A Canadian company has dismantled one of its multimillion-dollar solar investments in Ukraine following a dispute with a powerful tycoon believed to be close to the presidential administration in a case that has underscored the former Soviet state's troubled investment climate.
TIU Canada completed the removal of its 10.5 megawatt power plant in Nikopol, a city about 500 kilometers southeast of the capital, Kyiv, in mid-November after failing to be reconnected to the electricity grid, company spokesman Brian Mefford told RFE/RL on December 28. The plant contained more than 32,000 solar panels
TIU Canada commissioned the $12 million plant on the territory of the Nikopol FerroAlloy Plant in January 2018 amid much fanfare, with representatives from the local government, foreign embassies, and business community in attendance.
TIU's solar plant symbolized foreign investors' interest in the country's burgeoning alternative-energy industry. Ukrainian President Volodymyr Zelenskiy even highlighted TIU's investment in a pitch to Canadian investors during a visit to Toronto in July 2019.
However, on March 1, 2020, the Nikopol FerroAlloy Plant disconnected TIU Canada from the electricity grid on the pretext of needing to make repairs to the power substation on its territory, the solar company said.
Almost two years later, the solar power plant remained idle, costing TIU Canada millions of dollars in lost revenue.
The decision to dismantle the plant follows an unsuccessful, two-year legal, media, and lobbying campaign against Nikopol FerroAlloy Plant and its main owner, Ihor Kolomoyskiy.
TIU hired Washington-based Blue Star Strategies late last year to lobby on its behalf before the U.S. government on "sustainable energy investments in Ukraine."
TIU has accused Kolomoyskiy of cutting the company off from the grid in an attempt to purchase it at a knockdown price. Such ruthless business practices were common in the 1990s and early 2000s in many former Soviet states but have since subsided.
Nikopol FerroAlloy Plant, meanwhile, accused TIU Canada of blackmail and preventing it from carrying out urgent repairs.
However, Yurkovich told Voice of America he didn't see anyone doing repairs. Instead, Nikopol FerroAlloy Plant had sent offers to buy the solar power plant at rock-bottom prices, he said.
Ukrainian business ombudsman Marchin Svenchintskiy told Voice of America that even if Nikopol FerroAlloy Plant had to urgently carry out repairs, the work "couldn't last that long."
Ukrainian law requires power stations to give their permission to be disconnected, making Nikopol FerroAlloy Plant's actions illegal, TIU has argued.
However, the company has failed to win over a court system that is widely considered highly corrupt and its Nikopol project has become the latest poster child for the dangers of doing business in Ukraine.
Two court cases have failed to deliver any results for TIU. Several judges recused themselves from hearing the case, something that Yurkovich has attributed to their fear of crossing Kolomoyskiy.
"There are not many judges willing to take on the oligarchs, particularly Kolomoyskiy, and adhere to the rule of law," Mefford said.
CEO Yurkovich "saw no solution to that situation" and decided to dismantle the project, Mefford said. TIU is storing the recoverable assets -- at least temporarily -- in Ukraine, he said.
TIU Canada has two other solar plants in Ukraine. Mefford declined to comment on the company's future plans.
Ukraine has struggled to attract significant foreign investment since achieving independence from the Soviet Union 30 years ago due to its weak rule of law.
Ukraine's economy is dominated by a handful of tycoons like Kolomoyskiy, who exercise outsized influence over the government and courts.
Nowhere is that dominance more evident than in the country's energy and metals industries.
Banned By United States
Kolomoyskiy, a billionaire who made his wealth in the 1990s scooping up former state assets, is known for his aggressive business practices, which have included sending armed men to take over companies.
The State Department in March officially banned him and his immediate family from entry into the United States due to accusations of corruption that he denies.
Political analysts and members of civil society have expressed concern over Kolomoyskiy's ties to Zelenskiy.
The tycoon's media assets backed Zelenskiy's presidential campaign and are credited with helping the former comic and political novice win the April 2019 election in a landslide.
A month later, Kolomoyskiy returned to Ukraine following several years of self-imposed exile over fear of prosecution for bank fraud.
Zelenskiy promised during his campaign to take on the tycoons and improve Ukraine's investment climate.
While he has passed a law to reduce their influence and gone after several of the wealthiest individuals, he has largely left Kolomoyskiy alone, analysts say.
Yurkovich told Voice of America he removed the solar panels, a costly process, so that Kolomoyskiy would not get them for free.
Neither Nikopol FerroAlloy Plant nor the president's office responded to Voice of America's request for comment on the situation.