Ukraine Business News, Tuesday, March 26





  • Goldman: Foreign Participation To Soar in Ukraine Hryvnia Bonds
  • Gazprom Warns Bulgaria: Gas Thru Ukraine Stops in January
  • Russia Fights, China Invests
  • SkyUp Plans Flights to 20 Cities from Kharkiv, Kyiv and Odesa
  • Naftogaz CEO Stays On – at Half Salary
  • 25 Oil and Gas Blocks Up For Auction Through June
  • Foreign Companies Interested in PSAs
  • But Bonds Sold Well on Wednesday
  • EBRD to Loan €420 Million to Modernize Kyiv Mass Transit
  • Dnipro, Lviv, and Kharkiv Get New Ukrainian-made Buses
  • US-Ukraine Solar Plant Opens in Khmelniytskiyi Region
  • Škoda Car Assembly to Move from Zakarpattia to Serbia?
  • Tender to Dismantle Chernobyl Sarcophagus
  • Ukraine’s Saigon Port: Hub for Asian Trade?
  • Jabil to Double Payroll to 5,000 in Uzhgorod
  • ArcelorMittal Raises Steelworker Salaries Again
  • To End ‘the Batman Cut’, EU May Triple Duty Free Imports of Chicken Breasts
  • Dnipro Fights for its Airport
  • Tender Opens for $1 Billion, Japan-Funded Sewage Plant for Kyiv
  • €60 million Credit for SMEs
  • More Cargo, Fewer Ships at Sea Ports
  • 10% of Rail Network Closed For Safety
  • 20% of Trucks Overweight
  • Rivne, Uzhgorod Get Flights


Foreign participation in Ukrainian local debt auctions could increase up to 25 times, according to a new Goldman Sachs analysis of the impact of the opening this spring of a Clearstream link to the National Bank of Ukraine. This link will allow non-resident traders, based in London, Frankfurt or New York, to buy and sell hryvnia bonds from their desks. Goldman forecasts this could raise up to $6 billion in capital for Ukraine, as foreign participation rises from 1.3% today toward Russia’s recent peak of 34%.

 Linking to this international, Luxembourg-based securities depository will help Ukraine climb its “debt mountain.” With $20 billion in reserves today, Ukraine must pay back nearly $15 billion in debt obligations this year, and an additional $21 billion in 2020 and 2021.

 Gazprom Export has told Bulgaria it plans to stop sending gas through Ukraine to Bulgaria next January, Bulgaria’s Energy Minister, Temenuzhki Petkova, tells bTV, Bulgaria’s largest TV station. To replace the 30-year-old Ukraine pipeline route, Bulgaria, which depends on Russia for two thirds of its gas, plans to build this year a 484 km pipeline from the Turkish border through Bulgaria to Serbia. This new ‘Balkan Gas Hub’ would transport gas from Russia’s TurkStream and from Romania’s offshore fields. Gazprom has told Bulgartransgaz to raise the $1.6 billion to build the pipeline. In retort, Petkova threatens to sue Gazprom for $110 million in annual transit fees that Bulgaria should receive under its Ukraine transit contract, valid until 2030.

 Shanghai-listed LONGi Solar was the largest Chinese photovoltaic module supplier to Ukraine last year, the company reports, citing export data from China Customs. LONGi exported 285 MW of the assemblies of solar cells, accounting for 17% of the 1.7 GW exported from China to Ukraine. The largest of 80 Chinese companies supplying Ukraine’s solar market, the Xi’an-based company says: “LONGi Solar has placed great importance on the Ukrainian market…very rich in solar energy and suitable for the construction of PV power stations.”

 Three months after a Chinese Skywell electric bus started plying a 17-km route on Kyiv’s Left Bank, Skywell sent the same model bus to Poltava for testing. With a range of 300 km from a single charge, the bus can carry 50 passengers. Charging takes up to 90 minutes and can be done at night, when electricity rates are cheaper, Arseny Abduraimov, Skywell’s representative in Ukraine, tells Zmist news site. Last fall, the Nanjing-based bus manufacturer also sent an electric bus to Vinnytsia for testing.

 Shanghai Aowei Technology Development Co. is talking with Chernihiv Automobile Plant, a bus manufacturer, about producing electric buses at its factory. Aowei points out that it is assembling buses in neighboring Belarus and that a fleet of Aowei electric buses now carries passengers in Minsk.

 The electric transit vogue spreads to Odesa, as City Council adopts a 3-year, $134 million plan to buy 14 electric buses and 67 new trams, reports the Center for Transportation Technologies. Now in talks to win financing from the European Investment Bank, Odesa hopes to spend $30 million this year, partially on Škoda electric buses from the Czech Republic.

 China expects as many as 2,000 Ukrainian buyers and exhibitors at the upcoming Canton Fair in Guangdong Province, Xu Bing, deputy director general of China Foreign Trade Center, the organizer, tells Xinhua. Xu was in Kyiv Wednesday for an event attended by 200 people to promote the April 15-May 5 fair. “China and Ukraine are important trading partners,” Xu told China’s news agency. “Ukrainian companies are a very important part of the upcoming Canton Fair.” Agriculture, IT, and tourism are three export sectors to be on display at the fair, says Yaroslav Sydorovych, a presidential advisor. Foreign trade experts predict that in the 2020s China will displace Russia as Ukraine’s largest single nation trading partner.

 Matteo Patrone, the new regional head of EBRD, the largest investor in Ukraine, says: “Clearly the message from our Board is: invest more in Ukraine. Despite that marching order, he said that only 40% of the bank’s currently approved €3.6 billion portfolio is being deployed. Speaking at a US-Ukraine Business Council meeting, he confirmed a six-month-old EBRD halt to new investment in solar projects, pending the Rada’s passage of an auction bill for renewable energy. Saying “small privatization is working well, he added: Big privatization is a total disaster.” He said “the oil and gas sector could be a good candidate” for privatization. On Mariupol-Berdyansk infrastructure in the Azov, he cautioned that the EBRD can only deal with investment-ready projects.

 Kharkiv airport, serving Ukraine’s second largest city, joins the big leagues this spring with new flights to Azerbaijan. Cyprus, Georgia, Italy, Spain, and United Arab Emirates. The expansion of Eastern Ukraine’s biggest airport is part of a drive to increase passenger flow this year by one quarter, to 1.2 million.

 To Italy, Ernest Airlines started direct flights last week from Kharkiv to Rome and Milan Malpensa. Shadi El Tannir, business development director for the Italian-Albanian airline, said Airbus A320s are flying the two routes. He also said the company’s routes from Kyiv Sikorsky to six Italian cities are running at 80% capacity. His forecast for Kharkiv passengers is: 40% tourists, 30% Ukrainians living and working in Italy, 20% business travelers and 10% Kharkiv area residents transferring to flights to the US and Canada.

 Virtually overnight, SkyUp will become Kharkiv airport’s busiest airline, launching direct, scheduled flights between May 25 to June 7 from Kharkiv to six new destinations: Barcelona, Odessa, Kutaisi (Georgia), Lanarca (Cyprus), Rimini (Italy) and Sharjah (UAE). In May, Buta Airways starts flights to Baku. In September, Wizz Air adds a sixth EU city — Krakow.

 Also overnight, Ukraine-based SkyUp becomes the airline offering the most destinations from Odessa – seven. From May 17 to June 4, SkyUp launches direct scheduled flights from Odesa to Barcelona, Kharkiv, Kyiv Boryspil, Kutaisi, Lviv, Rimini and Yerevan. With operating bases in Kharkiv, Kyiv Boryspil and Odesa, the one-year-old airline has a fleet of five Boeing 737s, which it plans to expand to 18 planes by 2022.

 Completing expansion plans, SkyUp plans to start service from Kyiv Boryspil, from April 26 to June 2, to seven cities: Barcelona, Batumi, Lanarca, Naples, Odesa, Tbilisi and Yerevan. From regional airports, SkyUp launches service on May 25 from Zaporizhia to Barcelona. Also, the airline plans to start flights this year from Cherkasy, reports the Center for Transportation Technologies.

 After starting service last week from Kyiv to Uzhgorod, Motor Sich is in talks to start direct service from Kyiv to Mykolaiv. After opening a refurbished terminal in December, Mykolaiv handled 3,000 passengers in January-February. The target for the early 2020s is 200,000 passengers a year.

 With the Naftogaz CEO’s five-year contract due to expire tomorrow, the government has decided to renew it for one more year. With two elections and the Gazprom gas transit contract expiring, the government evidently decided Wednesday to keep a steady hand on the tiller to traverse a potentially stormy year. In response to the government’s objection to his “stratospheric” salary, CEO Andriy Kobolyev accepted a proposal by the Supervisory Board to cut his salary in half, to $19,330 a month without bonuses. Two weeks ago, the Cabinet of Ministers amended the Naftogaz charter to shift hiring and firing power over the CEO from the Board to the shareholders, i.e. the government.

 Contract renewal is subject to two other conditions. To meet EU rules, a gas transportation company must take over management this year of Ukraine’s gas pipeline system. In addition, Prime Minister Groysman wants domestic gas production to increase to reach energy independence. National production, largely by a Naftogaz unit, accounts for about 70% of Ukraine annual consumption of 28 billion cubic meters. Ukraine has 1.1 trillion cubic meters of gas, the largest proven deposits in Europe, according to the 2018 BP Statistical Review of Energy.

 “The Naftogaz production program failed,” Groysman complained to reporters, referring to stagnant production by UkrGasVydobuvannya. “The failure of Naftogaz in production creates problems in the country.” After the cabinet meeting, Energy Minister Igor Nasalik was equally blunt, telling reporters: “The program adopted by the government for gas production absolutely failed. There is no increase in production, despite the fact that extremely large amounts of money were invested.”

 To jump start foreign investment in energy production, 25 oil and gas exploration and production blocks go up for auction in May and June, according to details posted on ProZorro.Sale, the government’s online auction house. Seven blocks will be auctioned May 2. Nine more blocks will be auctioned June 18. All blocks are onshore with licenses for 20 years. Separately, production sharing agreements for nine more blocks, with a total area of 11,600 sq km, go up for electronic auction in June. Although no foreign companies bid for licenses in a first round of auctions, on March 6, upcoming rounds are winning news reports in the Oil & Gas Journal and S&P Global Platts.

 “There is interest from American, British, Norwegian and Canadian firms,” Energy Minister Nasalik told reporters Wednesday, referring to the production sharing agreements. The agreements are for 50 years. The fields are spread among six regions — Ivano-Frankivsk, Lviv, Poltava, Chernihiv, Sumy and Kharkiv. Interfax-Ukraine writes: “It is assumed that the state’s share in profitable products should be at least 11% of its total volume, the maximum investor’s share – 70% of total production.” Later this year, production sharing agreements for three more fields are to go up for auction.

 To prepare for a winter without Russian gas, Ukraine should store an extra 18% of gas in its reservoirs this summer and fall, Kobolyev, the newly re-empowered Naftogaz CEO, tells RBC-Ukraine. Naftogaz officials are pessimistic that Gazprom will send much – or any – gas through Ukraine’s pipelines after the transit contract expires on Dec. 31. Kobolyev said: “Many experts, whose opinion I appreciate, believe that the Russian Federation will interrupt transit from January 1.” With Russian gas supplies through Ukraine to the EU in doubt, Gazprom has said it plans to stop supplying gas to Turkey through Ukraine next year.

 Sliding gas prices in Eastern Europe will allow Naftogaz to charge Ukrainian households 2% less for gas in April than in March, the state energy company reports. Last November’s move to raise household gas prices by 23.5%, toward the regional market parity, is a big issue in the campaigning before the March 31 presidential election and the expected April 21 runoff. In April, industrial customers will pay 19% less for their gas. UNIAN calculates the industrial price of $262/1,000 cubic meters will be 14% cheaper than household gas. Due to dropping gas prices at European gas hubs, Ukraine’s prices are now at import parity. The government plans to talk with the IMF to drop a December commitment to raise gas prices by another 15% in May.

 Ukraine’s Finance Ministry raised UAH 12.5 billion, about $463 million, at its weekly bond auction on Tuesday. This is more than triple the UAH 3.5 billion in equivalent raised last week. The government satisfied all bids for dollar-denominated bonds, $85.2 million. Concorde Capital’s Evgeniya Akhtyrko writes: “Investing in UAH-denominated government bonds is very rewarding at the moment as interest rates remain high…. As at the prior auction, a significant share of UAH auction receipts came from the sale of 2Y bonds. This a positive development indicating some growth in investor confidence.”

 French airline Aigle Azur launches Kyiv Boryspil’s sole direct flights to Paris-Orly on April 18. From its Orly hub, Aigle Azur offers connections to Algeria, Brazil and China. Orly is France’s second busiest airport, after Charles de Gaulle, and closer to central Paris –17 km to the south.

 The EBRD is committed to loaning nearly half a billion dollars over the next three years to dramatically upgrade mass transit in Kyiv. By 2021, the capital should see new buses, trolley buses and subway cars, says Mayor Klitschko. As part of the EBRD’s Green Cities program, the mayor says, the EBRD has approved €320 million in funding for four projects, including renovating tram lines around Podil’s Kontraktova Square and renovating Metro Bridge, first opened over the Dnipro in 1965. Separately, the EBRD is loaning €100 million for the purchase of 50 new subway cars, 185 new buses and 202 new trolleybuses. Bohgdan Motors of Lutsk recently won a tender to supply 55 extra-long trolleybuses.

 Noting that Ukraine has five trolley bus manufacturers and 10 bus manufacturers, Andrei Glushchenko, analysts for GMK, the nation’s metal news site, says: “The EBRD project means a favorable opportunity to support the domestic market of metal products.” He said makers of wheels, rails and subway cars should keep an eye out for the upcoming tenders.

 With the number of cars in Kyiv expected to increase by 60% by 2025, the city has adopted a $3 billion, 5-year transportation program. Heavily oriented toward non-car mobility, the program calls for buying 400 trams, trolleybuses and electric buses by 2023. Bicycle paths, removal of cars from sidewalks, better marketing of the subway system and linking Left Bank and Right Bank tram networks are elements of the plan recently approved by the City Council. Andriy Strannikov, chairman of the Council’s Budget Committee, tells Interfax-Ukraine: “Now the capital’s bridges are overloaded, the tram network is degraded, and there is no associated bicycle infrastructure in general.”

 Upgrading urban mass transit across Ukraine is the goal of a combined credit line of the EBRD and the European Investment Bank. Under the Ukraine Urban Public Transport Project, two development banks are financing this year the purchases of 227 buses, 153 trolleybuses, 56 trams and 35 subway cars. The Infrastructure Ministry reports that last year, the credit line helped finance the purchase of 167 trolleybuses: 47 for Odessa, 40 for Kremenchuk, 23 for Dnipro, and eight for Kryvy Rih.

 Electrontrans, a Lviv-based German-Ukrainian joint venture, won two tenders in recent days totaling $37 million to supply a total of 20 self-propelled trams to Kyiv. The Lviv-based manufacturer is to deliver the low floor trams from May 1 until the end of this year.

 Odessa plans to spend $50 million over three years to upgrade its central North-South tram route. The city will buy 21 single car electric trams and 16 double car trams. Last year, Odessa’s trams and trolleys carried 171 million passengers. With only 20% paying full fare, most were students and retirees.

 The EBRD and the World Bank’s Clean Technology Fund are providing low interest loans totaling €17.5 million to Lviv to buy 50 low floor electric trolleybuses from Electrontrans. Under a loan agreement signed two weeks ago, the money also goes for modernizing two electric transport depots and for equipment maintenance. Separately, Lviv also plans to buy this year 10 new trams and 100 buses. Last year, the city bought 30 used trams from Berlin, 50 new buses from Electrontrans, and 100 new buses from MAZ, the Belarus manufacturer.

 Similarly, the EBRD and the Clean Technology Fund are loaning €13 million to Dnipro to buy 44 new trolleybuses. Last month, Bohgdan Motors won a €11.5 million tender to supply 57 new trolleybuses to Kharkiv.

 Ternopil has placed tenders for 100 used buses from EU countries. Expected to cost $6 million, the auctions take place on ProZorro May 15-16. Last year, Mariupol bought 20 used trams from the EU, its fourth such purchase. Similarly, Konotop, in Sumy region, has posted a $500,000 tender for six used trams from the EU. Set for delivery by Oct. 31, the trams would increase the municipal fleet by 50%.

 In a US-Ukraine joint venture, a $55 million, 64MW solar plant was inaugurated Tuesday in Kameianets-Podilskiyi, just north of Moldovain Khmenlnitskiy region. The plant was financed on a 50-50 basis by ICU, the Kyiv investment group, and VR Capital Group, a US investment fund. Richard Deitz, VR president, said: “Having invested more than $1 billion in Ukraine, we are one of the largest foreign investors in the country and are ready to continue to support the Ukrainian economy.” Makar Paseniuk, ICU managing partner, said: “In the near future, we plan to launch our second solar power plant, with a capacity of 35 MW, in the Kherson region.”

 Serbia’s largest Škoda importer tells Večernje Novosti, a leading Belgrade newspaper, that executives from Škoda and parent company Volkswagen talked to him last week about moving assembly from Zakarpattia, Ukraine to Serbia. Expecting more talks Friday, at the Belgrade Motor Show, Milenko Kostić, the importer, said: “There is smoke. But whether there will be fire, we will know soon.”

 Located on a rail siding three kilometers from the Slovak border, Eurocar assembles Škoda models, largely for export to the EU. With a production line capacity of 80,000 cars, the plant produced only 5,659 Skoda cars last year. This was 8% less than in 2017. During the first two months of this year, Eurocar produced 1,066 cars, virtually unchanged year over year. Eurocar is the last surviving automaker in Ukraine, a country that only a decade ago, in 2008, produced 424,000 cars. While auto parts plants now employ 50,000 people in Ukraine, plans for a major foreign automaker to enter the country foundered last year on the abrupt shift by EU automakers to electric cars.

 A nearly $100 million international tender has been announced for dismantling the cement sarcophagus built in 1986 around the still smoldering remains of the damaged reactor at Chernobyl. In Nov. 2016, a new, $1.7 million containment structure was rolled over the 30-year-old sarcophagus. The tender for removing and safely disposing of the old containment structure was announced Monday by the State Specialized Enterprise Chernobyl Nuclear Power Plant, a unit of the Ministry of Ecology and Natural Resources. The deadline for bids is April 15. ProZorro will hold the auction May 21.

 Smart Energy has hit daily gas production of 1 million cubic meters a day, the privately held British-Ukrainian group reports. If production maintains this level, it would mean a 22.5% increase over last year’s level. In 2018, production rose to 296 million cubic meters, a 31% increase over 2017. Composed of Regal Petroleum and Ukrgazvydobutok, the group produces in eastern Ukraine, in Poltava and Kharkiv.

 Ukraine’s part ownership of a container port on the Saigon River, a legacy of the Soviet era, could become a logistics hub for Ukraine’s exports to Asia, Viktor Dovhan, deputy infrastructure minister, tells the Center for Transportation Technologies. Last week, Dovhan toured the port, which is on the southern edge of Ho Chi Minh City, 43 nautical miles from the confluence of the Saigon River and the South China Sea. In 1991, Black Sea Shipping Co. – now Blasco-ChMP – bought 38% of the port of Lotos. With a 100,000 square meter patio for containers, Lotos “opens up convenient routes of communication with the global Eastern business activity centers – Singapore and Hong Kong,” Dovhan said.

 Smartphone payments with MasterCards could increase 90-fold in Ukraine in 2019-2020, Yuriy Bakhtin, Mastercard Ukraine business development director, predicted Monday at a Kyiv round table. In 2018 alone these payments increased 90-fold, he said according to Interfax-Ukraine. He said that last year Ukraine was among the world’s top five countries for digital payments with smartphones, digital watches and bracelets.

 Judging by income tax returns, Ukrainian declared incomes grew 7% last year, in post inflation terms. According to the State Fiscal Service, Ukrainians paid the hryvnia $3.6 billion in income tax, 17% more than in 2017. Inflation in 2018 was 10%.

 US-based Jabil has doubled its Uzhgorod manufacturing space and plans to nearly double its payroll, to 5,000, the company reports. In a $16 million investment, Jabil, traded on the New York Stock Exchange at ‘JBL’, will increase production of mobile phones, media players and goods for cars and for the smart home market. Coupled with a new logistics center in Tiszaújváros, Hungary, two hours by truck from Uzhgorod, “Jabil significantly increases its capacity to deliver for our customers, whilst sustaining growth in Eastern Europe,” Alessandro Parimbelli, Jabil executive vice president, said Friday at an inauguration ceremony attended by President Poroshenko.

 Competing for workers with Eastern Europe, ArcelorMittal Kryvyi Rih, Ukraine’s largest integrated steel company, plans to increase employee salaries by 15-20% on May 1, according to Vmesh-Profinfo, the trade union news site. This increase follows a 44% increase last year, to an average monthly wage of $600. Personnel director Julia Chermazovich told trade union leaders last week that $11 million in ‘13th salaries’ would be paid by Friday. The increases come despite a 22% drop last year in the company’s steel production.

 “Chicken Kiev baron on course for big EU trade win,” Politico headlines from Brussels. Under a plan emerging from the EU headquarters, Ukraine’s quota of chicken breasts would more than triple, increasing to 70,000 tons, from 20,000 today. The goal is to eliminate the ‘Batman cut’ loophole. Under this ruse, Yuriy Kosyuk’s MHP exports to the EU chicken breasts with bones still inside. EU meatpackers slice out the bones and sell the breasts tariff-free. The final deal needs the approval of EU member governments.

 Dnipro officials are fighting to protect their city airport, arguing that rebuilding their airport would take two years and cost €215 million, while the Infrastructure Ministry’s proposal to build a regional airport 40 km south of town would take five years and cost €400 million. These numbers were presented at a city hall press conference Friday by Airport Consulting Vienna GmbH, a company that has done studies for Kyiv Boryspil and Kharkiv airports.

 The airport terminals of Dnipro and Ivano Frankivsk are owned by Igor Kholomoisky, the Dnipro oligarch in self-exile in Israel. Last year, of Ukraine’s top 10 airports, Dnipro and Ivano Frankivsk were the only airports that did not see double digit passenger growth. Dnipro grew by 8% and Ivano by 2.4% Consulting Vienna said Dnipro airport should be built to handle 4 million passengers a year, four times the city’s current population and 13 times last year’s passenger flow — 300,000 people.

 By legalizing dual citizenship, Ukraine would keep its growing diaspora involved in business, culture and government service here, Foreign Minister Pavlo Klimkin tells Radio Kultura. “I stand for dual citizenship for such Ukrainians and consistently speak out in favor of it.” Despite such open attitudes, foreigners frequently complain that in practice work visas and residence permits are hard to get, often blocked on technicalities by low level ‘public servants.’

 Kyivvodocanal is posting an international tender for a five year, $1 billion, Japanese-funded project to upgrade Kyiv’s sole sewage plant to treat the waste of 5 million people, about 12% of Ukraine’s total population. Located on the Left Bank, near the southeastern limits of the capital, the Bortnychny Sewage Treatment plant was built in three phases in the Soviet era. Work started in 1965, when greater Kyiv’s population was one third the size of today. Fed by 2,662 km of sewer pipes, Bortnychny’s three units handle up to 1 million cubic meters of water a day. The 272 hectares of sludge fields contain 10 million cubic meters of sediment.

 Under tender terms released Friday, Japan International Cooperation Agency, or JICA, represents Japan for a 40-year loan, granted at 0.1% per annum with a grace period of 10 years. Of the 108 billion yen –or $971 million — loan, 30% of construction is reserved for Japanese goods. Two months ago, Kyivvodocanal, the city water company, started working with a new design and consulting joint venture composed of: Nippon Koei Co., TEC International Co. and Nihon Suiko Sekkei Co.

 “JP Morgan stuns market with Ukraine tap,” Reuters headlines from London about the US bank’s move last week to buy Ukraine’s entire placement of $350 million in Eurobonds. Sudip Roy an editor at Reuters’ International Financing Review, writes: “The trade was testament to JP Morgan’s belief that Ukraine is heading in the right direction, despite the huge challenges facing the country, and its willingness to put its balance sheet at risk.”

 Thousands of Ukrainian SMEs are to benefit from a €60 million EU-oriented credit line launched Friday by the EBRD and EU4Business. Available for privately owned businesses with less than 250 employees, the credit line is to help small and medium businesses export to the EU. Initially, €10 million will be administered by OTP Leasing Ukraine and €22 million by UkrEximBank. Matteo Patrone, EBRD regional director, said the line “provides local SMEs, which create almost 80% of jobs in the country but currently are responsible for only about 40% of GDP, with additional access to finance so they can develop further, become more competitive and comply with EU standards.”

Opened in 1794, Odessa, Ukraine’s world renowned Black Sea port, is being overtaken by its once junior satellites, Yuzhne and Chornomorsk, according to new cargo statistics from the Sea Ports Autority. Forty km south of Odesa, Yuzhne saw its cargo traffic jump by one quarter in January-February y-o-y, to 7.4 million tons, affirming its position as Ukraine’s busiest port. Forty km north of Odesa, cargo volumes at Chornomorsk increased by 27%, to 3.993 million tons. This pushed Odesa down to fourth place. Odesa’s cargo volumes increased by only 7%, to 3.971 million tons. Outside of Odesa region, Mykolaiv retained the second place spot, with a 26% increase, to 5 million tons.

 Fewer ships handle more cargo at Ukraine’s sea ports. During the first two months of this year, cargo was up 12.5% y-o-y to 23 million tons, but port calls were down 7%, to 1,726 vessels. As last fall’s bumper harvest moved through the ports, exports rose 21.5%, while imports fell by 5%. For export, the ships carried 35.5% more grain and 26% more metals than during the same period last year.

 Container traffic grew by 17% in January-February, compared to the same period last year. With dedicated container trains fanning out from Odesa, Odesa port handles 62% of the 145,000 units. Yuzhne saw its container traffic triple, to account for 24% of the nation’s total. In third place was Chornomorsk with 14%.

 Freight service is suspended on almost 10% of Ukrzaliznytsia’s 20,000 km rail network due to lack of maintenance, calculates the Center for Transportation Technologies. Fearing derailments, state railroad officials increased speed warnings by one third last year – from 251 track sections in 2017 to 339 track sections today. Track reconstruction is overdue on 2,432 km, including the 1,857 km where train traffic is suspended. Two weeks ago, the state railroad posted a blacklist of 301 freight stations that are candidate for closure due to low cargo volumes – 2.4 wagons or less a day during the fall harvest season.

 Twenty percent of trucks selected to drive through new weigh stations in Dnipro last week were overloaded, reports Interfax-Ukraine. The truckers were fined. Operated by Ukrtransbezopasnost, the State Service for Traffic Safety, the weigh stations are not popular with truckers. On the Dnipro-Kryvyi Rih highway, truckers drove over weigh station signs. One driver blocked the weigh station entrance for two hours ‘to change a wheel.’

 Reopening regional airports like beer bottles, Infrastructure Ministry officials welcomed restoration of air service between Kyiv and Uzhgorod on Friday and approved the first scheduled flight in years for Rivne.

 To Uzhgorod, Motor Sich now flies a 50-seater Antonov 24 turbojet on a twice weekly route: Kyiv Sikorsky-Lviv-Uzhgorod. The flight from Kyiv takes three hours, but the alternatives are a 10-hour drive or a 14-hour train ride. Enabling restoration of air service after a three-year gap, the European Aviation Safety Agency certified in December that Uzhgorod airport fully complies with EU air safety standards. With the runway ending at the Slovak border, all takeoffs and landings pass through EU air space.

 Welcoming the flight, President Poroshenko said: “We should bring tourists to Zakarpattia region by airplanes and trains in order to increase the potential of the region. In re-election campaign mode, the President told Zakarpattia reporters that Kyiv is spending a record $32 million to repair the region’s roads. To greet the President, residents placed flower pots in potholes along the expected route of his motorcade.

 This Saturday, Bukovyna Airlines and tour operator Join Up start a weekly flights from Rivne airport to Sharm El Sheikh, Egypt. With a leased McDonnell Douglas MD-83 passenger jet, Bukovyna and JoinUp also are studying starting a Rivne-Antalya, Turkey flight. Located a three-hour drive from Lviv airport, Rivne can draw passengers from northwest Ukraine and from southwest Belarus, also a three-hour drive. Starting last December, Eleron, a new Kyiv-based air cargo company, is basing three AN-26 turboprop transport planes at Rivne.


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



Ukraine Business News, Tuesday, March 19





  • Inflation down, Prime Stays High
  • Central Bank Moves to Allow Foreigners buy Hryvnia Bonds
  • JPMorgan Buys $350 Million of Ukraine Eurobonds in Private Trade
  • ProZorro Saves Nearly $3 Billion in 3 Years
  • Train to Plane to Get Bigger
  • Kyiv’s Big Bridge Will Boost Mega Development on Rybalsky
  • Spain’s Acciona Invests in Odesa Solar
  • Singapore’s Wilmar Invests in Yuzhne Port
  • Coming Down the Tracks: Private Locomotives, Private Rail Station Management
  • Russian Gas Flowing Through Ukraine Up 15%
  • Ukrainian Gas Consumption Down 9%
  • Heads Roll at State Oil and Gas Companies
  • Kyiv Dominates IT Growth
  • China to Finance a Russia Bypass: the Finland-Estonia Tunnel
  • UZ Railroad Starts Selling its Scrap Mountain
  • Faster Trains for Mariupol
  • New Investment for Sea of Azov Ports
  • Record Grain Harvest Bursts Silos
  • From Farms to Ports, Investment Grows in Grain Logistics
  • Arms Production: UAVs, APCs and Missiles
  • US Company Builds 2nd Zakarpattia Factory
  • Work to Create Ukraine-Slovakia Freight Corridor

 Inflation will end this year at 6.3%, one third below last year’s rate of 9.8%, predicted Yakiv Smoliy, governor of the National Bank of Ukraine. Next year, inflation will be 5%, he told reporters Thursday.

 Despite cooling inflation, Ukraine’s prime interest rate stays at 18%, a level first set six months ago, the National Bank of Ukraine reported Thursday. To combat inflation, the central bank started raising the prime rate 17 months ago, when it went from 12.5% to 13.5%. Smoliy said Thursday: “The timing of the transition to lowering the discount rate will depend on how robust the inflationary risks will be and inflation expectations improve.” Timothy Ash writes: “Solid move by the NBU to hold its policy rate at 18%, despite inflation heading lower. Prudent move given uncertainty around who wins the presidential elections – really a three horse race, with little real clarity on who will win.”

One day after a weeklong IMF review mission flew back to Washington, Smoliy predicted Thursday that Ukraine will receive a second low interest loan tranche in May. “[We] continue to cooperate with the IMF and expect to receive tranches in May and in November,” he told reporters. In December, the IMF board approved a 14-month, $3.9 billion stand-by program for Ukraine. Release of more money is contingent on Ukraine’s government making progress on anti-corruption. After noting the IMF team asked about the Constitutional Court’s recent abolition of liability for illegal enrichment, Smoliy said: “We continue to work as usual, continue to cooperate with the IMF.” The May tranche is expected to be be $1.3 billion, slightly below the December tranche of $1.4 billion.

In a key step toward allowing non resident foreign investors to buy Ukrainian government bonds, the central bank signed an agreement Wednesday with Clearstream Securities Depository. Soon, the National Bank of Ukraine is to establish a “link” with Clearstream, simplifying access of foreign investors to government domestic bonds. “Correspondent relations with the international depository will allow Ukraine to accelerate its integration into the world capital market,” said Oleg Churiy, the central bank’s deputy governor.

The National Bank of Ukraine was awarded the ‘Central Banking Award for Transparency’ Wednesday night at a ceremony in London. Selected by Central Banking magazine, previous central bank transparency award winners were: Ireland in 2017, Israel in 2016, Czech Republic in 2015, and Sweden in 2014. The US embassy in Kyiv tweeted Thursday: “We welcome the success of Ukraine in cleaning up the banking sector, and with the independent leadership the National Bank plays an important role in this transformation.”

Ukrzaliznytsia redeemed the first part of its Eurobonds for $150 million and paid a coupon yield on them. Money to repay the bonds were raised domestically, notably from Oschadbank and Ukrinfraproekt. On Feb. 13, the Cabinet of Ministers authorized the state railroad to issue up to $500 million in new Eurobonds to pay off old debt. Yevhen Kravtsov, the railroad chairman, said Ukrzaliznytsia “is always on time and fully calculated on its obligations.”

JPMorgan Chase bought $350 million worth of bonds from Ukraine’s government Tuesday, paying 98.88 cents on the dollar, reports The Wall Street Journal. The bank has been reselling them to investors at about 100.50 cents on the dollar. The Journal calculates that if JPMorgan sells all of the bonds at that price it would make a $5.7 million profit from this private sale. “In general we have a supportive environment for emerging markets, and JPMorgan is taking advantage of that,” Jan Dehn, research head at Ashmore Group, tells the Journal. ”Good for them. That’s what the market is there for.”

From the government side, the Finance Ministry announced Wednesday the re-placement of Eurobonds with a maturity period up to Nov. 2028 for $350 million, with a coupon rate of 9.75% per annum. The placement price was not indicated in the posting. With this placement, total nominal issue volume increased to $1.6 billion

In its three years of existence, the ProZorro electronic procurement system has handled 3 million tenders, saving the nation $2.8 billion, reports Maxim Nefyodov first deputy minister of economy. Open to foreign and national bidders, ProZorro posts tender details and electronically handles the bidding process.

In one step toward rebuilding Soviet-era hydro capacity, a $50 million contract was signed in Kharkiv Thursday to rebuild two of the 60-year-old power units Kremenchuk Hydroelectric Power Plant. With much of the money coming from the EBRD and European Investment Bank, the hydro turbines will be built by Turboatom and the hydro generators will be built by Electrotyazhmash. The third dam in the Dnipro cascade, the 624 MW Kremenchuk plant was inaugurated in 1959 at Svitlovodsk, or Bright Waterway. Prime Minister Groysman who presided over the signing said: “This contract provides for work for 25,000 Ukrainian workers, engineers, designers.”

China’s Great Wall Drilling Company is looking for contracts to design, drill and overhaul oil and gas wells in Ukraine, reports the Ministry of Energy and Coal Industry. On Wednesday, several officials of the company, a unit of China National Petroleum Corporation, met in Kyiv with Ministry officials “to establish mutually beneficial cooperation to involve engineering and technical services in the oil and gas sector in Ukraine.”

Estonia’s Bolt, formerly Taxify, expands its smartphone taxi hailing service to Lviv this weekend. After launching in Kyiv last June, the service expanded in December to Kharkiv. Now in 30 countries, Bolt competes in Ukraine with Uber and Uklon.

Kyiv’s single car, self propelled electric train to the plane has proved so popular that the state railroad plans to replace it with a conventional diesel locomotive pulling passenger cars, Yevhen Kravtsov, chairman of Ukrzaliznytsya, tells Segodnya news site. Marketed as the Boryspil Express, the 80 UAH ($3) ride between the airport and Kyiv Central Station is often so full that some passengers have to stand during the 35-minute trip. 

Kyiv’s Podolsko-Voskresensky bridge, a city fixture since work began in 2003, is to receive $8 million to speed up construction of the seven kilometer road and rail bridge over the Dnipro. Designed to carry 60,000 cars a day between Podil and the Left Bank, the ‘bridge’ is actually an ensemble of seven bridges, four interchanges and two viaducts. If spending holds up, the bridge could be open to road traffic by the end of next year. Allocating another $8 million to the northern extension of the Green metro line, Prime Minister Groysman told Mayor Klitschko: “Kiev should be the pearl of Europe.”

One beneficiary of the big bridge will be Sergei Tigipko’s TAS group, which plans to build on Rybalsky Peninsula ‘Lipki Island City Resort’ – a complex of 36 buildings with 6,200 apartments housing 15,400 people. The development will include 43,500 square meters of leasable office space and 33,300 square meters of leasable retail space. This week, TAS’ partner, City One Development, is presenting this mega project to potential investors at MIPIM, the annual real estate conference in Cannes.

Also at MIPIM, Ukrainian Trade Guild, the real estate consulting company, is promoting $400 million worth of real estate projects in Dnipro, Kyiv, Lviv, and Vinnytsia. The stand features: Alfa Mall, Alfa Residence, Alfa District (Dnipro), LCD Europe, IT cluster Hypercube (Vinnytsia), and urban hotels Urooms (Lviv).

Spain’s Acciona Energia Global will acquire majority control of a 26 MW solar project in Odesa started by Vasily Khmelnitsky’s UDP Renewables. Last summer, Acciona announced it was joining UDP to invest €55 million to boost capacity to 58 MW in the complex. UDP has posted on its website plans to further boost capacity this year to 175 MW. Called Gudzovka-Solar-1 and Gudzovka-Solar-2, the two solar stations are located in Artsyzky, Bessarabia, 100 km southwest of Odesa city.

Holland’s AEG Power Solutions has signed a licensing agreement with Odesa’s S-Engineering LLC to manufacture solar inverters using AEG technology. A key component of solar plants, inverters convert DC power coming from a solar panel into alternating current, or AC, which can be fed into a commercial electrical grid. The first inverters to be produced in Ukraine, the AEG inverters will be eligible for slightly higher green tariffs, reserved for Ukrainian-made renewable energy products.

Singapore’s Delta Wilmar CIS LLC plans a major expansion of its facilities at Yuzhne: a new shipping berth, a soybean processing plant, and storage and handling facilities for shipping bulk agricultural cargo. In coordination, the Sea Ports Authority plans to dredge the approach channel to the new pier. The new plant will be capable of crushing 2,000 tons of soybeans a day. The terminal will store 40,000 tons at a time.

A unit of Wilmar International, one of Asia’s largest agribusiness groups, Delta Wilmar is expanding its agro products handling capacity at Yuzhne, Ukraine’s biggest port, to 1.2 million tons a year. Rajvis Veckagans, chairman of the Ports Authority, said: “This project with Delta Wilmar CIS will create 200 new jobs in the port, and increase the processing capacity of agricultural products by 600,000 tons per year.”

Nibulon, the grain producing and exporting giant, expects to open in June its newest river port, in Ternivka, Zaporizhia region, on the Ploska Osokorivka river, a Dnipro tributary. Nibulon wants to build a Black Sea terminal in Oleksandrivka, but the company waits for permits from Kherson region authorities. Docking at a string of private ports on the Dnipro, Nibulon barges made 660 trips last year, moving 2.8 million tons of grain and oilseeds, a 24% jump over 2017.

Ukrainian authorities want to restore the Dnipro to its Soviet-era role as Ukraine’s Mississippi. Meeting with Kyiv region farmers on Tuesday, Infrastructure Minister Volodymyr Omelyan noted that river cargo volumes have tripled since 2013, to 10 million tons. “And this is only the beginning,” he promised. “It is cheaper, more convenient, and, in the end, it is more logical.”

The low design of Russia’s Kerch Strait bridge cut by one third the list of ships that historically served Mariupol, asserts Vadym Chernysh, the minister responsible for displaced people from the occupied territories. “Russia restricted the height of vessels: from now on, vessels like the Panamax cannot pass through the channel,” he said, adding that metal exports from Mariupol are down by 140,000 tons a month. In addition, he said, the bridge pylons have changed currents, causing silting problems. Russia’s ports on the Azov have half the depths of Ukraine’s ports and are used largely for fishing.

A pilot program of private freight trains will start in Ukraine this year, Minister Omelyan promises. Private fleets of freight cars are increasing, but private locomotives have been banned. After the Rada rejected a private train bill in December, the government submitted a new one on Jan. 31. Without going into details, Omelyan told the Kyiv region farmers: “This year, in the experimental mode, we are introducing private traction on the railroad.” Earlier, he told UNIAN the pilot program could involve a major international rail operator working on routes that are not profitable for Ukrzaliznytsia. State railroad freight cars will increasingly be leased through ProZorro, the electronic auction platform. Omelyan told the farmers: “The price may fluctuate depending on supply and demand. Electronic auctions are anti-corruption protection.”

To test private companies running train stations, Ukrzaliznytsia plans to transfer Khmelnitsky and Mykolaiv stations to private management this year. Handling 1.6 million passengers last year, Khmelnitsky is Ukraine’s ninth busiest station. Mykolaiv was not in the top 10. The state railroad is working with the EBRD and the World Bank to benefit from models that work well elsewhere. Experimenting with these two relatively small stations is a warmup to the real prize: private management of Kyiv’s Central Station. The busiest of Ukraine’s 1,300 rail stations, Kyiv’s Central Station handled 23.4 million passengers last year.

Ukraine is closing the nation’s air space to Boeing 737-8 MAX and 737-9 MAX. The measure puts Ukraine in line with the EU, which suspended use of the aircraft after two fatal crashes. No Ukrainian airline uses the new, fuel saving passenger jets. Ukraine International Airlines plans to receive three this year, including one within two weeks.

The volume of Russian gas flowing across Ukraine to Europe was up by 15% in the first two months of this year, compared to the same period last year. Ukrtransgaz, the state gas transmission company, said that 13.8 billion cubic meters of gas passed through Ukraine’s pipeline system to the EU and Moldova. Officials for Naftogaz, the parent company, predict that volumes could drop to zero next year.

Ukrainians cut their gas consumption by 9% during the first two months of this year, compared to the same period in 2018, reports Ukrtransgaz. The state pipeline operator did not say why consumption dropped to 7.9 billion cubic meters. Household gas prices were hiked in November, a move that spurred conservation. Last year, Ukraine raised its gas consumption slightly, by 1.3% year over year, to 32.3 billion cubic meters of gas. Since 2015, 525,000 Ukrainian families have received “Warm Loans” – government credits to winterize their homes and to buy energy efficient hot water boilers.

Mark Rollins, the British energy executive who has served as chairman of the Ukrnafta supervisory board since November 2015, will have his powers ‘terminated’ in a shareholders meeting on April 30, reports Ukrinform. The state news agency did not say why the former Shell executive would leave his post overseeing Ukraine’s largest oil and gas producer.

In a wider shakeup of Ukraine’s state-owned energy companies, the government has not renewed the contract of Andriy Kobolyev, CEO of Naftogaz. Kolobyev’s contract expires in 10 days. This Friday, Oleg Prokhorenko steps down as CEO of UkrGazVydobuvannya, the state gas producer. Prime Minister Groysman criticized Kobolyev for receiving an excessively high salary and Prokhorenko for not raising gas production fast enough.

Fifteen Ukrainian IT companies are on a worldwide list of top 100 tech companies rated for consistent performance over the last decade. Inclusion on the list is based on rankings given in past years by the New York-based International Association of Outsourcing Professionals. Ten companies have their headquarters in Ukraine: AMC Bridge, Ciklum, ELEKS, Infopulse, Intellias, Miratech, N-iX, Program-Ace, Sigma Software, and Softengi. Five others do much or most of their work in Ukraine: EPAM, Luxoft, Softjourn, Svitla, and TEAM International Services. The first list included only four Ukrainian companies.

Land lines are fading out fast, especially in villages where mobile access is increasingly available and affordable, reports the State Statistics Service. For rural households, the number of land lines dropped by one quarter last year, to 564,000. In cities, households with land lines dropped by 18%, to 3.8 million. Overall, about 7 million homes and offices in Ukraine have land lines.

The government has approved a $11 million project to create an International Pilot Training Center to train pilots under EU standards to fly for Ukrainian and European airlines. Training would be divided between Kyiv’s Hostomel Antonov airport and the National Aviation University’s flight academy at Kropyvnytskyi airport, Kirovohrad. Money would be spent to upgrade the Kropyvnytskyi landing strip and to buy two flight simulators and 24 single engine, two-seater planes: 12 Italian-made Tecnams, eight Ukrainian-made Skyeton K-10s, and four American-made Cessna 172s.

 Kyiv accounted for 46% of all IT vacancies in Ukraine last year, Volodymyr Kurylo, CEO of CleverStaff, tells Interfax-Ukraine. Following in the top five cities were: Lviv – 15%; Kharkiv – 13%; Odesa – 6%; and Dnipro – 6%. Demand for QA engineers grew by 67%, for front end developers doubled, and for Android developers tripled. “Based on the changes in the number of vacancies in the CleverStaff database, we can predict that within two years in Ukraine there will be a demand for 7,600 front end developers, 7,200 testers, and 4,600 Java developers,” said Kurylo, whose company develops software for applicant tracking and recruitment automation.

From Kyiv to Helsinki by train, bypassing Russia? Peter Vesterbacka, the Finnish entrepreneur behind the Angry Birds video game franchise, has signed a memorandum of understanding with a Chinese company, Touchstone Capital Partners, to arrange €15 billion to build a 100 km road and rail tunnel between Helsinki and Tallinn. Although the two cities face each other across the Gulf of Finland, the rail connection requires an 800 km detour through Russia. In addition to building the world’s longest undersea tunnel, the Chinese investors would build four stations and provide high speed trains. Completion would be by 2025, also the target year for completing Rail Baltica, a high speed European gauge railway connecting Tallinn and Warsaw. This year, Ukrzaliznytsia expects to extend its new Four Capital train to Tallinn. Launched last fall, this overnight train runs twice a week on a south-north route: Kiev – Minsk – Vilnius – Riga.

 Ukraine is more than doubling exports this year of a niche grain: rye. From last July to this January, Ukraine exported 85,000 tons of rye, 123% more than the total exports for the last marketing year, reports UkrAgroConsult. Rye is used for bread, beer, some whiskeys and horse feed.

Rusting landscapes familiar to train riders may gradually improve as Ukrzaliznytsia starts to turn its scrap steel into cash. On Monday, Metinvest agreed to pay $7 million for 26,800 tons of railroad scrap sold at auction on the ProZorro auction platform. This year, the state railroad plans to earn $75 million from scrap metal sales. With about 450,000 tons of metal for sale, it will take at least two years to work through Ukrzaliznytsia’s scrap mountain.

To cut the isolation of the Sea of Azov, Ukrzaliznytsia launches on March 30 a Kyiv-Mariupol ‘Night Express.’ Running every other day, the ‘express’ will cut two hours off the route, reducing it to 14 hours and 44 minutes.

Starting March 31, trains will travel daily from Mariupol to Kharkiv, Ukraine’s second largest city and home to a major international airport. These overnight trains will take 12 hours and 40 minutes.

Mariupol plans to inaugurate a $6 million modern grain terminal by August, in time for the new harvest, Igor Barsky, port director, tells the Center for Transportation Technologies. To drum up business, a major national conference, Grain Logistics and Terminals of Ukraine, will be held in Mariupol on June 12.

With half a billion dollars worth of wind projects planned for Ukraine’s Sea of Azov coast, Berdyansk is becoming a major port of entry for the massive wind turbines. DTEK and China Machinery Engineering Corporation plan to send 63 turbines through Berdyansk this year. Already, in January, 26 wind turbines were unloaded at Berdyansk Starting last May, Russian border patrol boats have intermittently harassed commercial ships heading for Berdyansk and Mariupol.

Asket Shipping has increased grain storage capacity at Berdyansk port to 100,000 tons, a 42% increase over last year. The company built a new warehouse and expanded an existing one, Victoria Abreyeva, Berdyansk director for Asket, tells the Center for Transportation Technologies.

Bids are accepted until March 26 on a ProZorro tender for major repairs at the main berth of Berdyansk port. Later this year, the Seaports Administration plans to put up for tender work on the second berth. The first job is to cost $140,000.

Russia and Ukraine have quietly set 2019 quotas for the Sea of Azov fish catch. After representatives of the two fishery agencies could not reach agreement in face to face meetings last fall, diplomats set the quotas for the catch – anchovies, sprat, gobies, herring, mullet and taran. When 95% of the total limit is reached, both sides are to stop fishing. Three decades ago, the Azov was the Soviet Union’s nation’s productive fishing area. Last year, Ukraine caught 21,300 tons of fish in the Azov. Ninety Ukrainian businesses used 811 fishing boats, employing 3,670 fishermen.

To help the Azov Sea ports, the Infrastructure Ministry plans to exempt Mariupol and Berdyansk from contributing to the state budget, leaving that burden to Ukraine’s 11 Black Sea ports. Minister Volodymyr Omelyan said: “We will not leave our two Azov ports in trouble. All the resources of the state will be sent to help. Together with the European Commission and our American partners, we are developing a project of financial assistance to improve the infrastructure of both ports and cities as soon as possible.”

The EU is to announce in coming days details of €50 million in road, rail and port aid to Ukraine’s Azov. At a recent meeting with EU officials in Brussels, Hennadiy Zubko, Ukraine’s regional development minister, talked about “the infrastructure gap between the Sea of Azov region and the rest of the country.”

AzovAkvaInvest Park, a 16-hectare industrial park in Mariupol, has been registered by the Economic Development and Trade Ministry. The goal of the park is to create 665 jobs in light industry. Ismail Hacioglu, a Turkish entrepreneur, has signed a memorandum with the City Council to build an assembly plant for elevators, escalators and home lifts.

With Swedish and USAID aid, much of Mariupol’s Chess Club has been converted into an IT-Hub. In addition to providing space for IT startups, the IT-Hub provides classrooms for Beetroot Academy. Since opening in Mariupol 18 months ago, Beetroot Academy, a Swedish-funded NGO, has trained 100 local students in skills needed to work for international IT outsourcing companies.

 Ukraine lost up to 15% of its record 70 million ton grain harvest due to improper storage and handling in transport, estimates Pro-Consulting. Investment is needed in silos and elevators. Competition is needed among the grain handling facilities at the nation’s 13 seaports, reports UNIAN, citing the Kyiv-based market analysis firm.

Construction starts this summer on a $12 million grain storage and processing complex in the Bila Tserkva industrial park. Designed to ship gain by truck or train, the complex is to have the capacity to accept 3,000 tons of grain a day. In the summer of 2020, Volytsia-Agro LLC plans to open the complex which will have an elevator, grain dryers and silos for wet and dry grain. Vasyl Khmelnytsky, owner of the farming company and the industrial park, made the announcement on Facebook.

Epicenter K Group is expanding its modern silo storage capacity to 1 million tons at eight locations, Svitlana Nykytiuk, tells Interfax-Ukraine. In July, the farming group plans to launch the first $30 million phase – 500,000 tons in four locations. While building rail tracks to two silos, the company also is spending $6 million to buy 100 grain trucks.

Kernel, the agro giant, opened its new grain export terminal in Chornomorsk last month, adding one million tons of throughput capacity. By the end of this year, the company is to open a second phase, increasing its Chornomorsk throughput by an additional three million tons. Last month, Kernel, Ukraine’s largest vertically-integrated agribusiness, bought railcar company RTK-Ukraine. Dragon Capital writes: “With almost 3,000 grain hoppers, at a estimated valuation of $64 million, [Kernel] almost met its grain transportation needs, complementing the existing fleet of 500 wagons.”

As demand grows to move grain, Sergey Tigipko is talking with foreign investors about expanding his grain wagon fleet as much as seven times, to 10,000 wagons. Tigipko, owner of TAS-Logistic, tells Novoye Vremya that his company now has 1,200 grain carriers.

Ukrzaliznytsia has posted on its website a list of 301 ‘low-performing’ grain stations that are candidates for closure. During the last harvest season these stations averaged less than 2.3 grain cars a day, Andrei Ryazantsev, director of finance at the state railroad, tells the Center for Transportation Technologies. Last summer, Ukrzaliznytsia announced that 130 grain stations received less than one car a day. One grain hopper typically carries 70 tons of grain.

Ukraine is the world’s largest exporter of millet, a grain used for food and fodder, according to Mordor Intelligence. The smallest of Ukraine’s grain exports, millet goes largely to Germany and South Africa. Ukraine exported 76,000 tons in 2016. By comparison, Ukraine expects to export 49 million tons of grain in the marketing year that ends this June.

Ukraine, South Korea and the US are working with Science Technology, a Saudi company, to design and build an unmanned combat aerial vehicle capable of carrying tons of weapons. Details of the long range ‘unmanned bomber’ were revealed at IDEX 2019, a recent defense show in Abu Dhabi, reports Defense Blog news site. Citing interest by Middle East and North Africa militaries, the Washington-based blog reports: “The UCAV fleet in the region is forecast to increase from dozens of aircraft in 2018 up to 700 combat drones in 2028.”

Ukrspetsexport, the military import-export agency, is building an armored vehicle assembly plant in Myanmar, reports Defense Blog. Equipment and production machines have arrived in Yangon for a plant that is to start operating next year, reports Defense Blog. The plant will assemble 8-wheeled BTR-4U armored personnel carriers, designed by Kharkiv’s Morozov Design Bureau. From the same Kharkiv company, the Myanmar plant will build 2S1U self-propelled Gvozdika howitzers. After Myanmar’s Buddhist majority government forced much of its Muslim minority to flee to Bangladesh, the US and the EU expanded existing bans on sales of arms and equipment that can be used for internal repression.

US-based Curtiss-Wright Corporation has signed an agreement with Kropyvnytskyi-based RadICS LLC to market their nuclear power safety systems to US power plant operators. Under the agreement signed recently in Dallas, the Idaho Falls unit of Curtiss-Wright will be the US stocking facility for all RadICS system components for the Kirovohrad region company.

US-owned Jabil Circuit Ukraine, Ltd. is building a second electronics assembly plant in Zakarpattia, 300 meters south of the main rail freight yard for trains to Slovakia. The new, 20,000 square meter plant will be five km south of Uzhgorod and adjacent to Jabil’s existing plant, a workplace for 2,300 people. The new plant is to employ 1,300 people assembling mobile phones, media players and computer equipment for export to the EU.

Slovakian and Ukrainian officials want to speed east-west freight and passenger rail traffic by developing logistics terminals in Košice and Mukachevo and a joint customs and border control point in Chop, reports Railwaypro news site. At a bilateral meeting, Infrastructure Minister Volodmyr Omelyan cited Ukraine’s new double track tunnel through the Carpathians mountains, saying: “After the opening of the Beskidy rail tunnel, the transit though the territory of Ukraine and Slovakia can increase by several times.” Dana Meager, from Slovakia’s Finance Ministry, said: “The development of a logistics complex in Košice can turn Ukraine and Slovakia into a gate between Asia and Europe and into a one big logistics hub.”

ActiveChat, a Kyiv-based chatbot software company, hit the top of sales charts last month at AppSumo, the Texas-based deals website for digitally distributed online services. ActiveChat sold 10,800 subscriptions during the last two weeks of January, making it the period’s bestselling Software as a Service, or SaaS. The previous record for a Ukrainian company was DepositPhotos, which sold 8,000 subscriptions on AppSumo. Believing in the future of voice-activated chatbots, Sergei Kostyukov, the company’s managing partner, is talking with potential American investors with a goal of increasing ActiveChat’s market cap 10-fold in the next three years.


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



Ukraine Business News, Tuesday, March 12





  • Oil, Gas Auctions to Unleash $250 million Investments
  • Dutch Buy Lviv Animal Feed Maker
  • Inflation Slows
  • Boryspil’s Terminal F Reopens March 31
  • Next for Ryanair: Kharkiv
  • New Office Space to Double in Kyiv This Year
  • Dragon Buys Another Shopping Center
  • US Ambassador Calls Out Government on Corruption
  • Foreigners Skip Auctions of Oil, Gas Blocks
  • Ukraine Has World’s 4th Cheapest Internet
  • UkrGazvyDobuvannia nearly doubled its ‘fracking’ operations
  • Ukrainians Spend $1 billion on Smartphones
  • Mariupol Mega Plant Will Export Steel Instead of Pig Iron
  • River Cargo Grows
  • Regional Airports Revive
  • France’s Alstom Eyes 500 Locomotive Deal with Ukraine
  • SCM Invests $1.3 billion in Ukraine Cos
  • EU to Spend €50 Million on Azov Roads and Rails

 The three oil and gas blocks sold at electronic auction should trigger almost $250 million in exploration and production investment, says Stepan Kubiv, Economic Development Minister. Sold Wednesday by online auctions on ProZorro, the blocks went for a total of $5 million, about triple the opening price. Kubiv said: “Simple and competitive access to special permits for subsoil use is a boost to increase our own production.” Concorde Capital’s Alexander Paraschiy writes: “This was the first transparent tender for the sale of oil and gas licenses in Ukraine. If such tenders become a regular occurrence, they will benefit the nation’s investment climate and energy independence.”

Holland’s Royal De Heus, one of the world’s top 10 animal feed suppliers, is buying majority control of D-Mix, a Lviv region manufacturer of food for chickens and pigs. With a capacity to make 80,000 tons of soy and sunflower-based feed, D-Mix is about to start building a multi-million dollar pre-mix plant at their Zolochiv site. Betting on beef and dairy herds expanding in the 2020s, Koen de Heus, CEO of the family owned multinational, says: “We believe that our extensive experience in international livestock farming and the animal feed sector will also be of value in further professionalizing livestock farming in Ukraine.”

The government will spend $130 million this year to turn around the gradual decline of the national livestock herd, Olga Trofimtseva, Minister of Agrarian Policy and Food, told the International Dairy Congress in Kyiv. Of this amount, about half will be for rebuilding milking barns and fences and purchases of modern equipment. For households, the subsidy for keeping a milk cow is raised to $33, paid twice a year.

Kormotech, a Lviv region producer of cat and dog food, is building a wet food plant in Lithuania and is expanding its dry food production in Ukraine by 50%, to 46,000 tons. To reach a target of exporting 50% of production by 2023, the company is entering new markets — in South America, Hungary, Lebanon, Libya and the Czech Republic. The company sells its pet food under the brands Optimeal, Club 4 Paws, Meow!, and Woof!

Inflation slowed in February to 8.8% year over year, reports the State Statistics Service. This was down from 9.8% for 2018. The National Bank of Ukraine predicts inflation will end this year at 6.3%. The IMF and World Bank predict 7.3%.

Work is to start this spring on doubling to four lanes the 200 km Lviv-Rivne section of the M-06, cutting drive times in half, to 90 minutes. This is a key section of the main truck route west from Kyiv and Zhytomyr to the Polish border. Construction will include building bypasses around towns on the way, reports the Center for Transportation Technologies, citing Ukravtodor, the state highways agency.

Hungary plans to build next year a new highway bridge over the Tisa River near Chop, the Zakarpattia border town. In addition, both countries are working to cut travel times on the new Mukachevo-Budapest train to six hours, from seven. Work also is underway to put to use Hungarian loans for Zakarpattia road rebuilding, first offered two years ago, reports Ukraine’s embassy in Budapest, citing a meeting Friday between Hungarian diplomats and Ukraine Infrastructure ministry officials.

Taking trucks off roads, Ukrzaliznytsia expands its increasingly popular container freight service, launching a new train running the north-south length of the nation, from Belarus to Romania. On Wednesday, the first train rolled — from Udritsk on the Belarus border to the Chernivtsi rail crossing with Romania, a 1.5-day trip. Started in earnest two years ago, Ukrzaliznytsia’s container service has expanded to 10 domestic trains and eight international transit trains. Yevhen Kravtsov, chairman of the state railroad, said: “This guarantees shippers the reliability, safety and speed of delivery of products on the principle of door to door.”

Boryspil’s Terminal F reopens March 31, relieving congestion at Terminal D, which handled 1 million passengers a month last year. Airlines moving to Terminal F are: Aigle Azur, Laudamotion, Ryanair, and SkyUp. Terminal F will also handle some flights by: Air Serbia, Bravo Airways, Bukovyna, FANair, Iraqi Airways, Wind Rose and YanAir. “Charter and low-cost carriers operating point-to-point direct flights will operate in Terminal F,” Yevhen Dykhne, first deputy director of Boryspil, writes on Airlines handling transfer passengers and codeshares will stay in Terminal D.

By refurbishing and reopening regional airports, Ukraine could triple its air passenger market to over 60 million people a year, Infrastructure Minister Volodymyr Omelyan tells Channel 5 TV. “We will be able to reach it quickly enough if we invest in airports,” the minister said. He noted that Ukraine’s air traffic increased last year by 25%, hitting 20.5 million passengers.

Ryanair is to start flights from Kharkiv this fall, making Kharkiv Ukraine’s second city to be served by Europe’s largest airline. The main destinations under negotiation are cities in Poland, Germany and the Baltics, Vladislav Ilyin, the airport’s marketing director tells ‘On Vacation’ (U Vidpustku) website. He says: “We plan that this year Ryanair will fly from Kharkiv.” Serving Ukraine’s second largest city, Kharkiv airport registered a 19% jump in traffic last year, to almost 1 million. Airport officials also are negotiating with Wizz Air about adding more German routes, beyond the sole Kharkiv-Dortmund flight.

New flights and new frequencies were approved by Ukraine’s Aviation Service Commission. Jonika airline won the right to fly Kyiv-Gothenburg, Sweden and Kherson-Erbil, Iraq. UIA won the right to increase the frequencies of its flight from Kyiv Boryspil to Toronto to five times a week and to Paris to 18 times a week. SkyUp won the right to increase the frequencies of its flights from Boryspil to Alicante, Spain to four times a week and to Tbilisi to daily. In June, UIA plans to start flights from Kherson to Burgas, Bulgaria.

Betting on foreign travel growth, Azur Air Ukraine is doubling its long-haul fleet by leasing two more Boeing 767-300s, reports Karen Antonov, charter airline’s company’s general director. The additional planes will allow Azur to offer business class on its flights to Barcelona, Egypt, Tunisia and Turkey.

New office space is to double this year in Kyiv – to 117,000 square meters, according to a new study by CBRE Ukraine. In 2020, new space is to increase by another 20%, fully returning to pre-2014 levels. Of new construction, 58% is in the central business district, an area with good metro access. As vacancies dropped last year from 17% to 10%, monthly prime office rents rose by 9% y-o-y to $25/square meter. Last year, about $130 million of known investments were made in Kyiv offices, the highest level since 2008.

Driving demand, IT companies accounted for 38% of office take up and co-working hubs accounted for 24%. The biggest expansion was by Regus, which rented three new office spaces for a total of 8,300 square meters. Of this take up, upgrading accounted for 51% and company expansions for 34%. CBRE writes: “Demand for high quality, well-located offices came from IT, high tech and telecommunications and business services companies willing to open most competitive offices in the fight for the best talent in the market.”

Dragon Capital has bought Aladdin Kyiv, its fourth shopping center in less than three years Ukraine. Located at a left bank highway interchange, near Poznyaki metro station on the Green metro line, Aladdin is 500 meters from Pyramida, a slightly larger mall that Dragon bought in 2016. Between those two purchases, Dragon bought Sky Park in Vinnytsia and Victoria Gardens in Lviv. Vladimir Tymochko, Dragon’s managing director for equity, says the purchase of Aladdin, with 10,571 square meters of leasable area, brings the total area of Dragon’s shopping center portfolio in Ukraine to 160,000 square meters. The Aladdin purchase price was not disclosed. In 2016, Interfax-Ukraine estimated the purchase price of Pyramida was $25 million.

Almost 40% of Ukrainians would like to open their own business, but two thirds believe the state hinders small and medium businesses, according to a late February poll of 2,500 people conduced by the Sociological Group Rating, a nonprofit entity. But only 27% see the government’s role as promoting economic freedoms. A majority, 64% see the state’s role as ensuring income equality and social justice, a jump from 48% last June.

An overwhelming majority – 77% – support cutting bank interest rates, currently the highest in Europe. Of respondents, 63% trust small entrepreneurs and 60% trust medium-sized entrepreneurs. Confidence in big business owners fell to 20%, and in ‘oligarchs’ to 6%.

It is now easier for foreigners to get work permits, the government says. Under regulations adopted Wednesday, foreigners are allowed to submit documents to the Foreign Ministry’s Consular Services Department, without leaving Ukraine. The change was announced at the latest deregulation meeting of the Cabinet. At the meeting Prime Minister Groysman said the government has abolished or changed 1,200 regulatory documents, including the removal Wednesday of 149 obsolete acts from the mid-1990s. The government abolished the obligation for companies to keep complaint books.

Ukraine’s goal this year is to climb 10 notches in the World Bank’s Ease of Doing Business ranking. Last year, Ukraine rose five points to rank 71st out of 190 countries. Charged with this deregulation mission, the current Cabinet is to remain in place until next November, when results of the Oct. 27 parliamentary election are known.

Of 10 oil and gas blocks up for electronic auction Wednesday, there were no bidders on seven and only Ukrainian bidders for three. In the three successful auctions, prices were bid up — from 43% to five times the asking prices. Nikolay Zlochevsky’s Burisma group agreed to pay $925,000 for a lot in Poltava. A unit of Rinat Akhmetov’s DTEK agreed to pay $3.1 million for a Kharkiv block, almost five times the lowest bid. State-owned UkrGazVydobuvannya agreed to pay $1.1 million for another Kharkiv block, three times the starting price. Foreign investors had complained about the lack of insufficient seismic data. They also expressed concerns that Ukraine’s next president could change the rules of the game.

In a survey of 230 countries, Ukraine has the fourth cheapest mobile internet in the world. With an average prices of US 51 cents per gigabyte, Ukraine was only bested by India, Kyrgyzstan and Kazakhstan in the Worldwide Mobile, Data Pricing list compiled by Cable, a Britain-based broadband advisory service. At the other end of the scale are: Zimbabwe $75 per gigabyte; Greece –$33; Chad — $23; Switzerland — $20; Turkmenistan — $20; Greenland — $17; Mozambique — $16; Portugal — $14; and Norway — $13. Cheap internet boosts Ukraine’s IT industry.

Naftogaz’ gas production company, UkrGazvyDobuvannia, nearly doubled its ‘fracking’ operations this winter. The state company reports that it plans to conduct over 100 hydraulic fracturing operations this year, extracting an extra 500 million cubic meters of gas.

Ukrainians spent nearly twice as much last year to buy mobile phones as to buy laptops and TVs combined. Ukrainians spent $1.1 billion to buy 6.9 million mobile phones, 78% of them smartphones. The average smartphone cost $200. The average push button phone cost $23. Point of Sales Tracking GfK Ukraine reports, Ukrainian spent $320 million to buy 610,000 laptops and $333 million to buy 810,000 televisions.

 Billed as “the largest industrial construction project in history of independent Ukraine,” a new $150 million steel casting plant in Mariupol is to pump out $1 billion worth of new steel slab exports a year. Metinvest says the new plant will increase Mariupol’s Iron & Steel Works steel smelting capacity by almost 40%. It will allow the plant to replace exports of low value pig iron with higher value steel slab. Inaugurated Friday after 2.5 years of construction, the new plant has created 347 new jobs.

Capable of casting 2.5 million tons of steel slab a year, the plant largely uses Austrian equipment from Primetals Technologies. Raiffeisen Bank International provided a €43 million loan, covered by Austria’s export credit bank, Oesterreichische Kontrollbank AG. Gas cleaning and dust removal equipment comply with EU environmental requirements. Yuriy Ryzhenkov, Metinvest CEO, said: “This large-scale project will ensure a clean production and new jobs, additional foreign currency revenues amounting to approximately $1 billion for the country, and guaranteed prospects to the industry, the region and the city.”

Nibulon has launched its 10th and final tug boat from its Mykolaiv ship yard. Completing a five-year construction project, the tug fleet is to haul grain barges down the Dnipro to Nibulon’s Black Sea terminals in Kherson and Mykolaiv. The latest tug uses key imported foreign components: Mitsubishi — main engines; Volvo-Penta — diesel generators; Rolls-Royce — screw-steering columns; and Viessmann — hot-water boiler.

With an early end to the ice season and completion of repairs on two locks — Kakhovsky and Zaporizhia – commercial shipping on the Dnipro is to resume this week. Last year, 10 million tons of cargo were moved on the Dnipro, up 22% from 2017.

Using the Dnipro River to move construction materials, Kyiv’s river port plans to build a 10,000 square meter, multi-modal logistics center, capable of handling containers for trucks or trucks, reports the Center for Transportation Technologies. Sand, gravel, metal, and cement are target cargos. Over the last five years, the Kyivport company has invested $1.5 million in building warehouses and a customs complex and buying an icebreaking tugboat and a floating crane. Two barges and a hydraulic lift were bought from Belarus. The port aims to attract cargo from Belarus, 1-2 days upriver from Kyiv.

Wizz Air is basing a fourth Airbus A320 jet at Kyiv Sikorsky this month, responding to near doubling of its Ukraine passenger traffic. In January-February, the airline carried 300,000 passengers on its 44 Ukraine routes, up 94% from the same period last year. Last weekend, the discount airline opened four new Ukraine routes: from Lviv to Copenhagen, and from Kyiv Sikorsky to Riga, Bremen, and Billund, Denmark. The company now employs 140 people in Ukraine and says its investments here total $400 million.

Mykolaiv airport aims to 200,000 passengers a year in the early 2020s, surpassing a level not seen 1990. Closed for a decade, the airport reopened 10 weeks ago with SkyUp flights to Sharm el Sheikh, Egypt. On May 1, SkyUp starts flying to Antalya, Turkey. On a visit to the airport Monday, President Poroshenko was told flights are planned to Kyiv and to Istanbul.

Cherkasy airport, closed since 2002, is negotiating with SkyUp Airlines to host international charter flights later this year. Odesa’s Rostdorstroy is under contract to complete repaving the airport’s 2.5 km landing strip by the end of this year.

 France’s Alstom is prepared to supply 500 train locomotives to Ukraine, Henri Poupart-Lafarge, the company CEO tells the Center for Transportation Strategies. Alstom is proposing to Ukrzalinystia a package that would include French technology, French financing and a degree of Ukrainian production. Asked about the degree of localization, he responded: “We need to balance our desire to localize production in Ukraine, which will benefit the Ukrainian economy, with the demand of the French side for localization in France.”

Prime Minister Groysman told the Alstom CEO about a locomotive deal: “The issue of localization is very important to us. We are interested not only in maintenance but also in full scale production.” The French CEO responded: “You have every opportunity to become a production base of European scale. We are, of course, aware of the amount of work that we have ahead, but we came to strive for a strong and lasting partnership.” According to the Center for Transportation Technologies, Alstom has interview 50 potential parts supplier and five potential locomotive manufacturers.

Ukrzaliznytsia plans to spend $1.85 billion through 2025 to buy 310 new locomotives, Alexander Bogdanov, deputy director of the state railroad’s locomotive department, said at a recent railway conference in Kyiv. The average Ukrzaliznytsia locomotive has used up 84% of its expected working life. By the end of this month, all 30 GE locomotives imported from the US since last fall are to be released for service on the tracks.

China’s Xian Electric Engineering Co. has signed a €19.4 million contract to rebuild a Ukrenergo substation serving the Boryspil, Brovary and Baryshivka regions of Kyiv’s region’s left bank. Ukraine’s state electricity distribution company says that 11 companies from eight countries participated in a tender under rules set by the European Investment Bank, the primary source of project finance. The Chinese bid cut the expected price by 25%. Xian is to complete upgrading the 330 kV Brovarska substation by the end of 2021.

The SCM group, owner of Metinvest, invested $1.3 billion in its Ukraine companies in 2018, Natalia Yemchenko, SCM spokeswoman, writes on Facebook. SCM is owned by Rinat Akhmetov.

The EU plans to spend €50 million to improve road and rail access to Mariupol and Ukraine’s Sea of Azov, President Poroshenko told the Odesa Regional Development Council on Saturday. By electrifying rail lines, he said, EU aid could extend Intercity rail service from Zaporizhia to Mariupol. “We will bring Mariupol closer through Intercity. For me, this is a fundamental thing and a challenge: we must reduce the distances.”

An IMF team arrives in Kyiv for a week long review visit. In December, Ukraine received a first $1.4 billion tranche of a 14-month $3.9 billion program. Progress toward implementing anti-corruption conditions is needed for release of a second tranche, expected to be $1.3 billion in May.

Ukraine has received a second loan, for €529 million, under a World Bank guarantee, reports the Finance Ministry. Funds were provided in two tranches – €240 million with a maturity of four years, and €289 million with a maturity of 10 years. The loan was arranged and provided by Deutsche Bank. Since December, a World Bank guarantee of $750 million has allowed Ukraine to attract about $1 billion from international markets.

Ukrainians and Georgians can visit each other’s countries using only their national ID cards, or internal passports, under an agreement that went into effect on Friday. Ukraine and Turkey have a similar passport-free, 90-day visit agreement. Last year, 177,000 Ukrainians visited Georgia. Four airlines fly from Kyiv to Tbilisi: Georgian Airways, SkyUp, UIA and Yanair. In May, SkyUp starts flights to Batumi. This summer, Yanair will fly to Batumi from Kyiv Sikorsky, Lviv and Odesa.

Kharkiv, Ukraine’s second largest city, gets more international flights this spring. On Saturday, SkyUp started flights to Sharjah, UAE. On March 25, Ernest Airlines starts flight to Rome and Milan-Malpensa. On May 3, Buta Airways launches flights to Baku.

Lviv airport’s passenger traffic increased by 50% y-o-y in January and February, maintaining the strong 48% growth of last year. Of the 108,400 passengers in February, 89% flew international. On Sunday, Wizz Air started flights to Copenhagen. Confirmed new flights this season are: Motor Sich to Uzhgorod on March 15, airBaltic to Riga on April 1 and SkyUp to Odesa on June 2. This year, Lviv is expected to win a flight to Doha on Qatar Airways.


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


Ukraine Business News, Tuesday, March 05





  • Big Real Estate Projects Announced for Kyiv
  • SkyUp to Move from Sikorsky to Boryspil
  • Geology Agency Doubles Oil + Gas Blocks For Auction
  • Almost 1 Gigawatt of Wind Projects Underway
  • Ukraine Exports Half a Billion Dollars Worth of Chicken Meat
  • Ukraine to Top Russia This Year as Largest Black Sea Grain Exporter
  • 90-Window is Open for Bids on Oil and Gas Blocks
  • Worries Mount that ‘Green Auction’ Bill is Stuck in Rada
  • Warehouse Rents to Keep Rising Until New Projects in 2020
  • Cargo Hub at Uzhgorod Airport Would Straddle Slovak-Ukraine Border
  • Kyiv Hotel Room Rates up 6%
  • Chickens to Ghana, Eggs to Singapore – 85 New Ag. Markets
  • Grain Exports to Grow by 23% This Year
  • China Courts Motor Sich, Again
  • Kyiv Office Rents to Rise Until New Buildings Open in 2020-2021
  • “Dead Malls” to Appear in Kyiv?
  • Cashless Payments With Cards up 55%
  • Foreign Tourists: More by Plane, Fewer by Train


Israeli-Ukrainian City Capital Group plans to invest more than $50 million over the next four years to convert old industrial spaces in Kyiv into offices. “The office real estate market is coming to life,” Maria Kazantseva, a CCG board member, tells Interfax-Ukraine. “All experts predict an increase in the demand in this segment. IT companies are declaring a shortage of quality space.” Founded a decade ago by Israeli businessman Ofer Kerzner, CCG manages Platforma Art Factory, on the left bank, near Lisova metro station.

Degraded industrial land around the shipyard on Kyiv’s Rybalski peninsula will be transformed into a residential complex, a shopping center and offices, Sergey Tigipko, the new owner, tells Novoe Vremya magazine. “We are planning to start a large-scale construction project in the near future,” Tigipko says. “Most likely, it will be a residential area – with schools, kindergartens, commercial real estate. As for the 9-hectare site near the railway station, we are planning to build a large shopping and office center.” Adjacent to the Obolon commuter rail station, the peninsula also offers views of the Dnipro River. Tigipko promised to keep open the shipyard, a fabricator of assault boats for Ukraine’s Navy.

Kernel, one of the nation’s largest farming groups, saw its net profit jump 83% to $164 million in the last half of 2018, compared to the same period in 2017. In Kernel’s fiscal year, ending next June, the company plans to process 3.1 million tons of sunflower seeds and and export 6 million tons of grain. Concorde Capital’s Andriy Perederey writes that the results “were higher than our estimates due to due to stronger sunflower oil segment EBITDA and better results in silo storage and farming.”

SkyUp Airlines, preparing for a major expansion this spring, will move its base on March 31 from Kyiv Sikorsky to Kyiv Boryspil. The Ukrainian discount airline will join Ryanair at Boryspil’s newly reopened Terminal F. Evgeny Khaynatsky, the airline CEO, said Kyiv Sikorsky “works with our heavy aircraft at the limit of its capabilities.” SkyUp’s all-Boeing 737 fleet is double over the next five years to 12. Between April 24 and June 15, SkyUp plans to launch 17 new destinations, for scheduled and charter service.

Boryspil has two runways – one 3,500 meters long, and the other 4,000 meters. Sikorsky has one 2,310 meter long runway. Surrounded by apartment buildings in the Zhuliany neighborhood, the airport has no for expansion. Last fall, flydubai moved from Sikorsky to Boryspil. Wizz has talked with Boryspil officials about moving from Sikorsky.

Motor Sich, Ukraine’s all-Antonov airline, expands its flight network this spring. On March 15, it starts flights between Kyiv and Uzhgorod. On March 31, it increases to daily its flight frequencies between its Zaporizhia base and Minsk. On June 6, it starts flights between Zaporozhia and Burgas, Bulgaria’s Black Sea resort city. Ukraine’s fifth largest minority, 200,000 Bulgarians live in southern Ukraine, largely in Odesa and Zaporizhia. Bulgaria Air flies from Odesa to Sofia.

Concrete paving of Odesa’s 2,800-meter new runway restarts in two weeks, weather permitting, reports the contractor, Highway-South. Work should be completed by this fall. Replacement of the Soviet-era concrete block landing strip is a key condition for Ryanair, Wizz Air and other discount airlines to fly to Odesa.

 To attract foreign investment into oil and gas exploration and production, the State Geology Service is doubling the number of blocks prepared for electronic auction by June. “More than 30 oil and gas sites” are to be auctioned, Oleg Kirilyuk, head of the service, told the Cabinet of Ministers on Wednesday. The current schedule for auctions is: March 6 — 10 fields; April 29 –7 fields. The Geology Service says these 17 sites have ‘projected resources’ of 92 billion cubic meters of gas and 16 million tons of oil.

The oil and gas auctions are designed to “attract the maximum quantity of not only Ukrainian companies but also foreign companies to the market,” said Ostap Semerak, Minister of Ecology and Natural Resources, the Ministry that controls the Geology Service. Ukrinform reports Semerak told the Cabinet of Ministers on Wednesday: “I am convinced that the Service will show a good result, because the new conditions are very liberal and comfortable. I want this to be a new impetus for the Ukrainian economy.

President Poroshenko pushed a button starting a GE wind turbine Wednesday, but did not publicly talk about the fate of the green energy auction bill in the Rada. “The new energy industry is one of the most important, primary issues for moving our state forward,” the President said. Hailing the Primorsk project by DTEK Renewables to build 52 towers with 3.8 MW turbines on Zaporizhia’s Azov coast, the President said: “It is through such projects that we turn Ukraine into a regional leader.” Back in Kyiv, 700 km to the north, analysts noted that the President did not use the press event to throw his weight in the Rada behind passage of the auctions bill, a step designed to unlock more wind and solar investment.

German commercial banks will loan €90 million for construction of the second phase of the Primorsk Wind Power Plant, Philipp Leckebusch, DTEK Renewables CEO, said at the inauguration. “This project is financed by two loans of German commercial banks for a total of EUR180 million,” he said. “This will be one of the largest commercial loans in Ukraine in recent years.” Expected to cost €300 million in total, the plant is to have the capacity to generate 200 MW.

Almost 900 MW in wind power projects are under construction in Ukraine today, says Andriy Konechenkov, chairman of the Ukrainian Wind Energy Association. Of these about 300 MW will be commissioned this year, he predicts. The projects are largely in southern Ukraine, along the coasts of the Black and Azov seas, where winds are the strongest. Last year, 68 MW of wind power capacity was commissioned.

If Ukraine does not move from Europe’s highest green tariffs to an auction system, consumers will pay $1.5 billion a year for renewable energy by 2021, warns Olha Buslavets, director of energy markets for the Ministry of Energy and Coal Industry. This sum is equal to what consumers paid last year for electricity generated by nuclear power plants, source of 56% Ukraine’s power, she said in a press statement on Wednesday.

DTEK Naftogaz, one of the nation’s largest private gas producers, plans to nearly double natural gas production to 3 billion cubic meters by 2024, Igor Shchurov, the company’s general director, said Wednesday at the Ukrainian Energy Forum in Kyiv. Praising regulatory changes and cuts in royalties, Shchurov said the company plans to double investment, to $110 million, and to increase drilling depths, possibly to below 7 km. Responsible for about one third of Ukraine’s privately produced gas, DTEK Naftogaz produced 1.65 billion cubic meters last year, the same amount as in 2017.

Ukraine exported half a billion dollars worth of chicken meat last year – four times the combined total of beef, pork and sausage exports. According to the Food Export Council, meat exports were: chicken — $507 million, 326,000 tons; beef – $125 million, 42,000 tons; pork — $3.7 million, 1,700 tons; and sausages – 439 tons , $1.3 million.

Ukraine is expected to displace Russia this year as the largest Black Sea grain exporter. Russia is to export 42 million tons this year, 20% below last year’s record 52.4 million tons. By contrast, Ukraine is to export 49 million tons in the year that ends in June. Kommersant reports from Moscow that Russian Agriculture Ministry officials are calling exporters asking them to slow sales. Concerned about meeting domestic demand, Rosselkhoznadzor, the state food safety agency, is in go slow mode. stretching quality checks at ports from one day to five days or more. Yulia Melano, a food safety agency representative, is quoted saying longer checks respond to quality complaints from Indonesia, Vietnam and African countries.

Ukraine’s central bank has completed a pilot project on a blockchain-based ‘e-hrynia.’ “We are not talking about cryptocurrency, we are talking about digital currency of the central bank,” says Alexander Yablunivsky, director of payment systems at the National Bank of Ukraine. Ruling out the e-hryvnia becoming a crypto currency, a central bank must have more control over its issued currency than crypto currency’s immutable ledgers offer.

This summer, a 2,000 square meter shopping and entertainment center will open 50 meters from the southern exit of Kyiv’s Central Rail Station, reports Informator news site. With about 100,000 people passing through the Southern Station a day, the exit area already has a KFC, a Papa John Pizza and a Puzzata Hata. According to Colliers International, the new center will offer stores and two restaurants with summer verandas on the roof. Ukrzaliznytsia is drawing up plans to privatize management of the commercial spaces inside the Central Station, which opened in 1932.

 A 90-day clock has started running for energy companies to bid on nine oil and gas blocks put up for tender under 50-year production sharing agreements. By May 25, bids should be made to Ukraine’s Interagency Commission accompanied by a non-refundable bid fee of $11,100. Tenders require minimum commitments to invest $16-35 million during a five-year exploration period. The production sharing agreements also stipulate percentages of produced oil and gas to be handed over to the state.

Concern is mounting that ‘green energy’ auction bill is stuck in the Rada, threatening new investments in Ukraine’s booming renewable energy sector.

 The law should be “be adopted before the elections — because otherwise we will lose at least six months,” Torsten Wöllert, energy director for the European Commission’s Ukraine Support Group, told the Ukrainian Energy Forum in Kyiv on Tuesday. As approved Dec. 20 on first reading, the bill provides for moving next Jan. 1 to competitive auctions for most solar and wind projects. Noting that Ukraine can benefit from the experiences of other European countries, Wöllert said: “I very much hope that Ukraine will have a very advanced law.”

The EBRD, the largest lender to Ukraine, will resume lending for solar and wind projects only after the Rada passes the ‘green energy’ auction bill, Olga Yeromina, EBRD Ukraine’s senior banker for electricity, said Tuesday at a Rada energy conference. As reported by ExPro Consulting, she said: “As soon as the law introducing the new renewable energy support system through the mechanism of auctions is adopted, we will be ready to actively start the preparation of new framework financing for the continued support of projects in the field of renewable energy.” She said the EBRD hopes the bill will be approved by the Rada and signed by President Poroshenko in coming weeks.

Deputies under the control of “energy oligarchs” are sabotaging the auction bill by submitting extraneous amendments and blocking Rada consideration, Yuriy Chyzhmar, a Radical Party deputy tells UNIAN. The news agency reports: “A number of People’s Deputies are blocking the approval and approval of amendments, so the fate of the bill being submitted to the session hall remains unknown.”

Auctions are designed to lower Ukraine’s ‘green tariffs’, among the world’s highest. Last year renewable power sources provided 2% of the nation’s electricity, but accounted for 8% of the nation’s power bill, according to Olga Buslavets, director of energy markets for the Energy and Coal Industry Ministry. Reviewing solar and wind projects under way, she predicted at a Kyiv round table that the nation’s installed renewable energy capacity will increase by 50% this year, to three gigawatts. In Ukraine’s electricity pie, nuclear supplies 53%, coal, gas and oil power plant supply 37%, and largely scale hydro dams – 7%.

Worldwide investments in renewable energy hit $332 billion last year, the fifth year in a row the figure was over $300 billion, reports Bloomberg. Solar energy investment dropped by 24%, to $131 billion. Technological improvements cut the average cost of installing 1MW of solar capacity by 12%. Investment in wind energy increased by 3% to $129 billion. Investment in biomass and waste-to-energy increased by 18% to $6.3 billion.

Bloomberg calculates that Ukraine attracted $2.4 billion in renewable projects last year. China remained the world leader investing $100 billion. But this was one third below 2017 due to a cut in the number of new solar projects. The US came in second, with $64 billion, 12% more than in 2017. In the EU, investment jumped by 27%, to $74.5 billion, largely due to five massive offshore wind projects and a big expansion of solar in Spain.

With office space tight and tourism rising, the Rada rejected a bill that would restrict the use of apartment buildings to private residences. While office vacancies have fallen to 5%, Kyiv has an estimated 70,000 unsold apartments. Similarly, the arrival this spring of discount airlines from Europe – Ernest, Ryanair and Wizz Air – demand for hostels and two-star lodgings are expected to increase sharply.

Warehouse vacancies fell to 2.8%, pushing rents up last year by 20-25% in dollar terms, Property Times reports in a lengthy analysis of the warehouse sector, largely in Kyiv. Rents are to increase more this year as only two projects, with a total of 31,000 square meters, are to be commissioned this year. In face of the space shortage, many companies are responding with ‘build to suit’ premises that do not go on the open market. Over the next three years, developers have announced projects totaling 190,000 square meters. But, Property Times reports, several developers are waiting to learn the outcome of the presidential elections before starting construction.

Uzhgorod will regain flights to Kyiv on March 15, Valerii Lunchenko, a Rada member from Zakarpattia, tells Almost three year ago, Ukraine’s westernmost airport lost air service, leaving Kyiv-bound residents with a stark choice: 10 hours by car, or 12-14 hours by train. The 627 km flight will be the nation’s longest domestic flight, probably taking one hour.

Foreign investors propose expanding Uzhgorod airport into a Slovak-Ukrainian enterprise, with a free trade area and bonded warehouses for cargo on both sides of the international border, Eduard Maliar, infrastructure director of the Zakarpattia regional administration, writes on Facebook. To handle cargo planes from Asia, the runway would be extended 1,500 meters into Slovakia. After studying the airport, he writes, investors propose building “terminals both in Ukraine and Slovak territory that will serve both passenger and freight transport, including transportation of goods from China and South Korea to Europe.”

To better connect Slovakia and Zakarpattia, test passenger trains are to start in April on the standard gauge track between Košice, Slovakia’s second largest city, and Mukachevo, Zakapattia’s rail hub. With Slovakia’s ZSSK trains plying the 175 km route in four hours, service is start in June, in time for the summer tourism season. The new route “will make this region more attractive for tourists,” Arpád Érsek, Slovakia’s Transport and Regional Development Minister, said after meeting with his Ukrainian counterpart, Volodymyr Omelyan.

Reflecting pent up demand for this east-west connection, two Czech private rail companies, Leo Express and RegioJet, recently started bus service between Mukachevo and Košice, the eastern rail terminus for both rail companies. Separately, in December, Hungarian Railways and Ukrzaliznytsia launched daily direct Mukachevo-Budapest trains. They use standard gauge tracks first laid in Zakarpattia during the Austro-Hungarian empire.

The average daily price for a hotel room in Kyiv hit 89 euros last year, 6.3% increase over 2017, according to a report by STR Global, an American company that tracks hotel supply and demand. Kyiv’s occupancy rate inched up 3%, to 52.5% — well below the EU average of 72.4%.

 A $500 million windfall in duty payments on illegally imported cars will help fund an election month bonus for the nation’s 10 million pensioners.

 On Friday night, a 90-day window closed for 50% duty discounts on cars illegally imported from the EU. Instead of a forecast $37 million in duties, owners of 218,000 cars paid the hryvnia equivalent of half a billion dollars. The State Fiscal Service says the top paying areas were Kyiv and the four westernmost regions: Volyn, Lviv, Zakarpattia and Chernivtsi. Owners of cars in violation now have until May 23 to pay the full duty. After that, they face a $6,000 fine. The Finance Ministry suggests remaining violators drive their cars back to the EU, or sell them here for parts.

Chickens to Ghana, eggs to Singapore, milk to Macedonia, and sheep to the Emirates – these are some of the 85 new markets developed last year for Ukraine’s food exports. “Last year, our country expanded the geography of our products exports and the number of enterprises that received the right to export food of animal origin increased as well,” said Volodymyr Lapa, Head of Ukraine’s Food Safety and Consumer Protection agency. “This allowed to level the economic impact of the loss of the market of the Russian Federation and contributed to raising the level of Ukraine as reliable trading partner.” Last year, Ukraine’s food exports to the EU grew by 8.7% y-o-y to $6.3 billion.

Ukraine’s grain exports should be up 23% this marketing year over 2017-2018 levels, Elena Kovaleva, deputy minister of Agrarian Policy and Food, said Monday in Geneva at the annual meeting of the Rapid Response Forum of the Agricultural Marketing Information System. Encompassing producing and consuming countries of corn, rice, soybeans and wheat, the forum promotes policy coordination for a food crises. “Ukraine remains a stable, reliable partner and exporter of agricultural products,” Kovaleva said. Raising her ministry’s forecast by 4%, she said: “In this marketing year, we expect that grain exports from Ukraine will reach 49 million tons.”

Ukrainian wheat exporters could see an opening this year in Indonesia, the northern neighbor of Australia, reports UkrAgroConsult. During the last half of 2018, Australia, Indonesia’s traditional source, saw its wheat exports drop by 41% y-o-y. Due to a drought, Australia’s wheat harvest may be down 20% in the marketing year ending in June. The latest forecast is 17 million tons, the lowest in a decade.

Corteva Agriscience, the agricultural division of DowDuPont Inc., has achieved a 21% market share of Ukraine’s corn seed market and 16% of its sunflower seed market, says Serhiy Kharin, head of Corteva’s Eastern Europe division. He cited a survey of Ukrainian farmers conducted last year for the Kleffman Group, a Germany-based agricultural market research company. Over the last five years, Corteva has invested heavily in its Ukraine production complex , attaining full capacity in 2017: 500,000 corn seeds per year, and 250,000 sunflower seeds per year.

In a step toward food processing, Mover Mill LLC has opened a $4 million mill capable of producing 350 tons of flour, semolina or bran a day. The mill is located in the village of Kryvi Kolina, Cherkasy region, 250 km south of Kyiv. Despite the government’s push to add value to agricultural exports through processing, exports of Ukrainian flour were down 54% July-November, compared to the same period in 2017. According to UkrAgroConsult, Ukraine exported 94,300 tons of flour during that period, the lowest in five years.

“Individual entrepreneurs,” a low-tax status enjoyed by about 130,000 Ukrainian IT workers is threatened by a draft law prepared by the Social Policy ministry, according to a report by OpenDataBot. Since 2015, the number of IT ‘individual entrepreneurs’ increased by 45%. They generally pay a 5% income tax rate, a rate credited with cutting Ukraine’s IT brain drain to the EU. This year’s elections may decide the future of this low tax rate.

High speed internet should be provided across Ukraine, wherever there is electricity, President Poroshenko said in Lviv. Campaigning for a second, five-year term, he said: “The internet over the next five years should be everywhere where there is electricity. Broadband in every village…How will we train IT specialists if there is no internet in rural areas?” In Lviv, IT companies are growing so fast they recruit software engineers from Belarus and Moldova.

“Chinese investors” plan to work with Ukraine’s government in a $100 million plan to develop Motor Sich air engine factory and its design affiliate, Ivchenko-Progress, both in Zaporizhia, reports, citing Yuriy Brovchenko, deputy minister of Economic Development and Trade. Last September, citing national security concerns, the State Security Service, or SBU, blocked a $100 million bid by Beijing’s Skyrizon Aviation to take a controlling state in Motor Sich. In a move opposed by the US and Japan, China wants to learn how to make Motor Sich turbo fan engines for its own military helicopter, cargo and trainer aircraft. Anatoly Malysh, head of the Motor Sich Supervisory Board, later told Interfax-Ukraine that he does not know of any state investment plans.

Dragon Capital writes: “Confirmation of a budget to finance the company and a firm statement by a government official about joint investment with the Chinese could mean that legal pressure on Motor Sich from [Ukrainian] state authorities may ease soon.”

 Kyiv office rents will rise for the next two years, until a “huge amount new [office] projects” open in 2020-2021, Ihor Zabolotsky, a commercial real estate analyst for Colliers International (Ukraine), said at Kyiv’s recent Open Mind conference. Making up for the post 2014 slump, developers plans to commission 406,000 square meters in 2020-2021 — about two thirds more than the pre-2013 annual rate of 140,000 square meters. With office vacancies hitting 5%, IT companies are driving almost half of the new space demand.

DTEK Academy has become a major tenant of Kyiv’s UNIT.City, occupying two floors, or 12,000 square meters, of the six story main building. DTEK moved six kilometers from their old office in the Eurasia Business Center on Zhilyanska Street to work with start ups and to focus training on innovation and digitalization. Max Yakover, CEO of UNIT.City, says the Academy plans a four fold increase of students nationwide, from 30,000 this year to 120,000 in the 2020s.

Real estate purchase transactions increased last year by 8% y-o-y, to 277,230, reports real estate portal Drawing on statistics from public and private notaries, the news site reported that the two regions were: Kyiv – 35,000; and Dnipropetrovsk – 28,500.

Kyiv risks seeing “Dead Malls” this year, NAI Ukraine, the consulting company, writes in a new report on the city’s shopping mall scene. After 101,500 square meters in retail space opened last year, an additional 400,000 square meters are to open this year. NAI writes: “Such a large number of offers on the market may lead to the appearance of “Dead Malls” – empty, uninteresting for buyers and tenants of the mall. The concept that is common in America may appear in Kyiv due to the fact that such a large number of offers is not needed by the consumer.”

In a Kyiv poll, NAI found that more than half of respondents like to visit a mall every weekend. About 30% go to malls on weekdays. The average cost per visit is: food court — $5.20; restaurant – $22; jeans – $26; and shoes – $48. Mall goers are 54% women and 46% men.

Britain’s Marks & Spencer reopened in Kharkiv two weeks ago, returning to a market it abandoned during the 2014-2015 crisis. With the 500 square meter store in Kharkiv’s French Boulevard shopping center, the chain now has nine stores in Ukraine – five in Kyiv and one each in Dnipro, Kharkiv, Lviv and Odesa, and Lviv.

Cashless purchases using bank cards jumped by 55% last year, hitting $48 billion. The number of transactions rose by one third, to 3.1 billion, reports the National Bank of Ukraine. The portion of all non-cash transactions made with cards hit 45%. As Ukraine increasingly goes cashless, the number of point of sale terminals rose by 20% last year, hitting 279,000.

As contactless also becomes popular, the number of contactless cards jumped last year by 44%, to 4 million. Today almost 80% of point of sale terminals allow contactless transactions. Starting April 12, Mastercard increases the limit of contactless payments on cards without a PIN code to UAH 500, or $18.50, up from the current level of UAH100. Mastercard accounts for 70% of purchases by card in Ukraine.

Ukraine’s average monthly wage, as measured in dollars, has doubled in three years, to $380, Prime Minister Groysman said. The minimum wage, received by a minority of workers, has tripled, from $50 in 2016 to $150 today. He said: “The current size is not big, but we are moving forward.”

Less than one year after Beskidy railway tunnel opened, the tunnel through the Carpathians is carrying 60% of Ukraine’s exports to the EU, President Poroshenko said on a visit to Lviv. Opened in May, the double track, Lviv-Zakarpattia tunnel can carry 100 trains a day. Hailing “the Lviv locomotive,” he said that Lviv’s exports to the EU jumped by 22% last year. Last year, 79% of Lviv’s exports went to the EU, almost double the national average of 43%

Ukrainian loggers last year cut 22 million cubic meters, or about 1% of the national forest, reports Volodymyr Bondar, deputy head of Forest Resources Agency. Forest growth is about 1.5% a year, or 33 million cubic meters. The Agency controls 73% of Ukraine’s 10.4 million hectares, or 15.9% of the nation. Due to an Electronic Wood Accounting System, Bondar says that illegal logging has been reduced to 17,700 cubic meters.

Wood exports dropped 40% y-o-y to only 527,000 cubic meters, a tiny portion of the national cut. The EU is pressuring Ukraine to export more wood to feed its wood products industries. Ukraine restricts exports of raw logs in an attempt to rebuild the furniture and milling industries at home.

ProZorro, the electronic procurement system, has saved almost $2.8 billion since its introduction four years ago, reports the Economic Development and Trade Ministry. About 215,000 companies, 80% of them small businesses, have used the platform, the ministry reports Facebook. Mandatory for most government procurements since 2016, the system posts information on tenders and conducts competitive bidding sales. Foreign companies are eligible to participate.

Ukraine wants to sell to Egypt an upgrade of its anti-aircraft missile defense systems. Pavlo Bukin, head of UkrOboronProm, agreed at a defense show in Abu Dhabi, to provide “proposals for the modernization of anti-aircraft missile systems and other air defense systems used by the Egyptian Armed Forces.” Bukin met at IDEX 2019 with Hassan Ahmed Abdel-Mageed, director of Egypt’s Ministry of Military Production.

Tourists visiting Ukraine by plane – rather than train – jumped last year, according to the Border Service. As a result of this higher spending influx, tax money generated by tourism rose by 21% last year to $155 million, reports the Economic Development and Trade Ministry. EU growth champions were: Spain + 68%; Great Britain + 47%; Lithuania + 23%; Italy + 15%; Germany + 13%; and France + 9%. From the rest of the world, growth countries were: India + by 57%; China + 39%; Japan +38%; Israel + 22%; and the US +19%. Entries by citizens of border countries declined.


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