Odessa Region Town Boasts Mystery Investor

An anonymous Czech company is ready to invest approximately $1.2 to $2.4 billion in the construction of a thermal power plant in Odessa region, according to the investor's intermediary in Ukraine.

If the investment goes through, it would be one of independent Ukraine's largest single sources of direct foreign investment.

But the deal will continue to remain under a veil of mystery until the foreign investor's identity is revealed.

"We will not disclose the name of the investor until all the documents are signed,"said Petr Nemecek, a lawyer for D.S. Service s. r. o., a company that represents the investor's interests in Ukraine. Nemecek, a Czech citizen, spoke to the Post through a translator on June 5.

D.S. Service s. r .o. is registered on the official website of the Czech Republic's Ministry of Justice, but the company itself does not have its own website. Nemecek said that the firm primarily "assists Czech companies in finding investment projects in Ukraine, in facilitating negotiations and preparing the paper work that leads to a contract." He added that his company has mostly dealt with environmental projects concerning alternative energy sources.

"What I can say at the moment is that Vitkovice Holding, one of the largest producers of heavy machinery in Central Europe, will be the general contractor of the project," said Nemecek.

The power station is planned to be built in the city of Teplodar in Odessa Region, where the construction of a nuclear power plant was started 25 years ago and later suspended after the Chornobyl nuclear accident in 1986, said Nemecek.

According to Nemecek, at the beginning of this year a joint venture was established by D.S. service s. r. o. and the city of Teplodar, which currently owns the uncompleted plant facilities. The project is earmarked for completion in 2011, he added.

"The preliminary agreement stipulates that 50 percent of the energy generated [by the thermal power plant] will be consumed in Odessa region, while the other half will be exported to the European Union," said Nemecek. According to him, the investor is interested in exporting energy to Europe primarily because it would ensure a faster return on the money put into the project, but that the investor also did not rule out the possibility that these figures could change as Ukrainian energy prices come more in line with much higher European rates.

Teplodar Mayor Leonid Pechersky told the Post that the city had been looking for investors to build a power station at the city's unfinished site for a long time, but that until recently the search had been unsuccessful.

"The whole city was founded to serve as a home to thousands of specialists that would work for the future nuclear plant, but it was never completed," said Pechersky. "As a result, we have continuously been searching for opportunities to build a power station in the town," he added.

According to Pechersky, D.S. service s. r. o. has already paid out about Hr 400,000 (some $80,000) as one of the conditions for creating the joint venture, where the share of the Czech investor is 85 percent.

Although major Ukrainian news agencies and business weeklies published the news about Czech investors coming to Teplodar last week, government officials said they have no official information about the project.

Both Vaclav Rambousek, the commercial attach? at the Czech Embassy in Kyiv, and a spokeswoman for the Ministry of Energy of Ukraine said they could not comment without confirmed information about the project. The post was also unable to confirm the participation of Vitkovice Holding in the project.

Nemecek of D.S service s. r. o said he suspected that the information was leaked to the media by the mayor of Teplodar himself, who wanted to draw attention to the city, which celebrated the 25th anniversary of its founding last month. Nemecek did, however, confirm the project's approximately $1.2 to $2.4 billion price tag, which Ukrainian media had apparently quoted from an untraceable source.

Yulianna Vilkos, Kyiv Post Staff Writer
Jun 08 2006