NABU Detectives exposed 1.4 billion UAH gas embezzlement scheme

On January 16, 2018, the Detectives of the National Anti-Corruption Bureau of Ukraine (NABU) jointly with the Central Directorate of the Counterintelligence Protection of the National Economy of the Security Service of Ukraine under the procedural guidance of the prosecutors of the Specialized Anti-Corruption Prosecutor's Office (SAPO) detained four officials of Limited liability company (LLC) Energiya-Novyj Rozdil, LLC Energia-Novoyavorivsk and LLC Energiya. The detainees are suspected of 300 million cubic meters embezzlement of natural gas of National Joint-Stock Company (NJSC) Naftogaz of Ukraine which exceeds 1.4 billion UAH. On the same day, the suspects were given notices of suspicion for allegedly committing crimes under Part 5 Article 190, Part 3 Article 28, Part 2 Article 366, Part 3 of Article 209 of the Criminal Code of Ukraine.

The officials were detained during searches in offices and apartments of the abovementioned commercial enterprises according to the Article 208 of the Criminal Procedural Code of Ukraine. Currently, the NABU is preparing a motion to the court to apply for a preventive measure for the suspects.

The investigation revealed that the enterprises which own Novoyavorivska and Novorozdolska thermal power plants (located in Lviv region) during 2013-2015 conducted a number of agreements with NJSC Naftogaz of Ukraine on purchase of natural gas for production of heat energy for citizens. In order to reduce the cost of heat for this category of consumers, NJSC supplied gas at prices significantly lower than market prices.

However, Novoyavorivska and Novorozdolska thermal power plants had illegally got more than 300 million cubic meters of preferential gas, which was used in their private business needs instead of the needs of the citizens. The investigation revealed that plants further sold the electricity to the State Enterprise Energorynok. The electricity price was determined on the basis of the cost price of electricity produced from gas at market price.

As a result, the profit from the electricity generation of the plants exceeded 60%, while the Energy and Utilities the National Regulatory Commission Ukraine set the tariff with 3-5% profit. Thus, according to the NABU Detectives, due to this "scheme" the thermal power plants received overcome comparable with the size of Naftogaz losses.

The NABU Detectives started investigation of the abovementioned facts in December 2016 on the basis of materials of the Energy and Utilities the National Regulatory Commission Ukraine and media publications.