"Golden square meters": how the prices of housing reconstruction are inflated and who gets millions

During the reconstruction of one of the most expensive residential buildings at 151 Sobornyi Avenue in Zaporizhzhia, the fact of overpricing was again discovered. In the next tender for UAH 147.7 million, prices for building materials were inflated by at least UAH 14 million.

This is evidenced by procurement monitoring data during the analysis of the summary information of resources, which was conducted by the anti-corruption center "Institute of Legislative Ideas" and submitted a corresponding appeal to the State Audit Service of Ukraine. Interestingly, the difference between the expected purchase price of UAH 162.1 million and the actual contract value of UAH 147.7 million also amounts to UAH 14 million.

In particular, it is planned to be 11 times more expensive to purchase means for removing paint – UAH 2.2 thousand per kilogram, while the retail price on the manufacturer's website is UAH 195. The aqueous solution of sodium nitrate and carbonate will cost eight times more – UAH 21,900/m3 instead of UAH 2,600, as was included in the estimates of other purchases. Crushed stone, mounting foam, aerated concrete blocks, elastic mixture, hydrophobizer and diamond wheels are almost twice as expensive. A total of UAH 14 million was added to these nine positions.

The house at 151 Sobornyi Avenue is one of the most expensive reconstruction projects in Zaporizhzhia. According to the authorities' calculations, the cost of reconstruction of the damaged 5-story building was supposed to reach UAH 339 million. It is interesting that, against the background of overestimated prices in the estimates, the contractor claims savings in the amount of UAH 70 million. However, contracts worth UAH 295.4 million have now been signed.

It was previously noted that two entrances and 24 apartments were destroyed in the building. The tender offer for the second round refers to the repair of 12 rebuilt apartments and 21 partially damaged apartments.

According to preliminary media estimates, the estimated cost of rebuilding one apartment (based on 24 declared) is more than 300,000 dollars. For this money, you can buy several apartments in new buildings in any city of Ukraine.

Why square meters of damaged housing in Ukraine are becoming extremely expensive for the budget and to whom utility companies give hundreds of millions of hryvnias, we will learn below in the article.

"Restoration of a house is more expensive than new construction"

Anatolii Kurtiev, Acting Mayor of Zaporizhzhia, stated that the restoration of the building is more expensive than a new construction. However, he recommended not to count only apartments, because it is "a complete building complex."

This sounds roughly the same as, when buying housing in a new building, asking the developer not to include in the price of the apartment the cost of building the entrance or the roof.

 

What is wrong?

The scandal with the reconstruction of a 5-story building with 15 entrances in Zaporizhzhia occurred from the moment of the purchase of project works with an expected cost of 10 million UAH. During the open bidding with features, the only bidder won – "Anstroy Proekt" LLC, which lowered the price by only 47 kopecks from the expected price. After publicity, the cost of manufacturing the project was reduced by 301 thousand UAH. 

It is interesting that the founders of the LLC are Artem Ichetovkin, Olena Shuvayeva and Pavlo Chornyi, with whom "ANSTROY" and " ZAPORIZHBUILDGROUP" are also connected. The latter began to earn from the beginning of a full-scale war. In total, these firms have already tendered about UAH 150 million in 2023, participating in special procurements.

Scandal-2 happened during the first tender for the first stage of reconstruction for UAH 138 million. In the bidding for one participant, LLC "Ukrainian Investment Technologies" won, offering a price only UAH 46,000 lower than expected. Even then, the contractor included in the estimate the cost of bricks twice as expensive as the market price, pipes three times more expensive and concrete mix 70% more expensive. According to the journalistic investigation program called "Our Money", the overpayment for only a few items reached UAH 1.7 million. In today's language, this is a hundred FPV drones or a few cars for the front.

However, already in numbers of a thousand drones and a dozen SUVs from the salon for the front, it is possible to measure the overestimation of the price by UAH 14 million in the estimates from the second stage of works for the same building in Zaporizhzhia. The purchase was again awarded to one participant. The contractor is expected to be the same – LLC "Ukrainian Investment Technologies".

The company is more than seven years old, but it started making money only in 2023 – with the reconstruction in Zaporizhzhia. And as the only procurement participant. This year, LLC won a tender for up to UAH 285 million on only one high-rise building in Zaporizhzhia.

Such luck in budget purchases of the enterprise coincided with the change of manager and owner. A few days before the tender, Taras Konoval became the head of the LLC, and at the same time the chief accountant instead of Valerii Zasoba, and Volodymyr Komar became the owner instead of Maryna Kirakozova.

In total, in 2023, the company changed its owner three times. Such a situation may mean, for example, that the real owner of the LLC is a person other than the one represented in the registers, and all that it risks is the authorized capital of UAH 30,000.

In addition, a large number of rented equipment and subcontractors may indicate that the contractor did not have such volumes of work before. Yes, the subcontractors have – "Building Perspective" LLC, "Ukrbudengineering" LLC, "Elektroadvokat" LLC, individual entrepreneurs, equipment rental – in "BIAS" PrJSC, "ALEFBUD-21" LLC. The sublease agreement has the company "Elit-Proektbud", which signed a lease agreement with "TECHNO-LEADER" LLC a week before submitting the documents.

According to the documents, the reconstruction of the building should be completed by December 2024, but they promise much earlier.

Meanwhile, more than 19,000 apartment buildings have been destroyed or damaged in Ukraine. Such rates, costs and such overestimations of housing reconstruction, parallel attempts to build city halls will not contribute to maintaining the trust of international partners. And accordingly, financial support for the country. We can already see this on the example of the delay in the allocation of 50 billion euros.

Read this article in Ukrainian and russian.