Donetsk Transit

There is another original strategy used by Chinese companies to promote their interests in Ukraine that is worth mentioning. They often partner up with local heavyweights who can guarantee profitable political and economic decisions, especially in such crucial areas as agricultural and energy production.

The best example is the collaboration between DTEK*, a company owned by Ukraine’s richest man, Donetsk businessman Rinat Akhmetov**, and Chinese state-owned China Machinery Engineering Corporation (CMEC), which contracted the construction of the Nikopol Solar Power Plant (SPP) in 2018.

The Nikopol SPP was fully operational by January 2019. It is capable of producing up to 290 million kWh/yr. It is the largest SPP in Ukraine and is one of the three largest in Europe. According to the Chinese state news agency Xinhua, the total cost of the project is EURO 216 million. The source of funding is DTEK and a state bank loan from China.

The site was finished in less than a year. It occupies 400 hectares near the village of Starozavodsk, Nikopol district, Dnipropetrovsk region. The capacity of the station is sufficient to provide electricity to approximately two medium-sized Ukrainian cities – for example, the neighboring industrial centers of Nikopol and Marhanets.

Ukraine’s Nikopol Solar Power Plant, the largest in Europe. Source: ukrinform.net

Nearly 750,000 solar panels with a total capacity of 200 MW for the Ukrainian project were supplied by Chinese companies Trina Solar Limited and Seraphim Solar. The plant will also use 80 inverter stations with 160 PV inverters manufactured by the China-based Shenzhen Kstar Science and Technology.

DTEK’s website the company’s CEO Maksym Timchenko saying, “China is the global leader in energy investments. Our Chinese colleagues, CMEC, have constructed 4.3 GW of capacities, including 600 MW of solar capacities. We highly appreciate this partnership. It is capable of becoming a powerful catalyst for the development of the Ukrainian energy sector”.

In a surprising coincidence, on the eve of the implementation of this large-scale project the Ukrainian Parliament exempted VAT from imported equipment necessary for the construction of solar and wind power plants until 2022. The move was initiated by Narodny Front (The Popular Front), a faction friendly to Akhmetov. Leading market experts were quick to note that the multi-billionaire’s “green business”, which he began to actively develop in recent years, would be the main beneficiary of these amendments.
The new parliament, where factions associated with DTEK’s owner do not hold a majority, abolished tax breaks for SPP equipment using bill # 1210. The decision was supported by the Verkhovna Rada Committee on Tax and Financial Policy, explaining this timely move by the need to protect Ukrainian producers. According to MP Andriy Herus, previous tax breaks have had a negative impact on the Ukrainian budget, which lost nearly UAH 10 billion (EUR 380 million).

The so-called “green” tariff in Ukraine is one of the highest in Europe. A long-term partnership with DTEK guarantees Chinese state companies a leading role on the Ukrainian energy market.

DTEK, Ukraine’s energy giant. Source: dtek.com

DTEK is currently implementing another 323 MW SPP project in the Dnipropetrovsk region using modules from the Chinese company Risen. Its expansion into the alternative energy market will only add to DTEK’s actual monopoly on the heat energy generating market. It owns 9 of 15 Ukrainian thermal power plants, as well as 17 mines and coal-mining complexes.

*DTEK was established in 2005 to manage the energy assets of System Capital Management, a company owned by Rinat Akhmetov (SCM, Donetsk). It serves for the strategic management of the Group’s enterprises, which make up a vertically integrated chain of coal production and enrichment, production and sale of electricity.

 

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