UKRAINIAN RENEWABLE ENERGY MARKET

ENERGY INVESTMENT: Canadian company bets big on future of Ukrainian renewables

TIU Canada unveiled Nikopol solar plant in early 2018 amid plans further investments in Ukraine’s renewable energy sector

ENERGY INVESTMENT: Canadian company bets big on future of Ukrainian renewables
The TIU Canada solar plant in southern Ukrainian city Nikopol began operations in January 2018 and is one of the largest international investments to date in the Ukrainian renewables industry
Business Ukraine magazine
Thursday, 05 July 2018 13:24

TIU Canada is one of the first Canadian companies to have taken advantage of the opportunities presented by the recently inked Canada-Ukraine Free Trade Agreement (CUFTA). The Canadian company’s first Ukrainian solar energy plant, which is located in southern Ukrainian city Nikopol, began construction in summer 2017 and started operations in January 2018.

TIU Canada has already invested in the region of EUR 11 million in Ukraine and intends to break ground on their next phase of solar projects in Ukraine this summer, in addition to the existing 11mw power plant in Nikopol. Officials say plans may evolve further dependent on Ukraine’s market conditions and the political outlook in the country.

Business Ukraine magazine spoke to TIU Canada CEO Michael Yurkovich and TIU Canada COO Hani Tabsh about the company’s further plans for the renewables sector in Ukraine and discussed the added investor appeal created by CUFTA.

 

The first TIU Canada solar plant began operations in January 2018 in the southern Ukrainian city of Nikopol. Has performance so far lived up to your expectations?

Yes, we are happy and are ahead of expectations.

 

What are your plans for further investments in the Ukrainian renewables sector?

We will invest what we promised in 2018 and will then revisit the market in the first half of 2019. We may do a few more projects before the renewable tariffs are reduced and the sector is shut down for investment.

 

TIU Canada is a pioneer among a growing number of international investors moving into the Ukrainian solar energy sector. What makes the Ukrainian renewables market an attractive investment option?

There are a number of factors converging to make the sector appealing for international investment. These include solar conditions in Ukraine, the sophistication and skill of Ukrainian engineering companies, access to international logistics hubs, and the power supply deficit in the wholesale energy market that Ukraine must address in order to attract manufacturing and technology jobs.

 

What role did the advent of the Canada-Ukraine free trade agreement play in your thinking when you first opted to enter the Ukrainian market, and how important a factor will it be going forward?

Canada actually had a free trade agreement with Ukraine in place since 1993, however this only covered grains and cereals. The CUFTA (2016) expanded the areas of interest and cooperation so that institutional investors could look at the rest of the Ukraine economy on an “apples to apples” basis with other global investment opportunities. The signing of the CUFTA subsequently led to Israel, Dubai, Croatia, China and Japan starting or accelerating their own free trade dialogues with Ukraine, so we are pleased with how CUFTA has put Ukraine on the radar screen for both governments and institutional investors. We have seen a significant increase in institutional interest in Ukraine since CUFTA, by a clear double in terms of new names and research inquirers into the country’s economy and new venture companies, particularly by venture capital and pension funds. For Ukraine’s currency and inflation to stabilize, foreign investment is essential. It is the key to making the country great. 

 

Your investment in Nikopol is one of the largest FDI projects in the region. What do you see as the key impacts for the local community?

The impacts on Nikopol are numerous. These include generating tax revenues that can help support civic redevelopment and infrastructure improvements. Our investment provides a case study and reference for subsequent joint ventures and foreign direct investment. TIU Canada’s presence also creates seasonal jobs during construction and permanent positions post-construction including in the fields of electrical engineering and civil engineering, which can act as gateway jobs for highly paid labor, increasing the average wage in Nikopol and improving the wealth of the community.

 

Based on your experience of working with regional Ukrainian authorities on a major investment project, what tips would you share with Canadians who may also be considering investments in Ukraine?

Make sure you understand the local community needs and address their concerns about your project early and clearly. We were blessed to have good bench strength in this area, with a strong government relations team and experienced advisers who worked for 40 years on oil issues with “First Nations” in Alberta. Applying First Nations case studies to Ukraine is a very important lesson, as Ukraine has a right to play a role in community development. Due diligence is also key. Any potential investor must be certain all contracts and land titles can be proven. Do not skimp on legal support and be sure counterparts are comfortable moving law to English courts. Be sure you have your money and check that the banks you work with are sound. Liquidity and hard currency are important factors in your business strategy.

Local talent can play a vital role. Be sure you can verify all certificates and local contractor track records together with education qualifications. Ethics and accountability to investors are important, as Canadian foreign investors are held to Canadian standards. Do not compromise in order to get the deal done.

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