Ukraine Business News, Tuesday, February 26





  • DTEK Advances To Goal of €1 billion Solar, Wind Investments in 2019
  • Glencore Position Itself for Dnipropetrovsk Iron Investment
  • US Backs Poland as Regional Hub for US LNG Gas Exports
  • More Worries about Kolomoiskyi and PrivatBank
  • Florida Investors Bet on Ukraine Sugar Revival
  • Corn Harvest Jumps 50% in 2018
  • India’s Cooks Save Ukraine’s Sunflower Oil Industry
  • ZAZ to Make South Korean Tractors?
  • Mariupol Gets New Mass Transit Fleet
  • Zaporizhia Opens $10 million Air Terminal in Summer
  • IT Industry Hiring 4,000 Software Engineers
  • Kernel Buys Nation’s Largest Private Grain Car Fleet
  • Southern Ukraine Farmers Start Planting
  • Ukrposhta International Parcel Business up 45%
  • Wizz Air Doubled Ukraine Passengers in 2018
  • Dragon Buys Another Warehouse As Vacancies Hit ‘Zero’
  • Kyiv Region To Gain a Cargo Airport: Bila Tserkva
  • Online Ads up 40%
  • airBaltic Doubles Kyiv-Riga Seats in Bid for Moscow Traffic
  • DTEK Opens Europe’s Second Largest Solar Plant in Nikopol
  • Ukraine’s First Solar Panel Plant Opens in Vinnytsia
  • EU’s Donald Tusk in Ukraine Through Wednesday
  • UZ to Spend $1 billion in 2019
  • Goods Deficit Grows, Services Surplus Grows
  • Ukrainians Using Facebook up 30% in 2018

DTEK Renewables is starting work on a €200, 240MW solar polar plant near Nikopol, only a few kilometers from a site where the company inaugurated a 200 MW solar station last month. Construction this summer is to create 1,000 jobs.

The new solar station is part of a plan by Rinat Akhmetov’s DTEK to invest €1 billion in renewables in Ukraine by the end of this year. Already Ukraine’s largest wind power producer, DTEK is building an additional 300 MW of wind power generating capacity at two sites on the coast of the Sea of Azov. To get Ukraine’s high feed in tariffs, renewable projects have to be commissioned by Dec. 31.

Philipp Leckebusch, DTEK Renewables new CEO, signed a contract with Siemens to build the new solar plant on the site of a former manganese mine, in Pokrov, Dnipropetrovsk. Leckebusch flew to China, to sign a contract with Risen Energy Co. for supply of 874,000 solar modules, or panels. Hailing the deal, Zhao Zelin, Risen’s vice president for sales, said: “Risen Energy plans to continuously drive the transformation of the Ukrainian energy market.” Leckebusch, a German, said the new plant, called Pokrovskaya, will produce enough power for 200,000 households.

Canada’s Black Iron Inc has signed a memorandum of understanding with Glencore, the Anglo-Swiss mining giant, to finance and develop Shymanivske iron ore deposite in Dnipropetrovsk. One of the world’s largest iron deposits, Shymanivske has an estimated 833 million tons of reserves, with ore grading at 32% iron. The nonbinding memorandum contemplates Glencore funding all or part of construction in return for iron. A first phase envisages $436 million investment to produce 4 million tons of iron a year. Black Iron’s CEO Matt Simpson says: “I am pleased to welcome Glencore as an external investor for the construction of the Shimanivske project, as well as their agreement to work with us to provide additional funding.”

After Wednesday’s announcement, the Canadian junior’s shares jumped on the Toronto Stock Exchange by over 35%, prompting news site to headline: “Black Iron’s shares skyrocket after inking MOU with Glencore on Ukraine iron ore project.” In Kyiv, Concorde Capital’s Dmytro Khoroshun writes: “If the Shymanivske project is realized, even after many years of uncertainties, it would be positive for Ukraine’s investment image, especially if one of the equity partners is Glencore. Nevertheless, we are cautious because one of the main reasons for the long uncertainty with Shymanivske was the situation on the iron ore market, and the iron ore price volatility is unlikely to go away.”

Washington sees Poland as a future hub for re-export of American liquefied natural gas to Ukraine and Eastern Europe, Georgette Mosbacher, US Ambassador to Poland, told a conference in Warsaw on LNG and the countries of the EU’s Eastern Partnership. She said next year the US will export 120 billion cubic meters a year, about 30% of world LNG. Poland is expanding its three-year-old LNG terminal at Świnoujście, on the German-Polish border. In four years, Poland plans to stop importing gas from Russia. Referring to Poland’s plan to “become a regional gas hub,” Mosbacher said: “I support this fantastic initiative of Poland and Ukraine.”

Ukraine’s food exports to the United Arab Emirates hit almost $200 million last year, Olha Trofimtseva, Acting Agrarian Policy and Food Minister, said in Dubai at the Gulfood exhibition. The number of Ukrainian companies participating in the fair more than doubled this year, to 69, she tells Ukrinform. Ukraine largely exports sunflower oil, milk, honey, and eggs to the UAE. With a population of 9.5 million people and a per capita income of $42,000, the Emirates import almost all their food. After signing an agricultural cooperation deal, Trofimtseva said: “Ukraine intends to become a strategic partner of the UAE to ensure food security of this country.”

Next month, Ukraine will mount a pavilion for the first time at Asia’s leading food exhibition, FOODEX Japan, in Tokyo. The pavilion will display products of 13 manufacturers, reports Ukraine’s Agrarian Policy ministry.

In the last five years, the volume trade handled by Mariupol port dropped by almost two thirds, to 5.3 million tons. The number of countries receiving cargo from the Sea of Azov port dropped by more than half, to 24, reports the Center for Transportation Strategies. Metals accounted for 90% of last year’s exports, going to 21 nations. On the import side, the biggest shipper was the United States, sending coal, followed by Turkey. Because Russia built the Kerch Strait bridge too low, Port Director Oleksandr Oleinik says, Mariupol lost an annual contract to ship 1 million tons of pig iron to the US and to ship up to 500,000 tons to Southeast Asia.

EuroMoney Magazine speculates in a lengthy article about PrivatBank and Ukraine’s presidential elections that Ihor Kolomoiskyi’s post-election strategy might not be to retake control of the bank, but to have the government stop suing him to recover bank assets. “They couldn’t give Privat back to him,” author Lucy Fitzgeorge-Parker quotes ‘a senior banker’ saying. “There would be an international outcry. It would be tantamount to branding Ukraine as a rogue state.”

PrivatBank had to be nationalized in Dec. 2016, because it was insolvent, Kateryna Rozhkova, first deputy chairman of the National Bank of Ukraine, tells Novoe Vremya. “It was impossible to shut down, because then we would have crippled the entire financial system of the country,” she said. Since the government takeover, the central bank has won 22 lawsuits, stipulating the return of $43 million in mortgaged property. After the government intervention, a forensic audit by concluded that “PrivatBank was subjected to a large scale and coordinated fraud over at least a 10-year period ending December 2016, which resulted in the Bank suffering a loss of at least USD 5.5 billion.” The report stated that 95% of corporate lending had been to bank shareholders.

Betting that world sugar prices will rise, Florida-based Kopernik Global Investors LLC has bought 12,947 shares of Warsaw-listed Astarta Holding, raising its stake over 5%. Between February 2017 and August 2018, the price dropped in half. Since then, sugar prices recovered slightly, to 13 US cents a pound. Dragon Capital writes: “Kopernik’s latest share accumulation may reflect bottom-fishing demand in anticipation of a bounce in the sugar market. Astarta’s shares slid by 59% in USD terms in 2018, hitting the lowest level since 2015 on a drop in global and domestic sugar prices.”

Ukraine’s sugar beet plantings are to drop 20% this season, to 220,000 hectares, S&P Global Platts reports from London, citing “a source close to the National Association of Sugar Producers.” Sugar experts forecasts a similar drop in plantings in the EU and Russia. Platts notes that Germany’s Suedzucker, the world’s largest corporate sugar producer, said last month it is considering closing factories. In September, Tereos, France’s largest sugar producer, said it was planning to cut plantings to cut sugar beet production by 5%.

Ukraine’s corn harvest last year was up 50% y-o-y, to a record 35 million tons, reports the U.S. Department of Agriculture’s Foreign Agricultural Service. The Service reports that 5% of the corn may have been left to rot in the fields because silos were full. On Wednesday, the State Statistics Service reported that the nation’s capacity for simultaneous storage of grain, beans and oil seeds grew last year by 7.3%, to 78.3 million tons. Of this amount, farms owned 58%.

Sunflower cooking oil exports could rise this year by 16% to 6.2 million tons, the USDA predicts. This follows a 15% rise in seed production last year, to 14 million tons. India emerges as the savior of Ukraine’s industry, Fiscal Service statistics show. Last year, India bought 45% of Ukraine’s total exports. Exports to the next 11 countries dropped.

MHP, Ukraine’s largest agricultural producer, is obtaining a €120 million loan from ING Bank NV. According to Interfax-Ukraine, the loan is guaranteed by Zernoproduct MHP, the company’s grain unit with assets valued at €192 million. Based in Myronivka, 100 km south of Kyiv, Myronivsky Hliboprodukt is the nation’s largest chicken producer.

Capital investments in farming hit $2 billion during the first three quarters of last year, Elena Kovaleva, deputy minister of Agrarian Policy and Food, tells reporters. A major portion went into two declining areas of animal husbandry – cattle breeding and pig production. About $500 million was invested in dairy processing and baby food production. Kovaleva called this investment volume “amazing.”

Zaporizhia Automobile Plant, or ZAZ, has started assembling a test batch of South Korea’s LS Mtron tractors. LS, South Korea’s largest tractor maker, has factories in Brazil and China. “The creation of a joint venture with the manufacturer is not being discussed yet,” Dmytro Skliarenko, spokesman for UkrAVTO, the ZAZ parent company, cautioned Interfax-Ukraine. ZAZ has signed a distribution agreement with LS and has presented LS tractors at agro fairs here. Priced between $38,000-70,000, the LS models under study would go head to head with MTZ Belarus tractors, imports popular among Ukraine’s small and medium farmers.

Despite Russia’s harassment of merchant ships in the Azov, Asket-Shipping increased its grain silo storage capacity in Berdyansk last year by 42%, to 100,000 tons, reports the Center for Transportation Strategies. Victoria Abreyeva, director of the Berdyansk branch, says of the export-oriented investments: “All our warehouses are equipped with truck weighing complexes and laboratory equipment.” Asket has export warehouses in the ports of Kherson, Mariupol, and Mykolayiv.

While the EU studies new road and rail aid to Ukraine’s Azov, two international financial institutions are loaning €25 million to Mariupol, the region’s largest city, for new buses, trams and trolleybuses. Located 30 km west of the front lines, Mariupol’s population has grown to 450,000, swollen by people leaving the separatist controlled section of Donetsk region. On Wednesday, the World Bank’s International Finance Corporation signed a €12.5 million low interest loan for Mariupol to buy 64 large buses and to rebuild the Soviet-era bus depot. Similarly, last summer, the EBRD approved a €13 million loan to Mariupol to buy new trams and trolleybuses. Largely powered by overhead electric lines, city’s modern mass transit fleet also is designed to cut carbon monoxide. Largely because of Metinvest’s Iron & Steel Works on the city’s eastern edge, Mariupol has the worst air pollution of Ukraine’s 39 largest cities, according to a study last year by Kyiv’s Central Geophysical Observatory.

Zaporizhia, the closest airport to Ukraine’s isolated Azov coast, opens a $10 million steel and glass passenger terminal this summer. Last year, the airport handled 400,000 passengers, a post-Independence record. Flights were up 10% and passengers were up 15% to make Zaporizhia the sixth busiest in Ukraine. With two flights to Kyiv, on UIA and on Motor Sich, three quarters of traffic was international. Last year LOT Polish started flying to Warsaw. This year, SkyUp starts flying to Turkish and Egyptian resorts. This year, $35 million is being spent to upgrade the 223 km Mariupol-Zaporizhia road, cutting the drive time from the Azov to the airport to three hours. Road work is also trimming the Berdyansk-Zaporizhia airport drive time to three hours.

Wizz Air, the airline with the most flights to Lviv, is expanding its flights by 17% this spring, to 30 per week. After launching flights to Copenhagen on March 1, Wizz Air will fly from Lviv to 10 EU cities. Ryanair and UIA are tied as the airport’s second busiest airlines, five international destinations.

A survey of Ukraine’s top 50 IT companies indicates that job growth was 11.6% during the second half of last year, to 58,448 ‘specialists,’ largely software engineers. The industry started this year with 4,091 vacancies, according to the company poll, conducted twice a year for Looking ahead, 40% of 45 companies plan to hire 100 or more professionals by June. Only two companies say they do not plan to increase their payroll.

Confirming commercial real estate reports that IT companies account for nearly half of new office rentals in Kyiv, 43 of the top 50 IT companies have offices in the capital. Lviv has 21 major IT companies and Kharkiv has 20. Fourteen companies have more than 1,000 specialists. Two – EPAM and SoftServe – have more than 6,000.

Kernel, Ukraine’s largest grain shipper, is buying the nation’s largest private grain hopper fleet. Kernel is paying $49 million for RTK-Ukraine, which has almost 3,000 grain cars, about 15% of all grain cars in the nation. Last year, Kernel-Trade used 35,070 cars to move 2.2 million tons of grain to Black Sea ports, calculates the Center for Transportation Technologies.

Kernel intended to buy only 500 new cars this year. Tuesday’s bold move comes after grain car rentals charged by Ukrzaliznytsia increased 5-fold in recent months, to $38 a day. Reflecting tightening demand, the state railroad’s pilot program to auction grain car rentals on ProZorro is producing daily rates of $64. Kernel’s hopper fleet purchase comes as the company plans to commission this year its second TransGrainTerminal at Chernomorsk port, with an annual capacity of 4 million tons of grain. This year, Kernel aims to increase grain exports by 60%, to 6.2 million tons, a company record.

Taking advantage of unseasonably warm weather, farmers in southern Ukraine have started spring sowing – one month earlier than last year, ProAgro reports. In Kherson, farmers are sowing spring barley. Separately, the Agrarian Policy Ministry reports that the supply of spring seeds, 684,000 tons, meets “100% of the demand.” This year, farmers are expected to fill 27.7 million hectares, virtually the same area as last year.

As growing exports strain Ukraine’s rail system, SCM’s Metinvest is leasing two GE C30-7A locomotives once operated by Conrail, the US freight giant. Rebuilt by a Czech company, CZ Loko, the locomotives are leased from Operail, Estonia’s state-owned rail freight company, reports Since Ukrainian law does not allow private locomotives on public tracks, the locomotives will be used internally by the Ukrainian mining and metals giant. The results of this year’s elections will determine whether the Rada allows Ukrzaliznytsia to go ahead with a pilot project for private freight trains.

Nine new oil and gas exploration and production blocks are now posted online by the State Geology Service for a third round of electronic auctions, the Service reports. Five are in Ivano-Frankivsk region and four straddle Kharkiv and Dnipropetrovsk regions. This year, 10 auctions of oil and gas sites are to be held on the ProZorro.Sale electronic platform. The first 10 blocks are to be auctioned March 6, three months after site details were announced. A second auction, of nine blocks, will be held at the end of April.

Back to the 1970s…in the 2020s. By 2023, Ukraine should once again be self-sufficient in gas production, a status Soviet Ukraine enjoyed 50 years ago. Praising this year’s oil and gas auctions and production sharing agreements, Prime Minister Groysman told the Freedom of Speech TV show: “We are beginning to untangle a very complicated and closed system – access to Ukrainian subsoil.”

Ukrposhta handled 34 million international parcels last year, up 45% y-o-y, the Center for Transportation Technologies writes, analyzing the state postal company’s statistics. With e-commerce driving the parcel business, the top sources of shipments were: China, the Netherlands, Israel, and the US. Last year, Ukrposhta started partnerships with Hongkong Post and Alibaba’s delivery platform, Cainiao Smart Logistics Network Ltd. This year, Ukrposhta plans to increase parcel deliveries by 27%.

Wizz Air doubled passengers on its Ukraine routes last year to 1.5 million passengers, making it the largest low cost operator in Ukraine. With flights starting in May from Kyiv Sikorsky to Athens and Thessaloniki, Wizz Air reports that it will offer 45 routes to 13 EU countries from three Ukrainian cities – Lviv, Kharkiv and Kyiv.

Dragon Capital has bought a cold storage warehouse complex on western Kyiv’s Ring Road, raising the investment company’s warehouse holdings to 300,000 square meters. With the purchase of the Arktika warehouse, “logistics space will constitute 48% of our total commercial property portfolio,” says Volodymyr Tymochko, Dragon’s managing director for private equity. “Ongoing growth in demand for warehouses, fueled by the expansion of offline and online retailers, is making this particular real estate segment attractive for investment.” Last week at Dragon’s annual investor conference, Tomas Fiala, Dragon’s CEO, said: “In logistics and retail — not only in Kyiv, but across the country — vacancies are close to zero, which we last saw in 2007–2008.”

After opening five stores on Kyiv’s right bank last year,, Ukraine’s largest online store, now finds it cannot find warehouse space. “Ukraine is growing fast enough – this is good – but the problem is that the infrastructure is not keeping up with such growth,” Vladislav Chechetkin, co-owner of Rozetka, tells Interfax-Ukraine. “The vacancy of the warehouses is zero. Therefore, if you want a warehouse on the right bank, this means that you have to find (land), get approval, permission to build … is a significant time lag.” Two years ago, Rozetka bought a warehouse on Kyiv’s left bank. Although that space is full, the retailer plans to open a sixth Kyiv store this year, on the left bank.

This fall, Kyiv region gains a cargo airport with the opening of international passport and customs controls at Bila Tserkva Airport, Infrastructure Minister Volodomyr Omelyan announced Monday. Belotserkovsky Cargo Aviation Complex, a new municipal enterprise, plans to handle cargo at the airport, one hour by truck from Kyiv’s circle highway. The airport’s new international status also will allow expansion of its existing jet maintenance and repair business. After Kyiv’s Boryspil was unable suspended air cargo deliveries during the Christmas period, Omelyan decided to fast track the opening of Bila Tserkva and to push Boryspil to start construction this spring on a new air cargo terminal.

Ukraine has passed the halfway marker in implementing the massive EU-Ukraine Association Agreement of 2017, according to Ivanna Klympush-Tsintsadze, deputy prime minister for European Integration. This year’s priority sectors for harmonizing laws and rules are: judiciary, energy, customs, and the digital market. Of the overall task of shifting Ukraine from Russian and Soviet standards, the work is 52% done, she told a Kyiv conference reviewing the Agreement. Hugues Mingarelli, EU ambassador, said: “There are areas where progress has been very, very limited: customs, taxation, transport, intellectual property rights.”

Over 15,000 Ukrainian companies have qualified to export to the EU. This business battalion expanded Ukraine’s EU exports by two thirds since the Maidan – from 25% in 2014 to 42% last year. According to the EU-Ukraine conference, the main buyers are Ukraine’s exports are: Poland – 17%; Italy – 14%; Germany – 10%; Hungary – 8%; and the Netherlands – 8%.

Soy oil, long overshadowed by Ukraine’s sunflower giant, achieved record exports last year — 215,000 tons, reports the Agrarian Economics Institute. By contrast, sunflower oil exports were 26 times greater — 5.6 million tons. Last fall, both crops had record harvests: soy up 13% to 4.4 million tons, and sunflower seeds up 12% to 13.6 million tons. Vegetable oils and seeds accounted for one third of Ukraine’s 2018 farm exports, reports the Ministry of Agrarian Policy and Food.

Canada’s Fairfax Financial Holdings has bought France’s AXA Insurance (Kiev) for $16 million. In Ukraine’s insurance market since 2007, AXA has 780 employees and 1,220 agents in Ukraine. At the end of last year, the company collected $68 million in insurance premiums. Toronto-based Fairfax has $65 billion in total assets and an investment portfolio of $39 billion.

Ukraine’s online advertising grew by 40% last year, to $125 million, reports the Ukrainian Internet Association. In-stream video totaled 42% of spending, banners for 37%, in-page video for 9%, ‘non-standard solutions’ for 7%, and sponsorships for 5%. Social media and instant messaging platforms accounted for 34.5% of the ad spend, up from 26% in 2017.

Next month, airBaltic will double its weekly airplane seats — to 5,760 — between Kyiv Boryspil and Riga, the largest airport in the Baltics. By shifting from Bombardier regional turboprops to Boeing 737 jets and increasing frequencies to three a day, airBaltic takes aim at the lucrative Ukraine-Russia transfer traffic developed by Belarus’ Belavia. Last year, Belavia increased its flights between Minsk and Kyiv by 10%, becoming Ukraine’s second largest foreign carrier, after Turkish Airlines. In a codeshare with Aeroflot, airBaltic offers up to eight flights a day from Riga to Moscow. This is Riga airport’s second busiest route, after London. On April 1, airBaltic starts service from Lviv to Riga. On March 2, Wizz Air starts flights from Kyiv Sikorsky to Riga.

DTEK Renewables has opened the second largest solar power station in Europe, the 200 MW Solar Farm-1, in the Nikopol district of the Dnipropetrovsk region. The contractor was China Machinery Engineering Corporation. The National Regulatory Commission has awarded the project the relevant green feed in tariff — €15.03 per MWh until 2030. The solar plant should power 100,000 households, about three times the population of Nikopol city. The largest solar plant in Europe is Cestas Solar Park, a 300 MW station in the Gironde region of southwest France.

In neighboring Kirovohrad region, DTEK plans to build three solar plants for a total of 190 MW by the end of next year. According to regional officials, DTEK plans to start building this year the 60 MW Morozivka station in Oleksandriia district. About 40 km to the west, in Dykivka, DTEK plans to start building next year Solar Farm 8 – two stations with a total capacity of 130 MW. Ultimately owned by Rinat Akhmetov, DTEK Renewables is already Ukraine’s largest producer of wind energy.

Ukraine’s first solar panel production plant starts work this week in Vinnytsia. Using Chinese technology, the Kness factory starts production at an annual panel capacity of 200 MW. By the end of this year, capacity is be 400 MW, says plant director Oleh Dovboschuk. Located on a once abandoned industrial site, the €5 million plant now employs 120 workers. Currently, Vinnytsia region has 250 MW of solar power and plans to add 60 MW more by the end of this year. Through 2025, Ukraine grants a 5% premium on feed in tariffs for solar projects using 30-49% domestically made equipment. For equipment with 50% or more local content, the bonus is 10%.

The Rada is expected to vote next month on a bill that would replace high renewable energy feed in tariffs with energy auctions. Matteo Pattrone, the new EBRD representative in Ukraine, warns excessively high feed in tariffs have provoked some governments to retroactively change the rates, hurting EBRD financed projects. A supporter of auctions, he tells the Kyiv Post: “It’s better to have sustainable compensation regime than one that is too good to be true.” To jump start foreign investment, Ukraine adopted in 2015 some of Europe’s highest feed in tariffs for renewable energy.

Donald Tusk, president of the European Council, visits Ukraine through Feb. 20, spending Monday and Tuesday in Kyiv and Wednesday in Lviv. His visit comes as EU foreign ministers meet today in Brussels to discuss sanctions against Russia for the Azov Sea attack and new road and railroad aid to cut the isolation of southeast Ukraine.

With the state railroad due to pay $150 million on a Eurobond next month, the Cabinet of Ministers has re-authorized Ukrzaliznytsia to issue up to $500 million in Eurobonds at interest rates up to 11% a year, slightly higher than the level authorized last September. Last December, a Eurobond launch planned was postponed in an adverse environment marked by delay in reaching the IMF accord and nervousness around the one month imposition of martial law. Today, the lead managers are JP Morgan and Dragon Capital. Separately, Evhen Kravtsov, chairman of the railroad, said Friday that Ukrzaliznytsia cut its hrvynia debt last year by 10%, to the dollar equivalent of $1.1 billion.

Ukrzalyznitsia plans to spend nearly $1 billion on capital expenditures this year – one third more than last year. Spending is to go for 3,650 new freight cars, the repair of 7,000 freight cars and the purchase of 15 locomotives from GE. Rail chair Kravtsov says an EBRD loan guarantees renovation of almost 6,000 freight cars through the end of next year.

“How much will these injections help solve the main problem of the railway – shortage of locomotives?” Aleksandr Krivoruchko, head of the Freight Car Owners Association, writes in Obozrevatel. “In the first 10 months of 2018, Ukrzaliznytsia fulfilled only 51% of its annual plan for repair of locomotives: repairing 95 units, while the investment plan provided for a complete overhaul of 187 locomotives….This “drop in the ocean” does not solve anything. Out of 1,758 freight locomotives listed in UZ’s inventory, only 945 are in operation – 54% (!) And the minimum need for UZ in new locomotives is 310 units for a period up to 2025.”

Germany’s Chancellor Merkel balanced her support of the Nord Stream 2 Russia-Germany gas line with support of Ukraine’s continued role as a gas transit country to Europe. “Ukraine must remain a transit country,” she said Saturday at the Munich Security Conference. She said Europe has a geostrategic interest in diversity of sources of energy supplies.

President Trump has signed bills that increase aid to Ukraine to nearly $700 million, Ukraine’s Embassy in Washington writes on Facebook. Last week, USAID launched an $85 million program by TetraTech, a U.S.-based engineering firm, to help implement free market changes and incentives to promote natural gas production, energy conservation, and renewable energy investment.

Ukraine’s deficit in foreign trade of goods and services slightly more than doubled last year, hitting $5.8 billion, reports the State Statistics Service. Exports of goods and services in 2018 grew by 8.6%, to $57 billion, while imports rose by 14.3%, to $63 billion, the statistics service said. Last year, the deficit in foreign trade in goods increased by 54.5%, to $10 billion. By contrast, the surplus in foreign trade in services – largely IT – increased by 15.5% to $6 billion.

The number of Ukrainians using Facebook increased by 30% last year, to 13 million, according to a survey by Agency PlusOne. Since May 2017, when Ukraine banned the use of Russia-based social media networks, the number of Ukrainians using Facebook, a US-based network, increased by 57%. About half of all Ukrainians aged 13 (the minimum age) to 45 use Facebook: 68% of the 18-24 year group; 62% of the 25-35 year group; 48% of the 36 to 45 year group. Users are skewed by gender: 59% female; 41% male. About two thirds access Facebook exclusively through their smartphones. Only 9% percent only through their computers.


The original English version is from our partner UBN – Ukraine Business News. For more information and news archive, go to:



Ukraine Business News, Tuesday, February 19





  • Gas transit through Ukraine fell by 7%
  • Mariupol Cargo Diverted to Kherson and Mykolayiv
  • Fastest Growing Airlines in Ukraine
  • South Korea’s Posco Buys Mykolayiv Grain Terminal
  • M&A up 78%, Foreign Investment up 47%
  • Internet of Things Spreads
  • Roads, Railroads and a New Icebreaker: Ukraine’s €675 Million Wish List for EU Aid to Azov
  • Low Interest Loans to Ease Debt Burden
  • Izmail Airport, Port Dredging, Danube Ferry and New Road Open
  • More Rail Relief for Besieged Mariupol
  • A Boeing Maintenance Hub For Kyiv
  • Kyiv to See Record 6 Shopping Centers Opening in 2019
  • Ukrainians Go Cashless
  • Foxtrot, JYSK, Novus, ATB, and Brocard Expand in 2019
  • Restaurants Groups
  • Developers Shift to Offices, Warehouses

While Russian gas transit through Ukraine fell by 7% last year, it spiked up 26% year-on-year in January, to 7.6 billion cubic meters. Today, about one third of Russia’s gas exports to Europe cross Ukraine. Russian officials say they will not need Ukraine’s gas pipelines in the 2020s. But recent years show they needed Ukraine as a back up when the Nord Stream pipeline had problems. Russia’s 10-year gas transit contract with Ukraine expires at the end of this year. Russian officials say they will renegotiate seriously only after they know who will be Ukraine’s next president.

Posco’s purchase of the big grain terminal under construction in Mykolayiv means “billions of dollars and hundreds of additional jobs” for the Black Sea port, Yuri Budnik, head of the seller, Onexim Group, writes on Facebook. Writing “I don’t have the right to disclose the details of the agreement,” Budnik said negotiations with the South Korean company took two years. The terminal, capable of handling 2.5 million tons of grain a year, is to open in July.

Kherson and Mykolayiv, the two Black Sea ports closest to the Sea of Azov, had the biggest cargo increases of Ukraine’s 10 largest ports in January, the Sea Ports Authority reports. Because of Russian harassment of Ukraine-bound merchant ships, cargo handled by Mariupol in January was down 27% year-on-year. By contrast, cargo handled by Kherson last month was up 27% y-o-y. Cargo handled by Mykolayiv was up 19%. On Monday, EU Foreign Ministers meet in Brussels to discuss sanctioning Russia for its interference in shipping in the Azov.

Turkish Airlines, the busiest foreign airline serving Ukraine, increased its passengers on Ukraine routes by 28%, topping 800,000, the airline’s Ukraine director, Dinser Saychi, tells reporters. With the number of flights up 9%, the average occupancy was 71%.

Wizz Air was the fastest growing airline in Ukraine last year, recording a 73% increase in flights, to 15,251, according to UkSATSE, Ukraine’s air traffic control agency. For the other top five: UIA increased its flights by 8% to 61,691; Turkish up 9% to 29,972; Belavia up 10% to 16,003; and LOT Polish up 24% to 15,813. Ryanair launched flights last fall and was not counted in the year-on-year comparisons.

Kyiv’s train to the plane will expand with trains from Kharkiv and Dnipro going directly to the new rail platform at Boryspil Airport, Roman Wepritsky, regional rail head, tells Channel 5. Last year, Boryspil accounted for 61% of Ukraine’s 20.5 million air passengers. To make airport access easier for Kyiv residents, Ukrzaliznytsia is building a multimodal — rail, metro, bus and car — terminal at Vydubichi, the green line metro station. Launched in December, the airport line is a money maker for the state railroad. Each passenger pays the hryvnia equivalent of $2.85 – 15 times more than the ticket for a comparable suburban train ride.

South Korea’s Posco Daewoo is buying 75% of a 2.5 million ton a year grain export terminal under construction in Mykolayiv. South Korea, a nation of 52 million people, imports almost all its wheat and corn – about 15 million tons. This year, Ukraine is to export 47 million tons of grain. Last year, Choi Jeong-woo took over as Posco chairman and the steel giant on a path to become a global grain trader. Posco became a corporate member of President Poroshenko’s National Investment Council and sent executives to Ukraine on fact finding visits here. In a deal where investment values were not made public, Ukraine’s Orexim Group retains minority ownership of the terminal.

Ukraine increased food exports last year by 5.4%, to $15 billion, according to the Ukrainian Food Export Board. Grains accounted for about half of exports. India was the biggest buyer of Ukrainian farm products — $1.8 billion, largely soy and sunflower oil. China came in second — $1 billion, largely for corn and sunflower oil. The Netherlands came in third — $643 million for chickens, butter and corn. Spain was in fourth place, with Saudi Arabia close behind with $510 million.

Farm exports account for 39% of foreign currency entering Ukraine, Prime Minister Groysman told the Cabinet of Ministers Wednesday. President Poroshenko told the Dragon conference Tuesday that a key challenge for the 2020s is for Ukraine to add value to farm exports by increasing processing.

Mergers and acquisitions increased by 78% in 2018 year over year, to $1.8 billion, KPMG reports in its annual Ukraine M&A Review. The number of deals increased by 19%, to 80. Foreign investment increased by 47% to $508 million in 25 transactions. “The Ukrainian economy is recovering” says the report. Noting the two elections this year, KPMG predicts that foreign investment growth in 2019 will be “modest.” “Ukraine is now on the verge of change,” the report says. “And if reforms continue, the number of mergers and acquisitions will only increase with the growing number of foreign investors considering access to the local market.”

Despite the lack of a farm land market, agriculture attracted the highest portion of foreign investment. Saudi Agriculture and Livestock Investment Company, or SALIC, bought Mriya Agro Holding for a reported $242 million. Switzerland’s Julius Baer paid $73 million for a stake in Kernel Holdings. Japan’s Sumitomo paid $45 million for a controlling 51% stake in Spectrum-Agro and Spectrum Agro-Engineering. Noting last year’s record 70 million ton grain harvest, KPMG says: “International investors are even more closely looking at the Ukrainian agricultural sector.”

Capital investment grew by almost 20% in 2018, Prime Minister Groysman tells the cabinet Wednesday. “957 industrial and industrial facilities were repaired and reconstructed – new products and new jobs.” He says the government’s investment promotion office, UkraineInvest, is facilitating $2 billion in planned foreign investments.

Kyivstar, Ukraine’s largest mobile telephone company, is testing in Kyiv and Odesa its Narrowband Internet of Things network, or NB IoT. After testing with client businesses this month, it plans to launch the network nationwide later this year. This low power next network offers indoor coverage, low cost, long battery life, and high connection densities for items like gas and water meters. ‘Smart’ street lights turn on when it gets dark. ‘Smart’ traffic lights turn red when approaching cars break speed limits. ‘Smart’ water, gas, and sewage lines detect breaks.

Lifecell, Ukraine’s third largest mobile operator, is partnering with IoT Ukraine to launch IoT networks, first in Kyiv and Lviv, later in Dnipro, Kharkiv and Odesa. To cover 90% of Kyiv, the Turkish company is erecting 40 base stations, a network capable of connecting 200,000 sensors. With Kyivgas, lifecell’s IoT network allows the gas company to read thousands of gas meters. Ericsson, which supplies the radio equipment, estimates that, by 2024, four billion devices will be connected to the Internet around the world. Vodafone Ukraine is testing NB IoT Vodaphone technology, a platform used for 77 million connections worldwide.

EU foreign ministers meet Monday in Brussels to discuss aid to Ukraine’s southeast and sanctions on Russia for interfering with merchant shipping in the Azov. With unanimity needed, EU sanctions are expected to be wrist slaps. For aid, Ukraine has drawn up a wish list for improving road and rail access to its Sea of Azov ports, Berdyansk and Mariupol. With the airports of both cities closed, highways and faster trains would speed freight and bring tourists to the coast. Two weeks ago, Viktor Dovhan, Infrastructure vice minister, visited the area with EU officials. Last week, drew up this €675 million list


€7 million to upgrade tracks and signals to increase freight and passenger train capacity by 60% on the 480 km Mariupol-Zaporizhia line.

€15 million for four new GE diesel locomotives and upgrading the locomotive depot at Volnovakha, Donetsk region.


€40 million to complete rebuilding the 224 km Mariupol-Zaporizhia road into a highway. With completion expected next year, half of roadwork is done.

€70 million to complete repairing the 143 km Berdyansk highway north to Vasylivka, on the Dnipro River.

€130 million to complete repairing the 321 km Dnipro-Mykolaiv road. A major artery feeding cargo to the Black Sea, this road takes seven hours to traverse.

€313 million to repair and rebuild the 419 km Mariupol-Berdyansk-Melitopol-Kherson road. Known as the M-14, this is Ukraine’s major east-west road running along the north shore of the Sea of Azov. If rebuilt as a highway, it would allow trucks to take cargo from Mariupol to Kherson port in five hours.


€24 million – a dredging ship dedicated to Ukraine’s Sea of Azov portsν

€16 million – upgrade of navigation safety systems, weirs and sea wallsν

€60 million – a new icebreaker; Ukraine’s only icebreaker, the Kapitan Belousov, was built in 1954.

To escape poverty, Ukraine needs to grow by at least 5% a year, the Prime Minister said. After growing by about 3.3% last year, Ukraine’s GDP growth will slow this year to 2.8%, according to consensus forecasts. Vowing to continue free market reforms, Groysman said: “For us, a priority is the growth of the economy above 5%. This requires investments. In order for investments to come, we need clear rules and guarantees of the security of these investments.”

Interest rates could be lowered later this year if inflation stays on track to end the year at 6.3%, Yakiv Smoli governor of the National Bank of Ukraine, told Dragon. Last month, year-on-year inflation was 9.2%, down from 9.8% in December.

Within two months, Ukraine hopes to win the second tranche of EU €500 million macro financial aid, Finance Minister Oksana Markarova told reporters at Dragon. At the same time, she is negotiating a new loan guarantee with the World Bank and new low interest loans with G7 countries. In December, the World Bank extended a $750 million guarantee, enough for the government to borrow $1 billion at low rates. “Our priority is concessional lending,” Markarova said. She aims to use low interest loans to help Ukraine lower its indebtedness to 50% of GDP by 2021.

Izmail airport, closed for a decade, will reopen, Yuro Dimchoglo, deputy chairman for Odesa Regional Council, tells the Center for Transportation Studies. “We are planning to relaunch the airport,” he said referring to the 1,840 meter concrete strip which handled flights from Kyiv and Istanbul until 2009. This summer, European discount airlines are expected to start flying to Odesa and officials want to develop tourism in Bessarabia. On an Embraer 190 or an Antonov 158, Izmail would be a 45-minute flight from Kyiv, or a 15-minute hop from Odesa, 200 km to the east. While Odesa officials work on lining up the $1 million needed for airport upgrades, they also talk with a local air company, Odesa Aviation, about starting flights.

Ukraine’s long delayed car and truck ferry across the Danube, from Olivka to Isaccea, Romania, should start this summer, Maxim Stepanov, chair of the Odesa Regional Administration, writes on Facebook. He posted photos of Orlivka’s newly completed ferry terminal buildings for passport control and the road ramp to the Danube. On Tuesday, President Poroshenko inaugurated the newly rebuilt European route E47, a road that cuts the Odesa-Orlivka drive time to four hours. But to reach Isaccea – 800 meters across the river – drivers have to make a 2h15, 95 km detour, through Moldova. Ferry service would provide a big shortcut for truckers and tourists.

On the opposite end of the country, in Mariupol, work is underway to ease isolation caused by Russia’s harassment of merchant ships. To remove a rail bottleneck, Ukrzaliznytsia plans to double a final 25 km section of single track on the 480 km Mariupol-Zaporizhia line. This €4.5 million project would allow daily trains to increase from 30 today, to 49 in the future — 42 freight and seven passenger, Viktor Dovhan, deputy infrastructure minister, writes on Obozrevatel news site. Dovhan also said the state railroad might purchase four more GE diesel locomotives to service the line. Separately, Evhen Kravtsov, Ukrazaliznytsia, promises a “completely renovated Kiev-Mariupol night express,” referring to a ride that takes 17 hours.

Driving investment in rail, cargo at Mariupol sea port was down 27% in January, year over year, to 335,000 tons, the port administration reports. By contrast, cargo was down 10% in 2018, over 2017. After Russian harassment of Ukraine-bound ships proved enduring, some shippers reacted by boycotting the port, Ukraine’s largest on the Azov. Far from marginal, Mariupol carried the largest volume of metal exports for Ukraine last year – 4.1 million tons, just over the 4 million from Odesa.

Two Boeing 737-500 jets are undergoing maintenance and painting in Kyiv, a first step toward creating a Boeing maintenance hub next to Sikorsky (Zhuliany) Airport, reports BiznesTsenzor site. Using the same runway as the airport, Kiev’s Civil Aviation Plant 410 plans to expand beyond servicing Antonovs to service 40 Boeings a year by 2024. Ryanair, Europe’s largest carrier, has an all-Boeing 737 fleet. Last November, David O’Brien, the airline’s chief commercial officer, told President Poroshenko that the carrier has a five-year, $1.5 billion investment strategy for Ukraine. It includes basing and maintaining 15 Boeings in Ukraine.

Six new shopping centers, containing a record 400,000 square meters of rentable space, are to open in Kyiv this year, according to the Ukraine Retail Center. This would be eight times the new leasable space of last year and a record for the capital, says Daryna Kulaga, a market analyst for Jones Lang LaSalle Ukraine. Although developers often do not reveal construction costs, the six could total around $350 million.

By June, these Kyiv shopping entertainment centers are to open: Smart Plaza Obolon – 10,000 sq.m; Oasis, Heroes of the Dnipro metro station – 13,200 sq.m; Blockbuster Mall, Stephan Bandera Ave. — 135 000 sq. m; and River Mall, Dnipro Embankment Left Bank –59,682 sq. m.

By September, two more are to open: Ocean Mall, next to Ocean Plaza, Lybidska Metro station — 100,000 sq. m.; and Retroville, on Pravda Ave. — 80 718 sq. m.

In Odesa, Gargarin Plaza is to open by May with 20,000 sq. m.

The overall vacancy rate at Kyiv shopping centers fell to 3.7% at the end of last year, Jones Lang LaSalle reports. This is down from 5.6% at the start of 2018. Annual store rents rose to $1,140 per square meter, almost the level of 2013.

Ukrainians are among the world’s fastest adopters of contactless, cashless payments systems, Inga Andreeva, general director of Mastercard Europe SA, tells reporters. Last year, Ukraine registered the fourth fastest growth rate in the world for taking to this technology, which typically involves waving a smartphone or digital wrist watch in front of a terminal to pay with Google Pay or Apple Pay. Common in the Kyiv metro system, contactless terminals start working this week in the busiest station of Kyiv’s suburban ‘elektrichka’ trains.

With 38% of Ukrainians businesses accepting cashless payments, there is room to grow. The EU average is 60%, Mastercard says. Some businesses resist going to credit cards and contactless because it means paying taxes. But 64% of business managers surveyed by Mastercard say they prefer cashless for its simplicity and potential to boost sales. By last September, according to National Bank of Ukraine estimates, cashless payments accounted for 44% of transaction in Ukraine – a 13% increase since the start of the year.

Foxtrot plans to double online sales this year, to 20%, Valery Makovetsky, chair of the supervisory board of home appliances and electronics chain, tells Interfax-Ukraine. In traditional bricks and mortar, Foxtrot plans to invest $10 million this year reformatting about one third of its 162 stores. Last year, it opened 18 new stores across Ukraine, largely in small cities. Depot Development Group, the umbrella group controlling Foxtrot, also is building or expanding shopping centers in regional cities – Chernihiv, Kriviy Rih, Kropyvnytskyi, and Zaporizhia.

Danish furniture retailer JYSK plans this year “to dynamically expand the network in different regions of Ukraine,Yevhen Ivanytsia, JYSK Ukraine director. tells Interfax-Ukraine. Last year, JYSK expanded its Ukraine store network by one third, to 48. With stores in 20 cities, JYSK expanded into new neighborhoods – with three stores in Khmelnytskiy and five in Odesa.

Novus, the supermarket chain, opened five supermarkets and a 7,000 square meter warehouse last year in Kyiv, the retailer reports. Founded a decade ago, Novus now has 43 stores, 34 of them in Kyiv and Kyiv region. One year ago, the EBRD opened a $25 million credit line to Novus to open more stores and the logistics center.

ATB, the discount shop chain, plans to keep expanding this year, after opening 80 new stores and rebuilding 41 more last year, the Dnipro-based company reports. With 990 outlets, there are ATB stories in 253 cities and towns in 22 regions of Ukraine.

Brocard intends to open 5-7 new perfume and cosmetics stores this year in Ukraine, increasing its network to nearly 100, Brocard-Ukraine LLC tells Interfax-Ukraine. Three stores – for Dnipro, Kharkiv and Lviv – will be in a new compact format: Brocard Niche Bar. Last year, Brocard opened four stores – two in Kyiv and two in Odesa.

Owners of one of Ukraine’s largest restaurant groups plan to open 200 new restaurants by 2021, largely in Ukraine, Oksana Serediuk, co-owner of the chain, tells Interfax-Ukraine. Serediuk and her husband, Taras, operate restaurants under the brands Mafia, Casta, Bao, Nam, Georgia, Brilliant Bar and Yakitoriya. This year, the group plans to double its restaurants in Moldova to six. In Ukraine, six are under preparation, including one in Volnovakha, Donetsk, 15 km west of the front line.

Dmytro Borysov, the Kyiv restaurant entrepreneur, plans to open 100 ‘fast casual’ restaurants in Kyiv this year, he tells the Kyiv Post. According to his surveys, 70-80% of Kyiv residents eating out want to pay no more than $5.25 per person. One of his big hits, Bilyi Nalyv, on Kreschatyk, charges €1 or 29 UAH per menu item. In the last year, he has taken this successful formula to Kharkiv, Lviv, Lutsk and Odesa.

Coca-Cola has launched a €10.5 million production line in Brovary, Kyiv region. Capable of bottling 40,000 bottles an hour, the line expands the Brovary plant capacity to 100 million cases a year.

Ukrainians spend 44% of their income on food and non-alcoholic beverages, according to the latest household survey conducted by the State Statistical Survey. The average household cash income during the third quarter of 2018 was $335. The average household was 2.1 people.

Real estate developers now are moving from residential to offices and warehouses, says Volodymyr Mysak, head of capital markets for the Ukraine office of Cushman & Wakefield. Offices vacancy rates have dropped to 4.9% and monthly rental rates have increased to $29 per square meter. Similarly, warehouse vacancies are at a cyclical low – 3%. Last year, investment in commercial real estate hit $300 million, a 10-year high, he told the Ukrainian Steel Construction conference.


The original English version is from our partner UBN – Ukraine Business News. For more information and news archive, go to:


Ukraine Business News, Tuesday, February 12





  • Germany’s Used Diesel Cars Flow to Ukraine
  • Banks Make First Profits Since 2013
  • Online Auctions Sell State Properties
  • Make Market For Farmland Rents
  • First New Highrise in a Decade Proposed for Kyiv
  • Boryspil: Europe’s Fastest Growing Airport in its Size in 2018
  • Foreign Exchange Freedom Starts Today
  • Agro Businesses Power Crop Growth
  • Sunflowers Up, Sugar Down
  • Oil & Gas Tenders Advance
  • Central Bank Wants to Cut Inflation in Half This Year
  • Banker Survey: Loans to Grow
  • Foreign Trade Hits $100 billion
  • Food Sales to EU up 50% Since 2016
  • €4.5 Billion to Upgrade Roads, Railroads, Ports and Airports in the 2020s
  • GDP Grew by 3.4% in 2018
  • Dragon and AVentures Invest in Ciklum
  • Retail Up
  • E-Commerce Up More

With diesel bans spreading through Germany cities, 71% of the 51,500 used cars registered in Ukraine last month were diesels. Volkswagen, Opel, Audi and BMW accounted for about half of the imported used cars. Further depressing prices of Germany’s 15 million diesel cars, manufacturers are offering trade in deals, offering new, lower emission for older models. In coming years, diesel bans are expected to take effect for the city centers of Athens, Copenhagen, Paris and Madrid.

After four years of losses, Ukraine’s banks collectively earned a profit last year — $775 million. In 2016, the banks lost $1 billion. Part of the profits came from expansion of retail lending in hryvnia, which increased by about 30%, says Kateryna Rozhkova, first deputy governor of National Bank of Ukraine. Of the nation’s 77 banks, 64 were profitable. The most profitable were banks with foreign capital and PrivatBank. The main losses took place at Russian state capital, which underwent severe restrictions.

Foreign direct investment totaled $2.5 billion last year, reports the National Bank of Ukraine. About $1.5 billion of the total went into the real sector. For an economy the size of Ukraine’s — $125 billion – foreign direct investment should be five times higher, over $12 billion economists say.

Mini-privatizations – the sale of state properties under $9 million – are on track, with auctions selling 187 properties in January. During the rest of 2019, 605 more properties are to go on sale, reports the State Property Fund. Started six months ago, the program has brought $25 million to the state treasury and has released hundreds of properties to the private sector.

Since September, rents for 301 state-owned plots of farmland have been set through electronic auction, reports the Justice Ministry. Using Blockchain technology, OpenMarketLand has been the electronic platform, often serving to set land lease prices in a transparent way. So far, the government has netted $1.1 million through the new leasing system.

After a decade long drought in high rise construction starts in Kyiv, a Ukrainian group wants to build a 100-meter tall hotel and office complex at 107-109 Velyka Vasilkivska, facing the Palace of Ukraine metro station and concert hall. Located midway between St. Nicholas Roman Catholic Cathedral and Ocean Plaza shopping mall, the builders, Ukrzhitlobud, would need a city variance for rising higher than the 27-meter limit on buildings in the historic district. Nashi Groshi news site notes that building permits have been given for ‘hotels’ that end up being apartment buildings. Of the 11 buildings in Kyiv higher than 110 meters, eight are residential. All were built in the 2000s. The last one, No. 1 Obolon Embankment, was completed in 2013.

Kyiv Boryspil’s 19.4% passenger growth rate last year was the highest of any European airport of its class, 10 to 25 million passengers. According to Airports Council International Europe, runners up were: Moscow Vnukovo — +18.4%; Budapest — +13.5%; Warsaw Chopin –+12.8%; and St Petersburg — +12.1%. By comparison, the average growth rate for non-EU European airports last year was +8.3%. Boryspil handled 12.6 million passengers last year. With more growth expected, Boryspil reopens Terminal F in April.

Albania, Greece and Italy are targets for new, scheduled flights from Kyiv. Italy’s Ernest Airlines plan to launch flights this summer from Kyiv Sikorsky to Tirana, Rome and Genoa. (On March 21, it starts flights from Kharkiv to Rome and Milan.) On March 31, Wizz Air starts flights from Kyiv Sikorsky to Athens and Thessaloniki. On the same day, Greece’s Astra Airlines is to launch Kyiv-Athens service on its BAe 146 regional jets. Two days later, on April 2, Ryanair starts flights from Kyiv Boryspil to Athens.

Starting from February 7, foreign currency exchange rules are liberalized in a package of laws drawn up under a guiding philosophy: “Everything that is not directly prohibited is allowed.”

Replacing laws dating back to 1993:

– Currency controls are abolished on transactions up to UAH150,000, currently $5,360.- Individuals

– Ukrainians and foreigners

– will be allowed buy foreign currency online up to UAH 150,000 per day.

– To transfer foreign currency abroad, licenses are abolished and replaced by electronic limits: €50,000 per year for individuals; €2 million per year for companies.

– For foreign individuals, the limits for sending money abroad without having a bank account in Ukraine are increased 10-fold, to UAH150,000, or $5,360.

– Ukrainian companies are allowed free use of accounts in foreign banks, except for transferring funds to their accounts

– The doubling of the deadline to settle export-import operations – to one year.

Most major banks will offer account holders the option to buy foreign currencies online, Oleh Churiy, deputy governor of the National Bank of Ukraine, predicted to reporters Wednesday. “Some already starting Feb. 7. Some maybe later.” Asked if the new laws mean the end of Ukraine’s ubiquitous exchange shops, he said no. “After all, they work not only with the population, but also with the “gray” and “black” markets.”

Starting Friday March 1, the central bank cuts the mandatory amount of foreign currency that businesses must sell for hryvnia to 30% of export earnings, from 50% today, Churiy said. Without specifying dates, he said the Bank will eventually abolish this limit and the limit of on repatriation of dividends. As the first step on dividend repatriation, he said the bank plans to raise the monthly limit to €10 million, from €7 million today.

Olha Trofimtseva has been promoted to Acting Minister of Agrarian Policy and Food, replacing Maxim Martyniuk who was appointed Acting Minister two months ago. Trofimtseva earned a doctorate in agricultural science from Humboldt University of Berlin and worked for a decade for German farm companies and institutions. Fluent in German and English, Trofimtseva became well known to foreign investors after becoming Deputy Agriculture Minister for European Integration in September, 2016.

Farming companies powered last year’s big jump in grain and bean production, the Statistics Service reports. Production by agro businesses increased by nearly 17%. Family farm production was flat. Overall, production rose by 12.7% to a record 70 million tons. Year over year, the big gainers were: corn – up 44% to 36 million tons; barley – up 11% to 7 million tons; rye — up 23% to 400,000 tons; and rice – up 8% to 69,000 tons. The big loser was wheat – down 6% to 25 million tons.

Ukraine increased sunflower production last year by almost 16%, strengthening its lead over Russia as the world’s largest producer of sunflower oil. Production increased to 14.2 million tons, according to the Statistics Service. Other oil seeds also increased: soy – up 14% to 4.5 million tons; and canola up 25% to almost 3 million tons.

The EU may expand its Ukraine import quotas for beef, pork and poultry, Ukraine’s Agrarian Confederation reports, drawing on comments to the Rada Agricultural Committee by Christian Ben Hell, head of Agriculture section of the EU Delegation to Ukraine. Noting that Ukraine’s food exports to Ukraine have increased by one third since 2017, he reportedly said: “We are doing everything possible to enable Ukrainian products to enter the EU markets. In particular, we plan to expand the quotas for the supply of beef, pork, poultry products.”

With $2 billion in American, European and Chinese windpower investment planned for Ukraine’s Azov Sea coast, Troshchenko pitched visiting EU and European Investment Bank officials for financing for a German-made Liebherr LHM 550 mobile harbor crane to unload and store wind turbine blades. Logistics operator Holleman Ukraine is considering building a warehouse at Berdyansk for windpower equipment. Denmark’s Vestas Wind Systems A/S, General Electric Wind Energy and China Machinery Engineering Corporation are already using Berdyansk, the closest port to the three largest wind projects. In the last year, 12 ships with oversized wind turbine cargo docked at Berdyansk.

Tender terms for Ukraine’s first petroleum sharing agreements since 2012 will be released in two weeks, reports Drilling for web site. Companies will have until mid-May to submit applications. The 12 PSAs are expected to be valid for 50 years. To stimulate investment, winners will have to spend $16 to $36 million in the first five year on seismic research and exploration wells. Foreign companies are encouraged to bid.

Separately, the government puts up for auction on March 6, 10 blocks for production under a royalty formula. A second auction, of seven blocks, will be auctioned on April 29. Oleh Kirilyuk, director of Ukraine’s Geological and Mineral Service, described these seven blocks last week in London as “more than 2 thousand square kilometers, {with] the estimated resources of more than 2 billion cubic meters of gas.” By the end of this year, government plans to auction off rights to 30 onshore blocks. Foreign companies can participate through Ukraine subsidiaries.

Determined to cut inflation in half – to 5% next year – Ukraine’s central bank retained its key interest rate at 18%, the highest level in Eastern Europe. The interest rate was hiked by two percentage points last year, contributing to inflation falling to 9.8% in 2018. Economic growth this year will be 2.5%, down from an estimated 3.3% last year, predicts the National Bank of Ukraine. High interest rates contribute to a vicious cycle: with interest rates high, local entrepreneurs can only turn to friends and family for business loans; a lack of good paying jobs prompts labor migration; wage remittances – currently $1 billion a month – fuel demand, pushing up inflation.

Loans and deposits will grow in 2019, Ukrainian bankers tell the central bank in a survey of 61 Ukrainian banks, accounting for 96% of all banking assets in the country. Three quarters of banks surveyed predict growth of corporate loans and 62% of respondents predict growth of consumer loans. Two thirds predict growth in deposits from the public and from businesses. “The value of deposits is the highest in the entire history of observations,” the National Bank of Ukraine said, referring to the quarterly survey. The bankers did not predict a change in interest rates this year.

Ukraine’s foreign trade recovered to $100 billion last year, according to the National Bank of Ukraine. Exports were up 9%, to $43.34 billion, while imports were up by 14%, to $56.3 billion, leaving a trade deficit of $13 billion. For exports, the growth champions in dollars were: grain – up 11%; and metals up 15%. On the import side, the big growth sectors were: energy — up 15%; engineering products –up 18%; food up 18%; and industrial goods – up 21%. With the loss of much of the Donbas industrial area, Ukraine’s foreign trade last year was 28.5% below the 2014 level of $140 billion.

If reelected this spring, President Poroshenko promises to improve the rule of law, allowing Ukraine to become one of the top 50 countries in the world for investors by 2022. Currently, Ukraine ranks in 71st place, out of 190 countries, in the World Bank’s Ease of Doing Business index. In 2014, at the start of his presidency, Ukraine was in 87th place. In an interview with “Ukraine” TV channel. Poroshenko also promised to make Ukraine self-sufficient in energy. The presidential election vote will be March 31, with a second runoff round on April 21.

Ukraine’s food exports to the EU have increased by 50% since 2016, hitting $6.3 billion last year, reports Olha Trofimtseva, Deputy Agriculture Minister for European integration. Last year, the top three products were: grains –$2.2 billion; oil seeds — $1.1 billion; and vegetable oil –$1.1 billion. The top five buyers in the EU were: the Netherlands — $1.2 billion; Spain — $1 billion; Italy — $739 million; Germany –$667 million; and Poland — $657 million.

With food processing growing, Ukraine is moving from “Europe’s breadbasket” to “supermarket of the world,” Trofimtseva tells EURACTIV. She calls for more investment in food processing and agro tech.

The best aid for Ukraine is free trade, argues Ben Aris, editor/founder of bneIntelliNews. “If the West really wants to help Ukraine, it should drop the quotas on imports from the Ukraine – or at least greatly expand them,” he writes. “Business would boom and investment should flow behind very quickly.” Noting that Ukraine’s egg and poultry sector “could largely destroy the industry in Western Europe,” he says: “If quotas are to be lifted it would have to be done in steps.” Noting political realities, he adds: “Relaxing the restrictions on Ukrainian exports to Europe would benefit everyone, except the European agricultural lobby.”

Ukraine’s poultry exports jumped by 30% in dollars last year, hitting $507 million, according to the State Fiscal Service. In volume terms, exports were up 21%, to 329,000 tons. Top buyers were: the Netherlands, Slovakia and Saudi Arabia. Last year, Ukraine rose in the world ranking of chicken exporters to 6th place, overtaking Russia and Canada.

Through 2023, €4.5 billion in low interest loans have been committed to support 39 infrastructure projects to upgrade many of Ukraine’s highways, ports, airports, and railroads to EU standards. Largely designed to speed freight and passengers on east-west lines between Ukraine and the EU and to move export goods to the Black Sea ports, the aid is coordinated by the European Commission and is composed of European Investment Bank and World Bank loans and some grants, Infrastructure Minister Volodymyr Omelyan tells reporters.

The building package includes: 13 highways — €2.15 billion; nine ports — €873 million; nine rail — €851 million; six airports — €470 million; and two river projects — €112 million. Several projects will be open to public-private partnerships.

Ukraine’s GDP grew by 3.4% last year, reports Stepan Kubiv, Minister of Economic Development and Trade. Ukraine’s GDP grew by 2.5% in 2017 and by 2.3% in 2016. The 2018 growth is the highest since 2011, when growth was 5.5%.

Dragon Capital and AVentures Capital have acquired minority stakes in Ciklum, the London-based IT outsourcing company with about 3,000 employees in Kyiv. Andriy Nosok, Dragon’s Managing Director and Co-Head of Private Equity, said: “We believe that ongoing global digital transformation will support increasing demand for IT solutions and services, and that Ciklum is very well positioned to capitalize on this sustainable trend.” Michael Boustridge, Ciklum CEO, said: “This investment will continue to propel Ciklum’s rapid growth in delivering cutting edge technologies to clients around the globe.” All three companies are privately owned and the investment amounts were not made public.

Retail trade in Ukraine increased 6.1% in real terms last year, slightly below the 6.5% increase for 2017. The biggest jumps were in Ukrainian-controlled Luhansk – up 27% — and Donetsk – up 14%. Fueled partly by remittances from Ukrainians working abroad, retail was one of the three pillars of growth last year’s 3.4% growth – led by agriculture – up 8.2%; and construction – up 6.3%. Concorde Capital’s Evgeniya Akhtyrko writes: “We expect real retail to increase 6-7% yoy in 2019. It will be driven by real disposable income growth.”

E-commerce grew by 31% in Ukraine last year, the second fastest rate in Europe, following only Romania’s 37%, according to the Better Regulation Delivery Office, or BRDO, a regulatory advisory body funded by the EU. While growing faster than the world average of 24%, Ukraine has plenty of room to grow, Alexander Kubrakov, BRDO IT director, tells reporters. In 2017, online accounted for 3.2% of retail sales in Ukraine, compared to 8.8% in the EU, 10.2% in the US, 17.8% in Britain. To further promote online sales, the BRDO recommends the government allows online stores to email sales receipts, instead of requiring they issue printed paper receipts.


The original English version is from our partner UBN – Ukraine Business News. For more information and news archive, go to: