Foreign investor accuses Uzbek authorities of greed

The director of the Canadian company Skypower Global, Kenny Adler, says that some officials in the government are blocking the project of building a solar power plant in Uzbekistan.

Skypower Global is a Canadian company that has been building solar power plants for nearly 30 years. The main contributors are Americans.

In 2018, President Shavkat Mirziyoyev invited the company to build a solar power plant in Uzbekistan at a UN meeting. In the same year, the presidential decision on the construction of solar photoelectric power stations in Tashkent, Samarkand, Navoi, Jizzakh, Surkhandarya and Kashkadarya regions was also adopted.

According to the contract between the company and the government, it was agreed that Skypower will sell 1 KW of solar energy at 6 cents, but the Uzbek side later tried to lower the price.

Kenny Adler, director of the company, told the BBC Uzbek service that the company expressed its willingness to lower the previously agreed price, but the Uzbek authorities did not allow it. The investor accuses the government representatives of greed.

According to Adler, so far the US State Department, the Canadian Ministry of Foreign Affairs, and Canadian and US ambassadors have reported Uzbekistan about the obstacles to Skypower at least 6 times.

“High-ranking government officials were captured on video”

- Skypower is currently doing everything it can to promote the project. I am sorry that Uzbekistan is suffering from energy shortage. 4-5 years ago, my family and I were left without electricity in the middle of winter. Therefore, it is not easy to sit in the cold and wonder if the weather will get cold again. Skypower is working hard to implement this project, but events beyond our control have occurred. The COVID pandemic and subsequent restrictions have caused delays in sea shipments and logistical problems. And due to the war in Ukraine, equipment delays continue. These are difficult to control, but there are things that can be controlled.

Some elements in the government have been obstructing our project and delaying it from the beginning. Despite the good intentions and humanity of the President, who said that all investors would be protected, the reality we faced was different. Some people in the government of Uzbekistan left us in an abstract situation.

High-ranking government officials were captured on video. He was recorded saying that the project would be delayed again if we did not change the contract terms. They are doing this conspiracy on purpose. Why are they not giving the people of Uzbekistan the needed energy?

- Why do you think they are doing this?

- As a North American investor, we are subject to strict standards. We are against corruption, everything we do is transparent. Some would get involved in the corrupt scheme there, but we don’t.

The President personally called me at the UN meeting and invited Skypower to Uzbekistan. “Arrive within 14 days,” he emphasized. He guaranteed not only the land for the project, but also the security.

- You alluded to corruption, were there any cases where Uzbek officials directly or indirectly asked for bribes?

- If there was such a direct demand, we would inform about it. From the beginning, we told the government that there would be no such demands. I repeatedly hear that the reason for our problems is that we did not obey the rules that were used in the past in Uzbekistan. I know that corruption is widespread in Uzbekistan, but we agreed from the beginning that we will not give even 1 dollar extra.

We have agreed on fair terms in the negotiations that lasted for 6 months. The prices for the electricity we supply have been approved by an independent economic commission as the average price in the world market, and the President has even issued a decree.

- You say possible corruption is one reason, what other reasons could there be? Have you been warned that your project is not only delayed, but shut down altogether?

- At first, I thought that the reason they didn’t like this project was its price. We were the first company to go there when they said that they would invest more than a billion dollars in Uzbekistan by producing 1000 MW of solar energy. The agreement was signed during official visits. The contract is sacred for business relations, but after our arrival, Uzbekistan began to announce tenders.

Tenders work differently. The company is guaranteed by the World Bank, which is much stronger than the guarantee we received from the government of Uzbekistan. In this case, some companies came and offered a lower price than ours. Maybe these prices are the cause of our problems.

After 2 years of being blocked, I said to the Deputy Minister of Investments and Foreign Trade: “You don’t agree with 6 cents, let’s go down to 3.75 cents and produce almost twice as much energy”. “We have to think about it,” he said, and disappeared. Imagine I say I supply 1000MW of energy that lights hundreds of thousands of homes and I drop the price.

If our project had not been hindered so much, at least 300-400 thousand households in Uzbekistan would have electricity. People would not sit in the cold with their children. I have 6 children of my own and I can’t imagine how hard it must be to tell them no electricity.

- In 2012, the Skypower company appealed to the court against the decision of the Canadian territory of Ontario and the Ministry of Energy. But the court rejected your application. At the time, the judge said: “It may seem unfair to change the game terms in its middle, but that’s the game software when you’re dealing with government programs”. You say the contract is sacrosanct for business, but isn’t it fair for governments to change contract terms in the public interest?

- Let me dwell on the work that took place in Ontario in 2012. At that time, the government also began to sell agricultural land to produce more solar energy. Skypower and hundreds of other companies have bought or leased farmland. As a result, agricultural land began to decrease. Then the government imposed restrictions on the use of agricultural land for solar energy. It was decided that “other land should be used, otherwise it will have a negative impact on the food industry”. Skypower occupied hundreds of 40 hectares of land. But I support that decision.

The case in Uzbekistan is completely different. This is about energy, not farmland. The government has signed a contract with the investor. It guaranteed investor protection. How many billions of foreign loans did Uzbekistan receive and how many real foreign investments did it attract? If the President cares about the welfare of the people and believes in foreign investment, I think he is in this position: he must abandon the evil forces that are hindering the work of government. We have faced obstacles since the day we signed the contract.

- You say that you trust Mirziyoyev, he must be aware of what is happening. Why doesn’t he intervene and help you?

- I am not sure that Mirziyoyev is aware. He has many things to do for the country. He relies on subordinates, and he has to believe them when he is provided false information.

If the contract is terminated illegally, we will file a complaint. Under British law, we are entitled to claim compensation worth over $1.4 billion. If there is an attempt to cancel the contract, we will discuss it in open court. It will not take 4-5 years, it will be fast. There are all the evidences – written documents, audio and video materials show that the people in his administration were greedy trying to lower the price.

Even when we lowered the price and offered more energy, things didn’t work. What are they waiting for – Mr. Kenny’s arrival with suitcases full of dollars? This will not happen. I’m sure they’re waiting for something.

Imagine that we start preparing the land for construction with our partner company. They told our partners: “If you work with Skypower, you will not be able to work in Uzbekistan again”.

In July, if we wrote a letter saying that there was a shortage of semiconductors due to COVID-19 and the war, and we receive the following response: “You should have known that there would be a shortage of semiconductors because of the war in Ukraine and COVID-19”. How can I predict the destruction of Mariupol, the producer of neon gas, which is important for chips? This is stupidity, isn’t it? Interestingly, other investors who said “I might be late because of the war” were given extra time, but we were not.

- As you know, the electricity networks in Uzbekistan are very old. The entire network and infrastructure needs reform. The government sells energy to residents at 2 cents, and to businesses at 4 cents. So, even if he buys from you at 3.75 cents, he is still at a loss by selling consumers at 2 cents. This is such a subsidy system. You’re stuck with this unreformed system and you’re trying to sell them expensive solar power, aren’t you?

- I do not completely agree with this opinion. Last week, Uzbekistan held a tender and signed a contract with the Chinese. One was settled at 4 cents higher, another at 3 cents, and another at 3 cents lower. I know how to work with heads of government, I have worked with many heads of state; the leaders of many developed countries are forced to subsidize their population due to high energy prices. The decision of the government to provide cheap electricity to the population does not mean that it should buy cheaper electricity.

As for Uzbekistan, it is selling the energy it provides to its population at a lower price in return for the income from the gas it sells abroad at a huge profit. Some countries subsidize energy even without such revenue. We agreed on the price at the market price, even if this price falls over time, the government cannot lower it. For example, the Spanish government told companies that built wind and solar power stations to lower the price, but the court rejected the government’s request. All companies maintained the agreed price, including Masdar, which operates in Uzbekistan.

We told Uzbekistan: “Okay, you have a shortage of electricity, although we agreed on the market price, we will lower the price and produce more energy”. And their answer was: “We’ll think about it and get back to you later”.

- What are the opportunities for the development of solar energy in Uzbekistan?

- All our research has shown great potential if it is managed properly. True, the sun does not shine in the morning and in the evening. You can calculate the number of sunny days per year based on your 100-year history. NASA publishes such data. We use it in all international projects. Gas is used on days when the sun is not shining.

Uzbekistan has the potential to obtain 30,000 MW of solar energy. In the last plan, they are aiming for 7-8 thousand. If it is managed properly, 3-4 times more energy can be obtained from it.

No family in Uzbekistan should be without electricity. In his address to the Oliy Majlis, the President said that all licenses will be reviewed and ineffective ones will be canceled. Before you cancel the contract, study the real situation, don’t just listen to your ministers. Listen to the companies because you are not being told the whole truth.

We were told that our contract will be terminated on December 23. Technical specifications for construction were issued in October 2022 after years of negotiations. They gave us an important document about how to connect to the network 2 months ago.

President Mirziyoyev should understand: I am on his side, if there was another company, he would have already left and would have been sitting in court in Paris. We can get $1.4 billion as compensation, assuming 10% of lost revenue. What a shame this will be for Uzbekistan. It will both run out of energy and pay a high price. Because some officials do not support the presidential policy.

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Kun.uz tried to get comments from the Ministry of Energy and the Ministry of Investments, Industry and Trade regarding the investor’s allegations, but it was not possible.

According to Kun.uz source in the government, the leadership of the Ministry of Energy has instructed not to make any comments to the mass media regarding the Skypower issue.

For information, this is not the first time that the director of Skypower has expressed dissatisfaction with the government. He talked about obstacles to his project in 2020 as well. They said that the contract with him will be canceled by December 23, 2022.