Lviv has launched the procedure to terminate its contract with Polish company Control Process S.A. for the construction of a mechanical-biological municipal solid waste processing complex. Green City, the municipal utility company, has already sent the contractor an official notice, and the contract is set to cease on April 6, 2026. City officials say the decision was made due to the contractor’s prolonged and documented failure to fulfill its obligations.
This is not merely a local construction dispute, but a disruption in one of Lviv’s key environmental infrastructure projects, which was financed with the participation of international financial institutions. Back in 2018, the EBRD structured a financing package of up to €35 million for Lviv’s waste management programme: a €20 million EBRD loan, up to €10 million in E5P grant funding, and €5 million in concessional financing from the CTF. The project envisaged not only the remediation of the Hrybovychi landfill, but also the construction of a mechanical-biological treatment plant that was intended to become one of the first such facilities in Ukraine as part of the country’s convergence with EU standards.
Poland’s Control Process signed the construction contract in May 2021. According to the city, the company has already received €29 million, but the facility was not commissioned within the agreed timeframe. In February 2026, Lviv stated that the plant should have been completed and launched by October 4, 2025, but at that point the main building remained unfinished, part of the networks and works had not been completed, and the working documentation had not been handed over in full.
City officials claim that throughout 2025 the contractor repeatedly received formal remarks from the contract engineer, but failed to remedy the violations. Among the city’s claims are incomplete preparation of the design documentation, refusal to hand it over to the client, failure to supply part of the equipment financed by the E5P Fund, refusal to carry out certain works stipulated by the contract, and blocking another contractor from accessing the site to connect the external power supply. Separately, Lviv authorities state that Control Process attempted to obstruct the receipt of the bank guarantee, which also became grounds for contract termination.
The financial dimension of the conflict has already gone beyond formal claims correspondence. On March 5, 2026, Poland’s ING Bank Śląski paid Green City €3.664 million under the contractor’s bank guarantee due to breach of contract. This means that the dispute has effectively moved into a phase of firm protection by the client of its financial interests, and the case is becoming indicative for the entire market of municipal infrastructure projects in Ukraine.
At the same time, the conflict also has a criminal-law dimension. In the autumn of 2025, it became known that Lviv police had opened criminal proceedings regarding possible abuses during the construction of the plant. According to media reports, the investigation is examining a possible misappropriation of budget funds, including through the invoicing of certain materials while cheaper substitutes were allegedly used in practice, as well as the non-performance of part of the works envisaged by the project.
Control Process publicly denied some of the allegations and explained delays, among other things, by air raid alerts. However, Lviv responded that, according to official emergency service data, the total duration of alerts during working hours over the relevant period amounted to only around two days. In January, the contractor also claimed that around 90% of the works had been completed, but the city authorities insisted that the actual launch of the complex was still far from being achieved.
For investors and international donors, this case is important for three reasons. First, it demonstrates that even projects involving the EBRD and donor funds are not immune to disruptions of EPC and construction contracts. Second, completion of the plant will now likely require a new contractor, additional time, and possibly a budget adjustment. Third, the situation increases the importance of bank guarantees, technical supervision, and contract control in Ukrainian municipal green infrastructure projects. This follows directly from the already confirmed facts of contract termination, guarantee enforcement, and unfinished works within the framework of an internationally financed project.
At the same time, investment in Lviv’s waste management system is not being rolled back. Separately from the conflict around the plant, the EIB provided a second tranche of €4.7 million in January 2025 for the remediation of the Hrybovychi landfill, indicating that international financial institutions continue to support the city’s environmental modernization. However, in order to move the plant project forward, Lviv will have to rebuild the implementation model and restore confidence in execution.
