case. Comparing expenditures on construction tenders with general budgets (see Table 3) shows that in nine regions the "construction" share is approximately in the same range - from 26 to 35%, all of them in the first half of the table. Kharkiv and Mykolaiv regions are in the lead due to shelling and fortifications. The remaining regions have a ratio of less than 20%. But even among them there are regions with quite large budgets (Lviv, Zaporizhia, Zhytomyr, Cherkasy), but they hold construction tenders much less than Kyiv.

Table. 3. Share of construction expenditures in the total expenditures of the region

Source: data Openbudget.

What's worse, the concentration of contracts in one hand is also quite obvious. The top ten customers spent almost 30 billion UAH, and seven of them are the structures of the Klitschko City Hall. While a thousand other customers in Kyiv and the region made construction and repair purchases worth less than UAH 18 billion.

Table. 4. The largest construction customers in Kyiv and the region in 2024

Source: Prozorro.

In general, according to the estimates of the investigative journalistic program “Our Money”, in Kyiv itself, more than 30 billion UAH was allocated for tenders for various construction and repair works this year, while the Kyiv region accounts for less than 15 billion UAH (see Table 4). This means that the Сity Hall of Vitalii Klychko is the champion in construction in Ukraine, even if the region is removed from the total result of the Kyiv region of 45 billion UAH.

Even state all-Ukrainian structures did not reach 30 billion UAH, not to mention all other regions.

We turned to the Kyiv City State Administration with a request to explain the unprecedented construction activity or at least comment on the trend we noticed. The answer was encouraging (see the document): the extreme growth in construction tenders was explained to us by… the difference between the budget year and the implementation period of the construction project. As if this rule only applies to Kyiv, and the rest of the administrators with whom we compare Kyiv will not have anything longer than a year. Next, we were told about the city’s targeted program “Defender of Kyiv,” a program to support Kyiv defenders and, of course, about the funds transferred from the city budget to the Ministry of Defense of Ukraine and the Ministry of Internal Affairs of Ukraine: a total of UAH 1.4 billion in 2023, and UAH 30 million this year as of October.

How can all this be explained by the irresistible desire in the midst of the war to lay new asphalt on roads that are still in not the worst condition and repair empty kindergartens on an unprecedented scale? These are the things…