Roads Without Competition: Who Is Profiting from Billions in Kherson’s Reconstruction



Between March and June 2025, the Kherson region awarded roadwork contracts worth more than UAH 1.7 billion. Restoring infrastructure in this frontline area is a national priority. Yet an analysis of public tenders on Prozorro reveals the scale of investment and systemic risks: collusion, disqualification of cheaper bids over technicalities, and an almost complete lack of competition.

The most active customers of infrastructure works during this period were two institutions:

Total: UAH 1,694,982,294.92. However, the key question remains: Are these funds used efficiently and fairly?


Market players: favored contractors without real competition

LLC “European Road Construction Company” won contracts worth UAH 805.6 million. In one case, it secured victory despite offering a higher price, while a cheaper competitor was disqualified over a formality.

LLC “ROSTDORSTROY” collected another UAH 444.6 million, winning three tenders in a row.

LLC “Avtostrada Group of Companies” took part in three tenders, but its lower bids were rejected twice.

Other bidders — LLC “Avtomagistral-Pivden,” LLC “Global Build Engineering,” LLC “Avtomagistral-Zakhid,” LLC “Dorbud 777,” LLC “Energetychno-Dorozhnye Budivnytstvo” — appeared in the final stages but faced little to no real competition.


Formality instead of competition

Procurements worth hundreds of millions were awarded to only a single bidder. For example:

In each case, the “winner” was the only participant.

Even worse is "competition for 1 hryvnia." In two procurements:

  • UA-2025-03-26-011520-a:
    Avtostrada Group of Companies bid UAH 139,215,000, but Energetychno-Dorozhnye Budivnytstvo won by undercutting it by exactly one hryvnia — UAH 139,214,999.

  • UA-2025-03-26-009737-a:
     Avtostrada Group of Companies offered UAH 157,600,000, but Avtomagistral-Pivden won with UAH 157,599,999.

In both procurements, the difference between the offers was only 1 hryvnia. This is a classic marker of collusion or imitation of competition. When there is such a “random” synchronicity between the prices of two participants, this is not statistics; it is a signal.


How contracting authorities exclude “unwanted” bidders

Several tenders (e.g., UA-2025-03-26-009737-a, UA-2025-03-26-011520-a, UA-2025-03-26-012237-a) imposed discriminatory requirements:

  • Experience — only major repairs, reconstruction, or new construction.
    That is, companies that worked only with large facilities were allowed. If the company had experience in current repairs (less large-scale), its offer was not allowed, even if it had a good reputation and performed the work qualitatively.

  • The number of contracts — not less than 60–67% of the expected value.
    Only those companies that had previously performed similar work worth tens of millions of hryvnias were allowed to participate. For example, if the expected value of the tender was 100 million, then it was necessary to provide contracts to confirm their ability to perform work worth at least 60–67 million. This automatically cuts off smaller companies, even if they are technically capable of performing the work.

  • Current repairs are not taken into account.
    Companies that specialize in smaller-scale work (such as pothole repairs or restoration of individual sections of roads) were not allowed to participate in the tender, even if they had previously successfully performed dozens of such projects.

Potential bidders repeatedly asked for adjustments to include current repair experience, lower financial thresholds, and account for inflation. The contracting authority refused, citing Ministry of Economy guidelines.

Result: competition narrowed to a small circle of “approved” players.


Disqualification over technicalities — more expensive bids prevail

Lowest-priced bids were thrown out in tenders such as:

They were rejected for minor issues — certificate inaccuracies, the format of a bank guarantee, or staff documentation. While legally permissible, was it necessary?

Rejecting cheaper offers costs millions, raising doubts whether this was about compliance or pushing out unwanted bidders.


Audits as predictable box-ticking

The State Audit Service of Ukraine in the Kherson region has launched monitoring of most of these tenders. For example, UA-2025-04-07-003815-a revealed:

  • Absence of a monthly financial plan (violation of CMU Resolution №668),
  • Refusal to recognize current repair experience,
  • Rigid requirements for reporting forms (only KB-2v and KB-3).

These may look minor, but they create real risks: without a clear spending schedule, costs are hard to control, and strict reporting rules discourage some companies from participating. While not direct legal violations, such restrictions amount to rule-bending practices.


Signals from the market

Prozorro also contains questions from potential bidders, which reveal tension:

These are more than technicalities. They reflect the contracting authority’s approach to openness. Where responses are rigid and purely formal, risks are embedded in the process.


Conclusions

Rebuilding Kherson’s roads is a massive national priority. However, its implementation is compromised by the dominance of a narrow circle of companies and a series of opaque practices. Systemic signs of collusion, discriminatory requirements, lack of competition, and non-transparent financial planning create serious corruption risks.

Billions are effectively funneled to “chosen” contractors rather than those able to deliver efficiently and honestly. Rejections of cheaper bids, “1-hryvnia competition,” and restrictive requirements all point to market rigging and collusion, which is a direct path to corruption, waste, and loss of public trust.

The reconstruction of Kherson must not become a playground for manipulation and abuse.

Every citizen has both the right and the opportunity to monitor how their community is rebuilt. To support this, we have prepared a step-by-step guide on how to carry out such monitoring. Active civic engagement will bring greater transparency and stronger oversight of the reconstruction process.

This material was published with the support of the Czech non-governmental organization NESEHNUTÍ within the framework of the Transformational Cooperation Program of the Ministry of Foreign Affairs of the Czech Republic.

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