Finance Ministry avoids word "freeze." Will unprotected power system withstand this winter?
In a single day, without warning or discussion, the Finance Ministry halted funding for capital expenditures across the country. The news caused a stir, as one of the areas affected was the protection of energy facilities ahead of the new heating season.
Business Censor examined why experts believe that releasing the funds in December will be too late for this winter, which facilities will be at greatest risk, and whether this is indeed merely a rescheduling, as the Finance Ministry insists.
Government does not call it a "freeze": What is happening to capital construction funds
Capital expenditures are budget funds allocated for the construction, reconstruction and major repair of roads, hospitals, schools and energy facilities. Unlike salaries or social benefits, these are long-term investments spread over time.
The Finance Ministry itself avoids the word "freeze." In response to a query from Censor.NET, the ministry said that part of the capital expenditures planned for the autumn would be deferred until December due to a shortage of international financing:
"This is not a reduction or freeze of budget programmes, but a rescheduling of funding for some capital expenditures," the ministry said in its response.
The Finance Ministry has promised to disclose the revised consolidated total for the entire period later, once the amendments to the budget schedule have been finalised.
The scale of the "rescheduling" was recently disclosed publicly by Roksolana Pidlasa, chair of the Verkhovna Rada Budget Committee, on the Chronicles of the Economy podcast: at least UAH 39 billion was deferred in September alone:
"These are primarily capital expenditures: construction and reconstruction, including the construction and renovation of hospitals, the construction of shelters at hospitals and schools, the protection of energy infrastructure, the construction of social housing, and so on," Pidlasa said.
Awaiting a "domino effect": Avtostrada halts work on its projects
On Friday, 18 September, Maksym Shkil, the owner of Avtostrada, one of the largest companies in the capital construction sector, publicly announced that funding for its projects had effectively been halted.
Avtostrada is one of Ukraine’s largest road construction companies and had previously been growing rapidly. According to data from Opendatabot, the company generated UAH 10 billion in revenue in 2024 and UAH 14 billion in 2025, while its projected revenue for this year stands at UAH 18 billion. To illustrate the scale of the company’s involvement in government projects, it has won public tenders worth UAH 49.5 billion this year alone.
In a Facebook post, Shkil said that the government had halted funding for all capital expenditures without warning. Business Censor managed to contact him for further details.
According to Shkil, the suspension hit the entire country at once: payments for capital expenditures have not been processed since the beginning of last week, not only for new work but also for work already completed, with completion certificates sitting unprocessed at the Treasury.
"We were all simply presented with a fait accompli, without any consultation or discussion with the market. Halting capital investment spending in a single day means bringing many sectors of the economy to a standstill. There will be a full-blown domino effect: failure to pay suppliers, service loans and pay contractors for work already completed. These are a great many problems that hit us all at once, completely out of the blue," Shkil said.
The company is working on energy infrastructure protection projects in the Sumy region, Kyiv and at major substations. If funding is not restored soon, Shkil said, the deadlines for commissioning these facilities will be pushed back.
Shkil points to the difference between sources of funding: payments for projects financed with European or international funds are being made without delay. Payments from local budgets have also now been suspended (according to Business Censor sources, these payments stopped on Tuesday, 15 September), and if first- and second-priority payments are not processed this year, Shkil said, third-priority payments will not be reached at all.
Shkil’s own forecast is cautiously optimistic: he believes the Finance Ministry’s decision was a mistake and therefore expects funding eventually to be restored.
Lack of funding means lack of protection: Kharkiv, Dnipro and Kryvyi Rih particularly vulnerable
Oleksandr Kharchenko, director of the Energy Industry Research Center, stressed in an interview with Business Censor that a lack of funding directly means a lack of protection. Under Ukrainian law, even launching a construction tender is impossible without a clearly defined source of funding.
Kharchenko cited the figures: under national resilience plans, the frontline cities of Kharkiv, Dnipro and Kryvyi Rih receive 85–90% of their funding from the state budget. The average figure across Ukraine is 80%, while funding in Kyiv is split evenly between the state and local budgets. "The impact of these funds not being provided is entirely direct and clear," Kharchenko said.
Although left-bank Ukraine, where most frontline regions are located, will be hit hardest, the impact will be felt by everyone.
"In practice, this affects the whole of Ukraine, because most communities are not receiving a very significant share of the funds planned for them," Kharchenko said.
In his view, it was already unlikely in September that these funds could be used effectively by the end of the year: constructing physical protection takes at least four to six months, meaning the funds should have been allocated back in June or July. Even if funding is unfrozen in December, he says, it will already be too late for the current heating season, although it could still be useful in preparations for next winter.
"If these funds can be used at all, that will already be a stroke of luck. Even if they were allocated now, it would already be too late: constructing protection realistically takes four to six months at a minimum, so we will not finish by the New Year," Kharchenko said of the prospect of funding being released in December.
Preventive protection versus emergency restoration: How Ukraine is entering the most dangerous season for its energy sector
Energy expert Hennadii Riabtsev, commenting on the situation for Business Censor, immediately clarified that the UAH 39 billion cited in Pidlasa’s statement represented the total amount of deferred capital expenditures, not only spending on energy infrastructure protection. No official breakdown of this amount by sector that would make it possible to determine the share allocated specifically to energy infrastructure has yet been published.
According to Riabtsev, Ukraine is entering the winter with a higher level of engineering protection than it had several years ago: second-level protection has been completed at 22 facilities, while work is continuing at more than 100 others. However, he said, absolute protection against a direct missile strike does not exist in principle. Actual resilience depends on a combination of air defence, grid redundancy and the speed of recovery after strikes.
Riabtsev identifies not individual facilities but bottlenecks as the most vulnerable points – components whose loss cannot be quickly offset by an alternative route or backup capacity. These include major substations, transformer equipment and infrastructure on which heating and water supplies in major cities depend.
"We risk losing not the facility itself, but the function it performs," Riabtsev explained.
According to him, damage to a single substation may mean that electricity is available in the country, but there is physically no way to deliver it to a particular city.
"The government will then spend significantly more money not on preventive protection, but on emergency restoration, purchasing scarce equipment and dealing with the consequences – amid freezing temperatures and renewed attacks. Deferring funding is not merely an accounting exercise that shifts expenditures from September to December; it shifts part of the risk from the state budget directly onto the power system and consumers," Riabtsev concluded.
At the same time, even if the funds become available on 1 December, "they cannot be instantly turned into a completed protective structure," the expert noted.
"Materials, personnel, machinery, installation work, concrete work and the necessary construction time are all required. Therefore, some facilities may enter the most dangerous period of the heating season with their current level of protection," Riabtsev predicted.
$29.5 billion external funding shortfall: Wait for financing or set priorities?
The Finance Ministry explains the emerging situation as follows: by the end of 2026, Ukraine risks not receiving part of the expected $29.5 billion in international assistance, as its disbursement is linked to the adoption of several legislative measures.
Accordingly, the government continues to prioritise funding for the security and defence sector, public-sector salaries and social benefits, as these expenditures are covered by actual budget revenues.
Energy sector experts say that priorities will have to be set in practice:
"I would determine funding priorities not based on how many facilities need to be completed, but on which unfinished facilities, if lost, would have the greatest systemic impact," Riabtsev stressed.
Kharchenko offered a succinct forecast: "No money means no protection. There are no resources to build it and no funds to finance it."
Meanwhile, Shkil, who expects the Finance Ministry to revise its strategy, offered an optimistic forecast: "Halting capital investment spending means that these facilities will not be completed. If funding is restored, construction will continue."
