KYIV, Ukraine, Feb. 18, 2021 /PRNewswire/ – Solar energy producer TIU Canada announced their plans to appeal a lower court decision in their case against the Nikopol Ferroalloy Plant (NFZ) for illegal disconnection today. This move follows a January 26 decision by the Kyiv Commercial Court to reject the claims of an illegal disconnection despite overwhelming evidence presented by TIU Canada’s legal team. TIU Canada President Michael Yurkovich stated «Ukrainians and foreign investors alike are tired of oligarchy and injustice. Ukraine is on the wrong track. The Euro-Atlantic aspirations of the Ukrainian people will never bear fruit unless the administration takes to heart real judicial reform and complete de-oligarization of the economy and government. Efforts to date are piecemeal and futile against entrenched interests which regularly degrade the effectiveness of Ukraine’s institutions – whether judicial or bureaucratic. We will continue to challenge these unfair outcomes and thank our international and Canadian interlocutors for their support.»
A number of respected business associations and former diplomats commented on the case. Roman Washcuk who served as Canada’s Ambassador to Ukraine (2014-2019) said, «As the diplomat who cut the ribbon at the opening of this facility, it is extremely disappointing to see the power plant cut off from the grid, in a further deterioration of the investment climate. It is also in stark contrast to the promises made by Ukraine’s President to investors during the Ukraine Reform Conference held in Toronto in 2019. It is clear Ukraine cannot succeed without rule of law ensuring a level playing-field for foreign investors, including protection against oligarchic abuse.«
Sviatoslav Kavetskyi, Executive Director of the Canada-Ukraine Chamber of Commerce (CUCC) stated, «Attracting high quality investment to Ukraine cannot occur without adequate investor rights, judicial reform, and a level playing field. TIU Canada is one of the larger Canadian investors in Ukraine. It’s experience thus far, despite assurances at the highest levels, hinders investor confidence. We are deeply concerned and watching this case carefully.»
Meanwhile Morgan Williams, President of the US – Ukraine Business Council (USUBC) added, «TIU Canada was one of the first North American private investors in green energy in Ukraine. 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. As everyone has known for a long time, Ukraine faces two main threats: Russia and internal corruption. TIU Canada invested heavily in Ukraine to build solar energy plants and help the country reduce its energy dependence on the aggressor state, Russia. Ironically now, after helping Ukraine to overcome one problem, TIU Canada is an unfortunate victim of Ukraine’s internal problem of corruption and the lack of political will on the part of the Government of Ukraine to take major steps to significantly reduce the massive levels of corruption instigated by a large number of powerful, well-financed, politically and legally connected, monopolistic corporations. The U.S.- Ukraine Business Council, calls on the Ukrainian government, the international community, and Ukraine’s judicial system to ensure a fair trial in this case involving TIU Canada and Nikopol Ferroalloy Plant. International investment flows into countries where businesses can operate under the rule of law, and USUBC knows many international investors are watching this legal case very closely.»
The 10.5 MW solar station was disconnected from the electricity grid by NFZ on March 2, 2020, despite the fact that Ukrainian law prevents electricity producers from being disconnected from the energy grid without obtaining the range of all the necessary permissions. TIU Canada is seeking an immediate reconnection to the electricity grid and plans to hold the NFZ and its shareholders fully accountable under the law. The main shareholders of the Nikopol Ferroalloy Plant are Igor Kolomoyskyi, Gennadiy Bogolyubov, and Viktor Pinchuk.
The Nikopol solar station owned by TIU Canada is on land leased long term from the city of Nikopol. The solar plant connects to a substation on the grounds of the NFZ. On December 23, 2019, TIU Canada received a letter from the General Director of the NFZ, that they would be disconnecting the TIU Canada connection to grids via the substation on the grounds of the NFZ in order to make ‘repairs.’ The NFZ stated that they would begin the repairs after February 29, 2020, and TIU Canada immediately contacted the NFZ to seek solutions to avoid any disconnection. However, despite multiple discussions, the NFZ management and shareholders proceeded with disconnecting TIU Canada from the substation on the morning of March 2, 2020. This illegal disconnection has caused more than 1.5 million Euros of damage to TIU Canada already and increases daily.
The case is viewed as a test of the Zelensky’s administration’s commitment to protecting foreign investors. It should be noted that on July 3, 2019, while speaking to the Economic Club of Canada, Ukrainian President Volodymyr Zelensky praised the work of TIU Canada at the Toronto Ukraine Reforms Conference. He said, «We think about the future, that is why green energy will be one of the key sectors of our economy during the upcoming years. I know that we have here Canadian company TIU that already successfully works in this area. We are grateful to them for this – please, follow their example».
Unfortunately, this court ruling is just the latest in a series of setbacks for foreign investors in Ukraine. Last year Ukraine received only $200 million in foreign direct investment due to the lack of rule of law, widespread corruption, and the Covid pandemic. The corruption situation was exacerbated last year due to a kangaroo court ruling by Ukraine’s Constitutional Court which cancelled the disclosure requirements for public officials.
TIU Canada is owned by the Calgary based Refraction Asset Management, has been working in Ukraine since 2016, and is a leading solar energy producer. The company commissioned a 10 ½ megawatt solar energy plant in Nikopol, Ukraine, in January 2018, and an 11-megawatt solar station in the Mykolayiv region in April 2019. An additional 33 megawatts of solar electricity production have been commissioned in the Odesa region, for a total of 56.4 megawatts nationwide. TIU Canada has invested more than $65 million in Ukrainian solar energy over the last four years and was the first investor in Ukraine under the Canadian Ukrainian Free Trade Agreement (CUFTA).
TIU Canada directly and through its subcontractors employs more than 30 people in Ukraine whose jobs are now threatened by this illegal disconnection.
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SOURCE TIU Canada
