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China continues to penetrate the otherwise impenetrable – Ukraine

November 22, 2016

In April 2016 the blog noted a(nother) significant investment by China in Odessa – and by extension Ukraine – “It has now become public knowledge that the Chinese company CNBM International (part of CNGC) has acquired eight solar panel plants (previously owned by Activ Solar behind which were the Kluyev brothers, both now wanted in Ukraine having done rather too well within the Yanukovych regime for all their business dealings to be entirely above board).

The two “Franko” solar farms in Starokozache , both “Danube” solar farms in Artsyz, the pair of “Lakeside” solar farms in Kilivy, and twin “Limanskaya” farms in Renne have certainly been acquired by CNBM.

It is quite likely that the remaining Activ Solar farms in Bolgrad have the same CNBM owners too, although as yet that cannot be confirmed.  Also unconfirmed, but of reasonable likelihood given the source, is a further solar farm being built by CNBM.  CNBM is after all, a renewable energy superpower across Asia and a global heavyweight in wind farm blades – not withstanding thin film solar cells.

(It will surely not be long, if it hasn’t quietly happened already, that parent company CNGC expands its own interests into Ukraine – cement and drywall production and raw material trading on truly global scales.)

Regardless, China via CNBM has just acquired in Odessa one of the top 50 solar power plants in the world, and seemingly intends to expand its solar energy production in Odessa even further.

(With regard to these solar power plants/farms in Odessa, more than 70% of the parts are actually manufactured in China by part of the CNGC industrial empire – thus no surprise that its subsidiary CNBM have now acquired the Activ Solar assets.  Indeed the Kluyev brothers Activ Solar loans were underwritten by these Chinese produced assets.)”

The entry concluding thus – “A reader may perhaps wonder, with Ukraine no longer the most receptive of markets for the Russian Federation – and therefore opportunities aplenty exist where they once did not – why it is China that is prepared to walk the business investment walk, whilst it is the Europeans with the DCFTA and reform financing leverage over Ukraine, that are still engaged in business talk.”

To be blunt the size of the aforementioned Chinese investments whilst certainly not small, are only part of more than $10 billion invested in Ukrainian clearly identifiable infrastructure sectors in recent years.  There will be no reader that is not aware that China invests where China feels it will benefit – whether or not that is also beneficial to the location/nation/business market it decides to invest in.

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The reason this Chinese investment was worthy of note (far in excess of the notice actually taken) was that it penetrated the otherwise impenetrable – the Ukrainian energy sector with energy generating assets located in Ukraine.

It appears that China has not been put off by the experience either – in fact it is going to expand its presence in the Ukrainian energy market further – yet again in solar energy.

Another $1 billion investment will begin to physically manifest by way of solar power plants in the 10 kilometer exclusion zone around Chernobyl.  Those solar power plants expected to generate 1 GWh per annum.

The investors this time being,  GCL System Integration Technology (part of the GCL Group) and the China National Complete Engineering Corp.

Well so be it.  With the Russian Federation far from welcome in the Ukrainian energy market and no noticeable committed long-term western entry thus far, China may as well capture the solar generation market – move over Rinat Akhmetov’s DTEK.

It would appear that the early bird once again catches the worm.  (There is certainly not much concern over it usually being the second mouse that gets the cheese – for China is selfish, it is far too big, and far too influential than any Ukrainian mouse trap that would kill the first mouse.)

It would be somewhat ironic that as Ukraine legislatively progresses toward meeting its EU 3rd Energy Package obligations if only China manages to penetrate the Ukrainian energy production market.

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