Calgary-based solar company facing uphill legal battle in Ukraine
A Calgary-based company that has been building solar farms across Ukraine is embroiled in a nasty legal battle after falling victim to what it says is that country’s “deep-rooted history of corruption.”
TIU Canada, a solar company owned by Calgary-based
investment company Refraction Asset Management, has been fighting in Ukrainian
courtrooms since March 2020, when it says its 10.5 MW solar power plant in the
south-central city of Nikopol was “forcibly” and “illegally” disconnected from
the power grid. TIU is currently appealing a lower court ruling that rejected its
claims.
TIU — which is headed by president Michael Yurkovich, who
has an MBA from the University of Calgary and hails from a prominent energy
industry family — first entered the Ukrainian market in 2017, making it the
first Canadian investor in the Ukrainian economy following the signing of a
Canada-Ukraine free trade agreement in 2017.
The free trade agreement was supposed to help open the doors
to Western investment in the former Soviet state, and TIU was bullish on the
market opportunities that existed there, according to sources familiar with the
matter. Ukraine was trying to reduce its reliance on Russian oil and gas, and
Ukrainian president Volodymyr Zelensky had made statements indicating he wanted
to level the playing field for foreign investors — especially those working in
the green energy space.
TIU ultimately invested $65 million to build four solar
projects across Ukraine, including the Nikopol project, which was completed in
2017 and consists of over 33,000 solar panels. The site is located on land
leased long-term from the city of Nikopol, however, it connects to the power
grid via a substation owned by the nearby Nikopol Ferroalloy Plant (NZF), a
metals production facility owned by wealthy Ukrainian oligarch Igor
Kolomoyskyi.
In December 2019, according to TIU, the Canadian company
received a letter from the NZF factory manager announcing that the energy link
would be disconnected for repairs. However, nothing needed repairing, TIU said.
Ever since, TIU’s power plant has remained inexplicably cut off from the grid
and unable to sell its electricity, the company said, estimating its financial
damages as of the end of February 2021 at approximately $2.3 million.
According to sources familiar with the case, TIU believes
the disconnection of its power plant is the result of the company being
targeted by Kolomoyskyi, who has since offered to purchase the plant at a
steeply discounted rate. These same sources say TIU is not the first Western
company to run up against internal corruption while trying to do business in
Ukraine, but its case is an example of the deterioration of the investment
climate in the country and is likely being watched closely by other companies.
“TIU Canada was one
of the first North American private investors in green energy in Ukraine,”
Morgan Williams, president of the U.S.-Ukraine Business Council is quoted as
saying in a release. “The present court case is a real test of whether or not a
major international investor can obtain a fair trial within the current
judicial system in Ukraine.”
In an emailed statement, Yurkovich said his company will
continue to fight to be reconnected to the national grid immediately, and for
compensation for more than a year’s worth of lost revenue. He said TIU invested
in Ukraine believing that it was an important European market in the process of
opening up to the world.
“Instead, we are seeing a small group of Russian-backed
oligarchs attempting to drain the country of its wealth, sapping Ukraine’s
economic potential for their personal gain,” Yurkovich said. “The Ukrainian
people are tired of this, and so are those of us in the business community who
invested in the country’s future in good faith, only to be met with arbitrary
actions and corrupt institutions.”
Yurkovich said TIU is also calling on the Canadian
government to use “all the policy instruments at its disposal” to help the
company achieve a positive resolution.
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