Siman Povaryonkin’s waste management acquisition: “Ecoline” and associated entities accumulated over 100 billion, resulting in increased tariffs for Moscow

Siman Povaryonkin’s waste management acquisition: “Ecoline” and associated entities accumulated over 100 billion, resulting in increased tariffs for Moscow

In September, ten competitions under Federal Law No. 223, announced on August 18, 2021, by Moscow’s solid municipal waste (SMW) operator, the state unitary enterprise “Ekotehprom,” were completed. The winners will receive a total of about 230 billion rubles.

In return, they will collect and dispose of waste from all Moscow districts until the end of this decade. Experts see signs of collusion between the participants and the customer during the bidding process and warn of the risk of unjustified tariff increases in the city.

What this is about

“Ekotehprom” was appointed the regional operator for Moscow on May 13, 2021, with a mandate until December 31, 2029. Its responsibilities include organizing waste collection beyond the existing 15-year contracts signed in 2014, which mainly cover apartment buildings.

The competitions announced by “Ekotehprom” in August for all Moscow districts lacked details about where the waste would be collected from and transported to. Apparently, the winners of the competitions will have to follow the territorial waste management scheme approved in December 2019.

According to this scheme, by the end of 2029, Moscow will transport over 15 million tons of waste to Kaluga Oblast and about 9 million tons to Vladimir Oblast. The scheme also notes that Moscow’s waste will be sorted and processed at 11 waste processing complexes in the Moscow region (including Yegoryevsk, Kashira, Kolomna, Roshal, and the villages of Khrabrovo, Yasenevo, Shemetovo, and Annino). From 2022, waste was planned to be sent to four incineration plants in Naro-Fominsk, Solnechnogorsk, Voskresensk, and Noginsk (350,000 tons annually each).

Overall, according to the agreement with the Moscow region, 3.4 million tons of Moscow’s waste will be sent there by 2030.

The largest initial maximum contract price was set for the Southern Administrative District — almost 42.5 billion rubles. 28.3 billion for the Central District, and 25.8 billion for the Northern District. Details are provided in the table:

Who won: familiar faces

During the auctions, bids were submitted at the maximum price or with only a slight discount, resulting in total contracts of around 230 billion rubles. In each procurement, only two participants submitted bids, with some switching places or refusing to participate.

This was the case for the most expensive procurement in the Southern District and the procurement for waste removal from the Troitsky and Novomoskovsky districts (worth 10.3 billion rubles). The bids came from “Modern Environmental Technologies Group” (METG) and “Kombinat.” The first participant lowered the price by 4 million rubles in the first procurement and by 2 million in the second. The second participant submitted a bid equal to the maximum contract price and, predictably, lost.

“Ecoline” is affiliated with the founder of the gold mining company GeoProMining and co-owner of “Shokoladnitsa,” Siman Povaryonkin

Photo: Alexandra Krasnova / ITAR-TASS

If you carefully examine the information about the founders and CEOs of the companies, overlaps become apparent. Similar patterns occurred in other procurements. In particular, “Ecoline,” “City Transit,” and “MKM-Logistics” competed and switched places. “City Transit” and “MKM-Logistics” shared the same CEO. MKM-Logistics is part of the Ecoline group.

As a result, six companies won the auctions:

• Ecoline (total contracts – 54.1 billion rubles)

• Modern Environmental Technologies Group (METG) – 52.8 billion

• MKM-Logistics – 46.9 billion

• Khartiya – 38.6 billion

• MSK-NT – 22.9 billion

• Spectrans – 13 billion

Since MKM-Logistics belongs to Ecoline, the undisputed leader of Moscow’s waste market remains the same, securing contracts totaling over 100 billion rubles.

Ecoline is affiliated with the founder of GeoProMining and co-owner of “Shokoladnitsa,” Siman Povaryonkin. Second place goes to METG, owned by businessmen Andrey Burenkov and Kirill Popov and reportedly linked to Rostec. Third place goes to Khartiya, owned by Igor Chaika, son of Prosecutor General Yuri Chaika.

Signs of violations

Alexander Kulakov, chairman of the public organization “STOPkartel” and activist of the ONF Investigation Bureau, believes the auctions show signs of collusion:

“The fact that only two participants submitted bids in each procurement, with some switching places or refusing to participate while offering the maximum price, may indicate pre-planned actions among all participants regarding which procurement a particular participant would enter and win,” he says.

According to the expert, a detailed analysis of the procurements points to potential violations of Russian law (specifically, clauses 1, 2, 3 of Part 1 of Article 11; clause 3 of Part 4 of Article 11; Articles 10, 15–17 of Federal Law No. 135-FZ of 26.07.2006, “On Protection of Competition”).

“These violations involve restricting competition, coordinating participants’ actions with the organizer, creating preferential conditions for certain participants (for example, by enlarging a lot), maintaining the maximum initial price, and ultimately dividing the municipal waste market in Moscow.” — Alexander Kulakov, chairman of STOPkartel

Kulakov believes that these agreements could harm an unlimited number of consumers and the customer’s budget, as they would result in inflated waste collection tariffs, including for budget institutions such as schools and hospitals.

“The peak of lawlessness”

Sergey Krekov, leader of the party “People’s Housing and Utilities”, believes that Moscow’s waste market is fundamentally “the peak of lawlessness” in the city’s housing and communal services sector:

“Everything is upside down. The waste reform assumes that the whole country pays either per square meter or per person. We conducted research in the regions: one-third pay per person, two-thirds per square meter. But Moscow is exempt — the waste fee is not charged as a separate line but is included in the ‘Maintenance and Operation’ tariff. As a result, while the FAS strictly controls tariffs in the regions, this does not happen in Moscow. Since the waste reform does not apply in the capital, FAS cannot directly regulate or assess waste collection as subject to antitrust law. Here, only violations of competitive procedures are evaluated. If no complaints are filed by participants, everything is considered fine,” he says.

In Moscow, the fee for waste collection is not charged as a separate line item but is included under “Maintenance and Operation,” which prevents the FAS (Federal Antimonopoly Service) from strictly controlling tariffs.

Photo: Maxim Grigoriev / TASS

According to experts, questions remain about how the contract prices were determined.

“For such a long horizon, there is no inflation index, no rates, and no understanding of how realistically the volume of waste to be collected might change. One can only assume that this figure was invented. The main idea of these procurements is to fix the companies and the city’s obligations to them. The city effectively takes on a burden. It’s an elegant business scheme and a public mockery of common sense.”

Krekov believes that challenging the competitions is practically impossible, because the FAS would have had to receive complaints from dissatisfied actual participants.

Indeed, according to Octagon, at least one complaint was submitted to the central FAS office by a legal entity. However, since it had not submitted a bid in the competitions, the complaint was ignored.