The State Audit Office conducted an audit of the SOE Selydivuhillya and revealed numerous violations for the period 2016-2018. It is stated in the Service’s report, a copy of which was analyzed in StateWatch expert organization.
According to the results of audit, it is noted that in January 2016, Selydivuhillya LLC and its separate divisions, as a result of the sale of coal to wholesale market operators, at a price below the cost, lost revenues totaling 1.6 billion UAH.
During the same period, lost revenues were recorded at around 379.4 million UAH as a result of the sale of SOE Selydivuhillya to the third-party individuals and commercial entities at a price below the cost price.
Auditors also detected a tendency to reduce the volume of coal production due to the lack of licences for the development of new fields and the lack of funds for their development.
Such a situation arose because of the coal reserves in the Novohrodovska Mine No.1-3 and Kotlyarevska Mine sections, which are part of the SOE Selydivuhillya, which in 2012, without the consent of the Ministry of Energy and Coal Mining, decided to reduce the use of coal reserves in favor of private structures of Russia Mine LLC in the amount of 10.2 million tons and the mine shaft clone of Mine No.1-3 of Novohrodovska in the amount of 32.5 million tons.
The technical limits of the sites provided are set so that the existing state mines, Kotlyarevska and No.1-3, Novohrodovska, do not have the legal and physical ability to start and carry out mining work on other course of coal reserves or without using the subsoil plots of private companies.
Also, the auditors noted that private companies did not observe the dates for the start of coal mining in the 2nd quarter of 2014, as expected in the original version of the 2012 agreement. In its turn, the Public Service of Geology did not annul licenses, but also extended the time of preparation of sites for development and the start of production for the 2nd quarter of 2016 to private mines, which postpones the grounds for canceling special licenses for the 2nd quarter of 2018.
Due to the supply of coal products in violation of the terms of contracts without receiving advance payment and the lack of claim-related work by the management of SOE Selydivuhillya, at the end of 2018, commercial structures owed more than 75 million UAH to state mines.
As a result of ineffective management decisions made by managers from 2015 to 2018, the facts of purchasing goods and services for SOE Selydivuhillya were made at significantly inflated prices, which led to overhead costs totaling more than 153 million UAH, which were later included in the price cost of coal products.
The audit service concluded that during the last three years, SOE Selydivuhillya did not acquitted the goal of its existence and worked steadily at a loss. In 2016, losses amounted to 223.6 million UAH, in 2017 –396.3 million UAH, and for 9 months of 2018 losses increased up to 403 million.
As of March 2019, the tax debt of SOE Selydivuhillya is more than 910 million UAH, according to YouControl.
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