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Ukraine Business News, Tuesday, April 30

 

 

 

 

  • Central Bank Cuts Prime
  • EBRD Wants to Double Investments in Ukraine
  • Foreign Investors Wait Fall Rada Election
  • China Signs Deal to Build $340 Million Bridge Over Dnipro
  • EU, Ukraine Stop Russia Oil Imports
  • Rada Approves Radical Language Bill

In the first interest cut in two years, the central bank reduced the prime rate to 17.5%, from 18%, effective today.Currently, a steady downward trend in inflation towards the 5% target allows the National Bank to begin the cycle of reducing the discount rate,” Yakiv Smoliy, governor of the National Bank of Ukraine, told reporters Thursday.

Inflation will end this year at 6.3%, Smoliy predicted. Last year’s inflation rate was 9.8%. In March, the year over year rate was 8.6%. Asked about the impact of Russia’s June 1 restrictions on exports to Ukraine, Smoliy told reporters: “I do not see that this can significantly affect prices in the current year.”

The EBRD wants to double its new investment in Ukraine this year to $1 billion, Marina Petrov, a deputy head of the bank’s Ukraine office, tells the European Business Association. She said more lending depends on the future Zelesnskiy continuing to work with the IMF reform program. “We hope that, first of all, the work on the IMF program will continue,” she said. “We already see investors ready to come to the economy. The most important thing is not to frighten investors, not to make unexpected economic decisions.”

Two thirds of foreign investors are waiting for the outcome of Ukraine’s parliamentary elections before making new investments, according to a new survey of 75 investors conducted by Dragon Capital and European Business Association. Conducted the week before the April 21 presidential runoff vote, the survey found that 88% are interested in expanding their investments here. On Thursday, President-elect Zelenskiy accused election authorities of dragging their feet in declaring official results, a delay that would rule out advancing parliamentary elections from the Oct. 27 date. Top investor demands were: creating a real judiciary system, reducing corruption and preserving the independence of the central bank.

With an IMF mission to visit Ukraine next month, a Zelenskiy administration will continue cooperation with the IMF and free market reforms, Finance Minister Oksana Markarova predicts in a Bloomberg TV interview. “Economic policies – monetary and fiscal policies – are in place, and we are optimistic that our policies will continue,” Markarova said Thursday. “The messages that we see from President-elect Zelenskiy’s team are aligned with the economic policies of our government and also with the full support of the IMF program.”

With strong foreign investor interest in hryvnia bonds, there is no immediate need for a Eurobond sale, Markarova said. Separately, the central bank improved its forecast on the level of Ukraine’s year end international reserves by 3%, to $21.2 billion.

Separately, Oleksandr Danyliuk, her predecessor as finance minister and now a key economic advisor to Zelenskiy, said Thursday: “As for the IMF: naturally, the position is to continue cooperation. We look forward to a successful review in May.” Speaking to members of the European Business Association, he said: “We understand that any threat to interaction with the IMF will destabilize the situation in the country. Therefore, the position of Vladimir Zelenskiy to prevent this.”

China and Ukraine signed a deal for $340 million in financing to build a new highway bridge across the Dnipro at Kremenchuk, replacing a 70-year-old bridge built after World War II. An executive of China Road and Bridge Corporation and Slawomir Novak, head of Ukravtodor, signed the agreement in Beijing at the Second International One Belt, One Way Forum. Construction of a new highway bridge will route transit traffic away from the city center. The old bridge will be retained for railroad use and possible construction of a light rail connecting city neighborhoods on different banks of the Dnipro.

With Chinese-EU container trains starting to roll across Ukraine, Economic Development Minister Stepan Kubiv offered at the forum to build “a trade and industrial corridor China-Ukraine-EU.” “Ukraine is ready to offer profitable transport routes on the territory of Ukraine to connect China with the countries of Europe,” he said in Beijing. “We offer our Chinese colleagues a joint project portfolio: development of port infrastructure, alternative energy facilities, construction of highways and bridges, development of railway and airport facilities, high technology, cooperation in the aerospace sector, agricultural processing.”

Ukraine, Poland, Germany and Slovakia suspended imports of Russian oil on the Druzhba pipeline network Thursday, citing contamination by organic chloride at 100 times normal levels. Used to boost oil output, organic chloride must be separated before shipment as it can corrode and destroy refining equipment, Reuters reports. With Druzhba handling 1% of the world’s global oil supply, prices hit $75 a barrel for the first time this year. Russia’s Transneft says contaminated oil will stop flowing through the pipeline by Monday. Rare in Russia, chloride contamination last hit oil supplies 10 years ago, but at a lower level.

In Poland’s latest Ukraine-friendly move, Warsaw plans to end roaming charges for Ukrainians using their mobile phones in Poland. “Abolition of roaming charges will be very noticeable for ordinary people, including Ukrainians living in Poland,” Marcin Przydacz, Poland’s top foreign ministry official for Eastern affairs, tells PAP news agency. Faced with a growing labor shortage, Poland encourages Ukrainian labor migration, offering Ukrainian-language on city transport systems and such Facebook pages as “Pick Strawberries in Poland.”

President Poroshenko is expected to sign a sweeping language law that will impact business in Ukraine.

As approved by the Rada Thursday, the bill requires:

– All foreign businesses operating in Ukrainian must have Ukrainian versions of their websites

– All computer software distributed in Ukraine will have to be either in Ukrainian, English or one of the 24 official languages of the European Union. Russian is not an official language of the EU.

– All print and online media are to be in Ukrainian, or have Ukrainian versions. Exceptions are media in English, Crimean Tatar of one of the 24 official languages of the EU.

– Ukrainian-language content on national TV and radio increases from 75% to 90%; for regional broadcasters, the quota increases to 80%

– All movies produced in Ukraine must be in Ukrainian. All foreign language movies must be dubbed into Ukrainian. Foreign language movies with subtitles can only be shown at film festivals.

– Theater performances must be in Ukrainian, with a few exceptions

– Publishing houses must print at least 50% of their books in Ukrainian. Book stores will have to sell at least 50% of their books in Ukrainian.

– All education is to be in Ukrainian and all service sector employees must first address customers in Ukrainian.

 Vote Indicates Ukraine’s Population is 41 Million

Chinese Trains Charge Across Eurasia

Venture IT Investments up 30%

Addressing President-elect Zelenskiy, the American Chamber of Commerce in Ukraine issues its Ten Commandments for responsible stewardship of Ukraine’s economy. They include: advancing on integration with the EU, real judicial reform and an Anti-Corruption Court, investment and property rights, investment in infrastructure, transparent privatization of state property, cutting labor migration by improving investment conditions at home, achieving energy independence through a free and open energy market.

On Monday, the European Business Association came out with a similar, seven-point list. Addressing key upcoming presidential appointments, the EBA called for the selection “of professionals with an impeccable reputation and lack of ties with oligarchs and big business.”

Both chambers stress the importance to investors of macro economic stability. Timothy Ash sees this as a key Poroshenko legacy to Zelenskiy: “Ukraine’s macro backstop is also much better these days, with much smaller twin deficits (2-3% of GDP), lower public sector debt (just over 60%), a stable currency, over $20 billion in foreign exchange reserves at the National Bank of Ukraine (more than four months of import cover), and with respected technocrats at both the NBU and the Ministry of Finance. It was also encouraging today that Zelenskiy appeared to rule out a move to replace incumbent central bank governor, Yakiv Smoliy, highlighting that he has a fixed seven-year term.”

In a country without a census for almost two decades, presidential election indicated that the current population may be 41 million. In 1991, 31.9 million Ukrainians voted, out of a 1991 census population of 52 million. In 2019, 18.5 million Ukrainians voted. Adjusted for different turnouts – 84% in 1991 and 62% in 2019 – today’s total population appears to be around 41 million.

Where did 11 million Ukrainians go? About 6 million were lost due to Russian expansionism — 2.3 million in Crimea, 2.3 million in occupied Donetsk, and 1.5 million in occupied Luhansk. The other 5 million vanished through emigration and Ukraine’s falling birthrate. The loss of 21% of Ukraine’s population in one generation gives post-Independence politicians a poor report card. It undoubtedly boosted Zelenskiy, the 41-year-old post-Soviet challenger, who trounced President Poroshenko by a 3:1 margin.

Behind the start of China-EU container trains through Ukraine is tidal wave of transcontinental train traffic, reports World Railways, a Moscow-based news site. Last year, 6,363 freight trains traveled between China and the EU – almost one an hour and nearly equal to the 8,328 trains that made the trip during the previous seven years. From a first China-EU train in March 2011– from Chonquing to Duisburg, Germany – the China-EU network has grown to link 62 Chinese and 51 EU cities. Initially one sided, the rail traffic is more balanced, increasingly carrying EU exports to China. With traffic backing up at the Poland-Belarus gauge break border, Chinese shippers are experimenting with routing freight trains through Ukraine.

Finland’s Konecranes is using its Ukraine unit, Zaporizhkran, to make the chassis for 86 shipping cranes for the Virginia Port Authority. This US-bound order is part of a 98% export orientation of the Zaporizhia company, reports the Kyiv Post.

Venture investments in Ukrainian IT startups increased by 30% last year y-o-y, to $337 million, reports a study by Deloitte and the Ukrainian Venture Capital and Private Equity Association. Similarly, the number of deals increased by 29%, to 115. The average investment increased by 12%, to $918,000. Mergers and acquisitions appeared for the first time, with seven deals registered for a total of $25 million. With the collapse of the bit coin boom, the number of ICOs fell from 19 to four. For the smallest of startups, crowdfunding platforms remained popular, with seven campaigns raising a total of $1.4 million.

Ukrainian legal-tech startup AxDraft has attracted $1.1 million in funding on graduating from Y Combinator, the prestigious Silicon Valley-based acceleration program. Founded in Kyiv by Yuriy Zaremba, a former lawyer at Avellum, AxDraft use IT to detect codable patterns to develop contract templates. “For MHP we helped save more than 1,150 hours of lawyer time by automating corporate documents and land leases,” Zaremba says, referring to agro giant Mironivsky Hliboproduct. After working in Ukraine with MHP, FOZZI, Carlsberg and British American Tobacco, Zaremba says AxDraft “helps in-house legal departments of corporation spend 70% less time on drafting routine legal documents and delegate more legal work to non-lawyers.” As Zaremba looks for US sales managers, the startup now is valued at $10 million.

Telephone number portability starts in Ukraine on May 1. Resisted for four years by the three mobile telephone companies, the new system allows subscribers to switch telephone companies without losing their numbers. Ukraine’s three mobile operators are: Kyivstar, Vodafone, and lifecell.

EU Refiners Fill Gap

Landmark Properties in Central Kyiv Sold

Post-Election Bond Demand High

Retail Sales Strong

Canada’s Bombardier Wants to Sell Electric Locomotives

Facing gasoline and diesel restrictions from Russia and Belarus, Ukraine can meet its needs from other countries – possibly with slightly higher prices at the fuel pump – the Ukrainian Oil and Gas Association said Tuesday. “The degree of diversification of the Ukrainian market exceeds the level of many European states,” reports the industry association. “Starting in 2017, fuel comes to Ukraine from more than 10 countries using all sorts of logistics – maritime, rail, road and pipeline, which allows to organize any deliveries in a short time.” Warning in of “slight fluctuations in the cost of fuel,” the Association said Ukraine can get alternative supplies from Poland, Romania, and Hungary

 Funding for a $1 billion ‘autobahn’ to cut the drive time between Kyiv and Odesa to four hours is being negotiated with international financial institutions, Prime Minister Groysman said Monday during a highway inspection. Currently, it takes six hours to drive the 475 km road between the two cities, a highway that connects 15% of the nation’s population. During this road construction season, the government is spending $10 million to main the highway linking the capital with the Black Sea.

In central Kyiv, Dmitry Firtash is selling and Sergey Tigipko is buying.

Tigipko’s TAS Group has bought most of Kyiv’s landmark’s Arena City restaurant and entertainment center from Firtash’s Group DF, according to Novoe Vremya. Tigipko bought 10,000 square meters, or 71% of the complex, for $13-15 million, well below the $20 million asking price. Restaurants in Arena pay at least $50 per square meter rent, double the Kyiv average, Olga Naaonova, director of Restaurant Consulting tells NV.

Last week, Firtash sold the St. Petersburg Hotel for about $15 million, reports NV. Located, 200 meters from Arena City, at Taras Shevchenko 4, the 140-room hotel has been closed for renovations for six years. The new owner Vladimir Zubik’s Intergal-Bud, plans to complete renovations and reopen the 1901 building as a four star hotel in two years. In 2016, Firtash transferred to his partner, developer Vagif Aliyev, a 50% stake in the Parus business center, also near Arena. Since 2014, Firtash has been living in Austria fighting extradition to the US on corruption charges. He is under house arrest with bail set at €125 million.

In contrast, Tigipko is buying, amassing a major holding on Velyka Vasilkivska, a 10-minute walk from Arena. Earlier this month, his TAS Group paid million $6.7 million to state-owned Ukrgasbank for the business center at Velyka Vasylkivska 39. Six months earlier, he acquired the adjacent empty lot, at Velyka Vasylkovska 35, 35b, and 37.

Across town, at Podol’s Rybalsky Peninsula, Tigipko recently bought the Forge property from President Poroshenko and Rada deputy Igor Kononenko. Tigipko and partner Valery Kodetsky plan a $600 million development that is to include 50,000 square meters of office space and 36 residential buildings with a total of 6,200 apartments.

Two days after the presidential election, strong demand from bond buyers allowed the Financy Ministry to cut yields on short term bonds and to sell 5-year bonds for the first time in eight months. For the popular 4-month hryvnia bonds, demand was more than double the 1.5 billion hryvnia offer, allowing finance officials to lower the annual rate to 19%, from 19.5%. In the first effective placement of 5-year bonds since August, the government sold 3.5 billion hryvnia at 16%, during down one 290 million hryvnia offer at 16.2%.

Retail trade in Ukraine jumped 9% in March y-o-y, for 7.4% jump for the quarter, compared to last year, the State Statistics Service. Fueling this growth were: a 10.5% y-o-y growth in salaries in February; a 15% growth y-o-y in average monthly pensions in March, to $109; and a pickup in consumer confidence, to 65-67 points in January-March, All growth figures are adjusted for inflation – 8.6% a year in February.

Moving mining permits to auctions on the ProZorro.Sale online trading platform, the State Geology Service sold rights last Monday to seven deposits. In all auctions, prices were bid up, in one case 20-fold. Mining permits were sold for beryllium, graphite, titanium, zircon, amber, clay and underground drinking water.

Canada’s Bombardier is to join France’s Alstom and China’s CRRC in testing their electric freight locomotives in Ukraine, the Center for Transportation Strategies reports, citing Infrastructure Minister Volodomyr Omelyan. With testing to start place this summer, Ukrzaliznytsia stresses it wants foreign financing and a high degree of production in Ukraine. Henri Poupart-Lafarge, CEO of Alstom, said in Kyiv in February that his company is ready to supply 500 locomotives to Ukrzaliznytsia.

Lampooned by the Kyiv press at its launch five months ago, the Boryspil Express train to the airport is proving such a success that Ukrzaliznytsia plans to put an additional train on the route. With a record 2,500 people taking the train Monday, most of the 27 train trips took place with some passengers standing for the 35-minute, 80 hryvnia ride.

Poroshenko Allies Called for Questioning in Economic Cases

Transparency for Defense, Modernization for Health

A Sin City for Ukraine?

Markets Calm

Online Delivery Services Spread Across Ukraine

The Prosecutor General’s Office is summoning several top allies of President Poroshenko for questioning in embezzlement and money laundering cases, reports the Kyiv Post and Interfax-Ukraine. Those summoned include: Valeria Gontareva, the former head of the National Bank of Ukraine; Kostyantyn Stetsenko, managing partner at ICU investment bank; Borys Lozhkin, Poroshenko’s former chief of staff; Oleksiy Filatov, former deputy chief of staff; and Mykola Zlochevsky, Ukraine’s former ecology minister and owner of Burisma Holding, the natural gas company. Gontareva, who lives in London, told Interfax-Ukraine she would not go to Ukraine for questioning. She invited Ukrainian prosecutors to come to London.

Markets reacted calmly to the Zelenskiy landslide. The official exchange rate, traditionally ‘guided’ by the central bank, increased by 16 kopecks – less than 1% — to 26.66 / 26.69 hryvnia to the dollar. In neighboring Russia, the Moscow markets rose, reportedly on the belief that a Zelenskiy government will offer the window for a Russia-Ukraine détente and the easing of US sanctions.

Nova Poshta, the privately owned delivery company, has successfully placed bonds for UAH 300 million, or $11.2 million, Raiffeisen Bank Aval, the underwriter, tells Interfax-Ukraine. Maturing Aug. 14, 2020, the bonds have an annual yield of 22%, says Victoria Masna, head of investment banking at Raiffeisen. The money is to go to buying new trucks, new computer servers and modernizing the company’s 2,886 branches. Last year, Nova Posta delivered 174 million packages, 20% more than in 2017. As part of strategy to grow again by 20% this year, the company has opened 164 branches since Jan. 1. Reflecting the growing popularity of online shopping, one of all Nova Posha branches are in towns with less than 10,000 people.

Barcelona-based Glovo starts deliveries this week in Lviv, its fifth Ukrainian city, after Dnipro, Kharkiv, Kyiv and Odesa. After opening last fall in Ukraine, the delivery service has 5,000 couriers and a list of 10 additional cities for expansion including Mykolaiv, Vinnytsia, and Zaporizhia. “Of all European countries, Ukraine needed the least time to reach 100,000 orders per month,” Dmitry Rasnovsky, Glovo’s Ukraine manager, said at the SUP Day Forum Thursday in Kyiv. “I believe that we can reach a figure of 1 million orders per month by the end of 2019.”

With Kyiv restaurants unable to keep up with food orders, Glovo plans to open a ‘remote kitchen’ in August. Four ‘non-competing’ restaurant would cook under one roof at a central Kyiv location. “Already, restaurants in the center of Kiev are not coping with orders….they do not have the capacity to provide such a flow,” Rasnovsky said of surging online demand. He also is considering opening a ‘remote kitchen’ in Troieschchyna, a Left Bank district, where costs are low and restaurant offerings are poor.

Next month, Kyiv is to become the third city in world to have Uber Shuttle service. Currently, only Cairo and Monterrey, Mexico have the service, which allows passengers to book seats in minibuses operating along fixed city routes. Uber launched its taxi service in Ukraine in 2016, its regional headquarters in Kyiv in 2017, and, earlier this year, Uber Eats food delivery service and Uber Green electric car service.

Chinese Technology for Europe’s 2nd Largest Solar Plant

With UIA Cutting Flights, Kolomoisky Could Clip Wings of Competitors

Two of DTEK’s eight power generating plants run on anthracite coal which no longer is produced in government-controlled areas of Ukraine. DTEK has planned to entirely fuel these two plans with 2.2 million tons of coal imported from Russia, some from its own mines. Concorde Capital’s Alexander Paraschiy writes: “If DTEK won’t be able to supply coal to Luhanska from Russian territory (either from DTEK-related mines, or from other Russian suppliers), the plant will have to either switch to burning natural gas (which is too expensive) or halt its operations altogether…All in all, we continue to consider DTEKUA Eurobonds as the most exposed to political risks of 2019.”

Metinvest, Ukraine’s largest steelmaker, may face a shortage of coking coal. Concorde Capital calculates that Metinvest’s mines can only cover 57% of the 9.1 million tons of coking coal the company needs. On Thursday, Metinvest told Interfax-Ukraine that it has a long-term supply strategy that guarantees sufficient coal. However, Anatoliy Starovoyt, general director of Ukrkoks, the national association of coking coal consumers, worries that Ukraine’s seaports cannot handle an onvernight doubling of coking coal imports. Last year, Ukraine met almost half of its needs for 13.3 million tons of coking coal by import coal from Russia, by rail.

Russia’s outright import and export bans will cover $250 million worth of goods a year, estimates Russian Prime Minister Dmitry Medvedev. But, Ukraine analysts say these items are replaceable, analysts say. Last year, Ukraine imported most of its oil from Azerbaijan and only 20% of its bitumen – used for paving roads — from Russia. Interpipe only exported only 61,600 tons of pipe, 9% of its total exports, to Russia.

Foreign investment in Ukraine’s hryvnia treasury bonds rose by 20% last week, hitting a total dollar equivalent of $1.1 billion. Attracted by high interest rates and not put off by the presidential election, foreign investment in the bonds has increased almost 5-fold this year, to UAH 31 billion. Last year, foreign investment in the bonds increased by 22%.

With Chinese equipment, DTEK inaugurated Europe’s second largest solar power station on Friday in Nikopol, Dnipropetrovsk region. Costing $243 million, the 200 MW capacity plant is second only in Europe to France’s 300 MW plant in Cestas, Gironde region. China Machinery Engineering Corporation built the 400-hectare plant, using 160 PV inverters manufactured by China’s Shenzhen Kstar Science and Technology and 750,000 solar panels made by China’s Seraphim Solar System and Trina Solar. CMEC President Han Xiaojun told Xinhua news agency: “The Nikopol plant is based on advanced solar modules and inverters made in China, as well as on advanced power plant control systems.”

After opening a 10.5 MW plant last year in Nikopol, Canadian renewable energy company TIU has its second Ukraine plant, in Mykolaiv region, on Thursday. With an investment of about €11 million, the plant was built in Kalynivka, 150 km northwest of Mykolaiv city.

Delay of delivery of three Boeing 737 MAX passenger jets is prompting UIA to cancel its Kyiv-Vinnytsia flight and to cut frequencies on its flights from Kyiv Boryspil to Amman, Ankara, Athens, Baku, Geneva, Istanbul, Ivano-Frankivsk, Kherson, Minsk, Riga, Yerevan and Zaporizhia. Compounding UIA’s difficulties, the airline lost $100 million last year.

With Kolomoisky owning a major share of UIA, the election of his protégé, Zelenskiy, could result in government favors extended to the national flag carrier, analysts tell The Kyiv Post. While a frontal confrontation with discount airlines would be highly unpopular, a Kolomoisky-influenced government could cut aviation fuel taxes for Ukraine-based airlines and cut navigation fees, charges that the UIA already is fighting in court.

 

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

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Ukraine Business News, Tuesday, April 23

 

 

 

 

  • Kyiv Court Rules Nationalization of PrivatBank Illegal
  • Spanish-American JV Builds Ukraine’s Largest Corn Processor
  • China Extends More Export Credit Insurance
  • Consumer, Executive Sentiment Calm
  • Grain Exports up 21%
  • More Tools to Combat Overweight Trucks
  • Chickens Rule
  • Kyiv Vaults Into Elite List of Europe’s IT Startup Cities
  • S&P, Fitch Leave Bond Rating Unchanged, Outlook ‘Stable’
  • Canola Crop to Jump by Almost One Quarter
  • Rivers Revive

Ukraine’s central bank will appeal a surprise court decision ruling that the 2016 nationalization of Ukraine’s largest bank, PrivateBank, was illegal. Last September, the same Kyiv District Administrative Court recognized that the National Bank of Ukraine’s decision to declare PrivatBank insolvent was legitimate, reports the Kyiv Post. As part of the nationalization, the government injected $6 billion in PrivatBank, averting a banking crisis. In 2018, Kroll Inc., the New York–based corporate investigations firm, completed a forensic audit that concluded that a “large-scale and coordinated fraud” scheme had stolen $5.5 billion.

Markets and international observers reacted negatively to the court ruling. Ukraine’s dollar-denominated bonds fell Thursday, according to Refinitiv. The US Embassy in Kyiv immediately posted a statement: “In 2016 Ukraine’s international partners supported the decision of the government and the National Bank of Ukraine (NBU) to nationalize PrivatBank…It is important that the authorities continue their efforts to recover losses from former owners and related parties of failed banks. Ukraine’s international partners will be closely monitoring developments in this area.”

American Bunge Ltd and Spain’s Dacsa are investing $14 million to build Ukraine’s largest corn processing complex in Vinnytsia region. When completed next year, the plant is to export 80% of production, Dmitry Gorshunov, director of Bunge Ukraine tells Inventure news site. Last summer, Bunge inaugurated a $180 million farm products exporting terminal at Mykolaiv port. The new plant, located in Demkivtske village, is to use Italian equipment to process corn, breaking it down into oil, starch, protein and fiber.

Sinosure, China’s official export credit agency, will provide up to $500 million worth of insurance cover for credits for Chinese projects in Ukraine. Under a deal signed Thursday with Ukreximbank, the insurance cover is to go to projects in construction, agriculture, energy, transportation, oil and gas. Two weeks ago, Sinosure announced that it will extend $1 billion of insurance cover to Naftogaz to allow state energy company to get low-cost credit to buy high tech Chinese equipment.

The index of business expectations by Ukrainian enterprises’ top executives grew to 119.7% in the first quarter, from 117.3% in the fourth quarter, reports UNIAN. About half of business executives polled predicted that the hryvnia would not fall below 29 to the dollar, a 7% devaluation from today’s rate. Separately, the average value of the consumer sentiment index in Q1 exceeded the average value for all of 2018, according to a study by Info Sapiens. In general, the index of economic expectations in March rose by 1.4 points – to 68.1 – according to the results of a poll of 1,000 people.

Grain exports are up 21% compared to this time last year, reports the State Service for Food Safety and Consumer Protection. Since the start of the marketing year, in July, Ukraine has exported 40 million tons. Of last fall’s 70 million ton harvest, Ukraine may export as much as 50 million tons.

The outcome of trade disputes between China and the US and Canada will determine Ukrainian export flows in coming years, Argus Media reports from Kyiv’s Black Sea Grain conference. US-China trade talks are expected to end this month. No deal would big opportunities for Ukraine’s exports of corn, barley and canola. “There is a big opportunity for Ukraine to export to China,” Renault Quach, director of Chinese trading firm Donlink Grain and Oil.

The name of Ukraine’s busiest port has been officially switched from ‘Yuzhny’ (Russian) to ‘Pivdennyi’ (Ukrainian). Both words mean ‘Southern.’ Founded 40 years ago on a shore of the Ajalyk estuary, 40 km north of Odesa, Pivdennyi handled 43 million tons of cargo last year. It is also Ukraine’s deepest port, with average depths of 15 meters.

Two Canadian companies – International Road Dynamics Inc. and Quarterhill Inc. – have won a $6.4 million contract to supply 12 electronic complexes capable of weighing trucks as they travel down highways. In an effort to get overloaded trucks off the roads, the World Bank is largely paying for the Weight in Motion systems. The systems weigh and ticket drivers, minimizing the human interface. Reflecting the amount of money traditionally made by extorting drivers, a group of police officers attacked a rival police group early Wednesday morning at an Odesa highway weigh station. Five cars were damaged and three men went to the hospital.

UIA has switched to three new fare categories: Economy Light, Economy Standard and Economy Premium. Fares differ according to baggage amounts and the ability to switch travel dates. Designed to maximize revenue per seat, the rules follow similar rate structures adopted since 2015 by other legacy flag carriers – Lufthansa, Air France, KLM, Alitalia, British Airway, and LOT. Last year, UIA lost $100 million.

The ratio of unemployed people to vacancies, has fallen from 5 people per job opening in January, to 3 people per vacancy in March, reports the State Statistics Service. Overall, the official unemployment rate fell to 8.8% at the end of 2018, from 9.9% one year earlier. Faced with labor migration, Oleg Bakhmatyuk, owner of Ukrlandfarming, a major agro holding, tells UNIAN that in the last two years, he has nearly doubled the average farmworker salary, to $407 a month. Skilled mechanics earn over $1,000 a month.

A Dutch-Ukrainian poultry farm on the border with Poland is investing €38 million to double its production, says Alina Sych, general director of the company, Volodymyr-Volyn Poultry Factory. A new plant will be capable of processing 13,500 broilers an hour, she tells Interfax-Ukraine. The farm accounts for 6% of national production.

Ukraine’s poultry exports were up 39%, to 103,600 tons, in the first quarter of this year, compared to the same period last year, reports the State Fiscal Service. In dollar terms, exports were up 31%, to $147 million. As of April 1, there were 205 million chickens in Ukraine, reports the State Statistics Service. While cows, sheep and goats were down slightly year-over-year, chickens bucked the trend, increasing by 3.7%. Poultry in industrial farms were up 6%. Reflecting the industry’s dominance, in March poultry accounted for 69% of total meat production in Ukraine.

Racing the grain harvest, Nibulon is tripling its construction workforce to 1,500 to complete a new $19 million Dnipro river transshipment terminal by July. With the 300,000 ton a year terminal in Ternivka, Nibulon will have three Dnipro river ports in Zaporizhia region. “The need for farmers to use heavy trucks will disappear,” Nibulon CEO Oleksiy Vadaturskyy predicted on a visit to Ternivka, saying river ports cut out the expense of long drives to Black Sea ports. “This certainly will save each farm from $3 to $5 a ton…it is a colossal amount of money that farmers will be able to invest in development of their farms.”

Ukraine, the world’s largest exporter of sunflower oil, is exporting 7% more oil than during the last marketing season. Two thirds of the way through the September to August marketing season, Ukraine has exported 3.3 million tons of the cooking oil, according to APK-Inform. The largest buyers are India, the EU and China.

With food exports leading the way, Ukraine’s largest trade exports last year were: India $1.6 billion; Egypt $1.4 billion; Netherlands $827 million; Spain $741 million; and Moldova $671 million. Source: State Statistics Service.

In ranking of 1,028 big city ‘startup ecosystems’ around the world, Kyiv jumped 29 places last year, to come in 34th. Among European cities, Kyiv came in 6th. For the other cities of Ukraine’s big five, the rankings by StartupBlink are: Odesa –235; Lviv – 299; Kharkiv –435; and Dnipro – 561. The report says: “Kiev, Ukraine Startup Map has 321 startups, and the most popular startups…are Grammarly, Hotelscan and Template Monster.”

As part of the new foreign exchange liberalization, PrivatBank terminals now allow users to deposit hryvnia or use their bank card to replenish their dollar or euro foreign currency account. Under the Feb. 7 foreign exchange law, individuals can buy online every day up to 150,000 hyrvnia, currently $5,555.

No change at the coffee shop? The volume of hryvnia banknotes and coins in circulation is almost $1 billion less than at the start of the year, reports the National Bank of Ukraine. Currently, UAH 375.4 billion — $13.9 billion — in cash circulates in Ukraine, or 6.2% less than on Jan 1. The government encourages the use of credit cards and bank cards to collect more sales taxes.

Meal delivery is the fastest growing sector for Kyiv restaurants, says Michael Don, a 23-year veteran of the capital’s restaurant scene. “Delivery is growing by 30% a year, traffic is heavy, and people don’t want to drive,” says Don who maintains 90 small cars to make deliveries for his 74 restaurants. In addition to handling orders by Internet, Don’s USG Holding is investing in brick and mortar this year, opening two new Sushi-Yas and two more Il Molino. Currently, USG has 42 Sushiyas and and 18 Il Molinos. He also mulls opening a small chain of Lebanese restaurants, “depending on how quiet the election is.”

Shrugging off the election season fireworks, S & P Global Ratings confirmed Ukraine’s sovereign credit rating at the level of “B-/ B”, with outlook of “stable.” The international ratings agency says the stable outlook reflects expectations that Ukraine will comply with the IMF agreement, maintaining macroeconomic stability during the presidential and parliamentary elections. S & P expects Ukraine to retain access to domestic and international capital markets, allowing it to repay debts in 2019. Last month, Fitch confirmed its rating of Ukraine foreign currency bonds at “B-” with a stable outlook. Dragon Capital writes: “Uncertainty stemming from the presidential and parliamentary elections, compounded by high public sector external debt repayments, is likely to keep Ukraine’s credit ratings from being upgraded this year.”

Ukraine hopes to raise new sovereign debt backed by a World Bank guarantee again this year though the size has not been decided, Finance Minister Oksana Markarova tells Reuters on Monday. Last month, Ukraine borrowed €529 million under World Bank guarantees. “We are working on the maximum possible amount, but it is too early to say specific figures,” Markarova said. Next month and in November, Ukraine also expects to receive two IMF loan tranches worth a combined $2.5 billion.

Separately, Valeria Gontareva, who nationalized the bank as Governor of the National Bank of Ukraine, dismissed Kolomoisky’s demand for $2 billion “as complete nonsense.” “The bank did not have that capital — there was a hole of 5.5 billion dollars, which the state closed,” she told Novoe Vremya Biznes. In a warning to the court, she added: “This is the biggest fraud in the history of the financial world, so the whole world is watching this case.”

At the meeting with business leaders, Poroshenko drew applause when he said he signed the Bankruptcy Code. As adopted by the Rada last fall, the new Code makes it easier for individuals to go into bankruptcy and for bankrupt properties to be sold at electronic auctions by ProZorro.Sale.

At the urging of Houston’s Frontera Resources, Ukraine is offering an oil and gas tender for its first offshore block: a 9,772 square kilometer section of the continental Black Sea, near Romania. Called the Dolphin section, the block is to developed under a 50-year production sharing agreement that requires a minimum investment during the first five year to drill at least five exploratory wells. Frontera already produces oil and gas in the Black Sea, off the coast of Georgia. Romania, drilling in the Danube delta region of the Black Sea, is on track for a gas boom in the 2020s.

Ukraine increased electricity export revenue by 22% in January-March q-o-q, to $98.4 million, the State Fiscal Service reports. Hungary purchased 60%, or $58 million. Poland bought $22 million and Moldova about $14 million. Last year, Ukraine increased electricity exports by 19% to almost 1 gigawatt. In monetary terms, exports jumped by 41%, to $332 million.

Ukraine’s harvest of rapeseed, used for canola cooking oil, is to jump by 23% this year, predicts AgroConsult. This increase would put Ukraine in fifth place world wide – after Canada, the EU, China, and India. Exports of seed would increase by 17%, to 2.9 million tons. With new investment in crushing plants, processing into cooking oil is to jump by 50% this year, to 500,000 tons, predicts Yulia Garkavenko, the consulting group’s oil market expert.

Led by grain exports, cargo handling at Ukraine’s ports rose 12.4% q-o-q, to 37 million tons, reports the Sea Ports Administration. Grain exports were up by 33%, ore shipments were up by 30%, and container cargo was up by 14%. Fewer ships carry more cargo. The number of ship calls was down by 15.

Yuzhne confirmed its leadership as Ukraine’s busiest port, handling 11.6 million tons, up by 19%. Mykolaiv came in second, with 8.2 million, up 26%. Chornomorsk dethroned Odesa for third place, handling 6.4 million tons, up 23%. The Pearl of the Black Sea came in fourth, with 6.2 million tons, up 5%. Kherson enjoyed a 40% jump, handling almost 1 million tons. The two Azov ports saw declines: Mariupol down 5%, to 1.3 million tons, and Berdyansk, down 27%, to 261,000 tons.

With milder weather in March, shippers jumped at the chance to abandon trucks and trains for river barges. River cargo on the Dnipro jumped 8-fold q-o-q, to 724,000 tons. Of the cargo, 54% was grain, reports the Sea Ports Administration. With freight cargo rates going up this month, more cargo is expected to move to the river.

Ship passenger traffic was up by one third during the first quarter, with 11,373 people traveling by boat to and from Odesa and Chornomorsk. The lion’s share – 76% — traveled on UkrFerry’s Black Sea routes from Chornomorsk – to Poti and Batumi in Georgia and to Haydarpasa and Samsun in Turkey.

The Ukrainian Danube Shipping Company launches its shipping season this week. While some routes will go the full “Alps to the Black Sea” route, most cruises will be of a 1,000 km section of the Danube, between Passau, Bavaria’s ‘City of Three Rivers,’ and Budapest, ‘the Queen of the Danube.’ Based in Izmail, the company has four river cruisers: Dnipro, Moldova, Ukraine and Volga.

The European Investment Bank is to help pay for a feasibility study to build a 270 km highway from Lviv to Mukachevo and Uzhgorod, says Ukravtodor, the state highway agency. The goal is to cut the drive time to Mukachevo in half — to 90 minutes. The rebuilt highway would connect Lviv, Western Ukraine’s road hub, with the new highways approaching Ukraine from Slovakia and Hungary.

Through March, Wizz Air carried 450,000 passengers, 80% more than during the first quarter of 2018, reports the Budapest-based discount airline. With a new hub in Kyiv Sikorsky, Wizz Air starts service in May to Athens and Thessaloniki, in June to Lublin, Poland, and in July to Leipzig. With this expansion, Wizz Air will fly from Kyiv to 30 EU cities.

Passenger traffic at Ukraine’s airports grew by 22% q-o-q, to 4.4 million people, reports the State Aviation Administration. Of this flow, 91% flew internationally. Lviv and Kyiv Sikorsky airports grew the fastest. Ukraine’s top six airports are: Kyiv Boryspil – 2.7 million passengers +15%; Kyiv Sikorsky – 638,000 passengers +44%; Lviv – 370,000 passengers +53.5%; Kharkiv – 221,000 passengers +29%; Zaporizhia – 97,000 passengers +17%; and Dnipro – 62,000 passengers +12%.

 

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

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Career Day with HWC at the KYIV NATIONAL UNIVERSITY OF TRADE AND ECONOMICS

At the 16th of April KYIV NATIONAL UNIVERSITY OF TRADE AND ECONOMICS organized the “Career Day” for students and graduates. The event was of high interest from the students and graduates side and as well from the present companies. HWC used the chance to provide further detailed information about the Career of an Accountant to the interested students and graduates. HWC is investing time and efforts to support committed and motivated young specialists, help them to grow and become real professionals in accounting and finance. The hosting University provided a welcoming atmosphere for students and potential employers. With pleasure, we are looking forward to the next event.

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Ukraine Business News, Tuesday, April 16

 

 

 

 

  • Foreign Investment in Ukraine Treasuries up 4X
  • Trade with EU Up, Trade with Russia Down
  • River Shipping Season Opens
  • A Hilton Planned for Lviv
  • Ukraine Is the Region’s Top Country for Wage Remittances
  • To Compete, Employers Hiked Salaries 15-20% Last Year
  • Second Big Kyiv Office Buy
  • China-Eu Trains Roll Through Ukraine
  • More Flights to Switzerland, France
  • Metinvest to Invest $1 billion this year
  • Ukraine Steel Production up 4.5%
  • EU to Finance Road, Rail Out of Mariupol
  • Poland Invests to Become US LNG Hub
  • Ukraine Startups Win Attention in New York, Nigeria
  • Air Travel to Boom in the 2020s
  • Foreign Companies Can Now Open Bank Accounts
  • Wind Projects Under Construction Total $1.3 billion
  • Norway’s ABT Plans Europe’s Largest Wind Farm – in Zaporizhia

Foreign investment in Ukraine’s UAH treasury bonds has quadrupled since the start of this year, hitting almost $1 billion, according to the National Bank of Ukraine. The increase to 25.8 billion hryvnia is attributed to: high-interest rates, lack of concern about the presidential election, and the expectation that the opening in the coming weeks of the Clearstream clearinghouse link will increase demand and lower spreads for Ukraine bonds.

Setting an example for Ukraine, Moldova’s Aragvi Holding International Ltd., has successfully launched Moldova’s first ever international bonds – a $300 million, five year Eurobond issue. Fully subscribed last week the bond, with a 12% coupon, had this buyer profile: EU 33%; Switzerland 29%; Britain 19% and US 18%. Aragvi’s Trans-Oil Group specializes in growing and crushing sunflower seeds and exporting oil through Moldova’s Danube river port of Giurgiulesti and Ukraine’s adjacent port of Reni. The bonds are listed on the Irish Stock Exchange.

Trade with the EU is up, and trade with Russia and the CIS is down, according to first quarter statistics released by the State Fiscal Service. Ukraine’s trade with the EU grew 6% q-o-q, to $11.2 billion. Exports were up 3%. to $5.2 billion. Imports were up 9%, to $5.9 billion. During the same January-March period, trade between Ukraine and the CIS, including Russia, was down by 5%, to $4.3 billion. Exports fell by 6%, to $1.5 billion. Imports fell by 4%, to $2.8 billion.

Ukrtelecom JSC, the nation’s landline telephone company, starts in May $10 million, two-year project to lay 3,500 km of fiber optic lines to bring high-speed internet to 300 small towns and villages, the company reported Tuesday. Ukrtelecom, owned Rinat Akhmetov, will work with Slovenian telecommunications company Iskratel. Half of the budget is funded by SID Banka, Slovenia’s development bank.

After a three-month winter closure, the Dnipro is open for shipping with the locks open all the to Kyiv. At the start of the river shipping season, Yuriy Lavrenuk, deputy infrastructure minister, believes Dnipro cargo will grow, building on last year’s 22% rebound, to 10 million tons. “River transport is becoming more and more relevant,” he told a recent transportation meeting in Kyiv. “We see new carriers emerging on the river transportation market. Our goal is to reduce the load on Ukrainian roads by redirecting part of the cargo to the river.” Cargo by Ukraine’s ports on the Danube was 6 million tons, and on the Southern Bug River, 600,000 tons.

Increasing rail freight cargo rates and a highway crackdown on overweight trucks will push more cargo to river barges, predicts Dmytro Kozachenko, executive director of the Ukraine Rivers Association. He tells Interfax-Ukraine: “We are still far away from the figures before the 1990s when 60 million tons of cargo were transported on Ukrainian rivers. However, we can talk about some recovery of the market.” According to the State Statistics Service, the river cargo breakdown last year was: construction materials – 39.5%; or – 14%; and grain – 11%.

Two weeks after authorizing an ‘open skies’ aviation agreement with Qatar, Ukraine’s government proposes to Qatar Airways to start a local carrier. “We are ready to support the creation of Qatar Airways Ukraine,” Infrastructure Minister Volodymyr Omelyan tells U Vidpustku travel site. “This is a serious offer. We see that we are chronically short of airplanes on the domestic market of Ukraine.” Separately, Qatar Airways seeks to fly to Amsterdam via Lviv. Omelyan said that Wizz Air has applied to reopen Wizz Air Ukraine, closed in 2015.

Starting Sunday, Ukrainians can visit Thailand for 30 days without visas. UIA flies from Kyiv Boryspil to Bangkok Suvarnabhumi five days a week.

A Hilton hotel is to be built in Lviv, Mayor Andriy Sadoviy said at a City Council meeting. The hotel, with 157 rooms and apartments, is to be built on a site in Bohdan Khmelnytsky Park, the city’s best-known park. “They want to build a hotel, it seems, Hilton,” the mayor said. “Half of the building should be a classic hotel, half of the building – an apartment hotel. This should be a building of high architectural level – a work of art.”

The World Bank reports that Ukrainians sent home last year $14.4 billion in wages, almost one third more than the $10.9 billion figure reported by the National Bank of Ukraine. Ukraine is now the largest recipient of wage remittances in Europe and Central Asia, says the World Bank. For comparison, $14.4 billion is 11% of the nation’s GDP and 10 times the $1.4 billion disbursed by the IMF to Ukraine last year.

Labor is now Ukraine’s second largest export, after food. Wage remittances now are more than the total exports of metals and IT services combined. With more than $1 billion a month coming into Ukraine, economists say wage remittances boost retail sales and residential construction and help explain why the hyrvnia / dollar exchange is basically unchanged for three years.

Almost two years after the start of the 90-day visa-free regime with the EU, part-time work in the EU is increasingly common. Of the 7-9 million Ukrainians who work abroad, only one third do so full time, estimates Andriy Reva, Minister of Social Policy. Poland’s Foreign Minister Jacek Czaputowicz estimates about 2 million Ukrainians work or study in Poland — about 5% of the people living there. In turn, about 2 million Poles work further West in Europe, largely in Germany and Britain.

Poland’s average wage is $1,050, about three times higher than in Ukraine. In a recent Channel 24 report, economist Alexander Savchenko said a fast way to increase monthly salaries by one third would be to slash payroll taxes.

On average, Ukrainian companies raised wages last year by 15-20%, Yuriy Perch, Ukraine director for the ANKOR job agency, tells 112.ua for a detailed story about labor migration. To hold on to employees, Metinvest and OKKO raised salaries by 30% last year. since 2015, the average farm salary has tripled, says Leonid Kozachenko, president of the Agrarian Confederation. With farms in neighboring countries recruiting Ukrainian tractor drivers and combine operators, “labor shortage” suddenly displaced ‘corruption and raiding’ for second place on the Confederation members’ worry list, after the shortage of credit.

Ukrainian builders, welders, plumbers, and truck drivers are most sought after abroad, according to Vasyl Voskoboynik, who runs a Ukrainian employment agency association. An experienced tiler who earns $7-10 per square meter in Ukraine, can earn $30 per square meter in Belgium. On his return home after 90 days, he has little incentive to do the same work here for one quarter the wage, Perch of ANKOR, tells 112.ua.

In Ukraine, 42 domestic and international payment systems were in use at the end of last year, reports the National Bank of Ukraine. These included credit card companies and international transfer systems. On Wednesday, PrivatBank announced that it has set up an international transfer system with Israel, through STB Union. PrivatBank, Ukraine’s largest bank, said: “Now you can send a transfer from Israel for a few clicks through the mobile STB Union application at the best exchange rate.”

The Finance Ministry sold the equivalent of $304 million bonds Tuesday, fulfilling 99% of all bids without changing yields from the 18-19% range. ICU writes: “Demand for local-currency bills remains high, allowing the MoF to borrow more funds than needed for debt repayments. Foreign investors purchased more than UAH 8 billion during recent weeks.”

Horizon Capital has acquired a minority stake in Dobrobut, the Kyiv-based private healthcare provider. Financial terms weren’t announced for the investment which is from Horizon new $200 million Emerging Europe Growth Fund III. Dobrobut CEO Oleg Kalashnikov said the company plans to shortly open a 10,000 square meter facility in Kyiv that will offer surgery and heart and cancer care.

Dentons law firm moved last week from Volodymyrska, Kyiv’s law firm avenue, to the new Astarta Organic Business Center on Podol’s Naberezhno-Khreshchatytska Street. Billed as Kyiv’s first “green” business center in Ukraine, the Astarta building has its own park with fountains and lines of trees. Oleg Batyuk, the managing partner of Dentons Ukraine, which has 30 fee earner lawyers, said: “For over 25 years, we have been devoted to the Ukrainian market and we will continue to invest in growing our capabilities.”

Businessman Vadim Grigoryev has made his second big Kyiv office center purchase in a year, buying a 28,200 square meter building in western Kyiv currently occupied by Innovecs, the Israeli software outsourcing company. Hryhoryev bought the center for $13 million at a ProZorro.sale auction of assets owned by the now-defunct Ukraine subsidiary of Russia’s VTB bank. Last year, he bought the 17,100 square meters Renaissance Business Centre for $25 million, Kyiv’s largest office purchase of the year. With IT companies grabbing space, office vacancies in Kyiv have fallen to 3%.

Starting July 1, 5% of all new parking spaces – in public garages and apartment blocks – will have to be equipped with chargers for electric cars. By 2030, 100% of parking spaces in garages are to have chargers. “In the span of the next 5-10 years, the global community will entirely switch to electric cars,” predicts Lev Partskhaladze, deputy minister of Regional Development, Construction, and Housing. “This will not happen at once. We need to begin preparing now.”

Investments by foreigners in Ukrainian domestic treasury bills hit a new record last week, increasing by UAH 2.5 billion, to nearly UAH 23bn, or $852 million. ICU writes: “For three weeks in a row, domestic bills have been favored by foreign investors. It is very likely that demand from this category of investors will continue to be high during the following weeks.”

A new China-Hungary container train, rolling 1,200 km through Ukraine, starts weekly service on Friday. Last week, a 41-container test train carrying consumer goods from Shanxi, China, completed the 12-day trip to Eperjeske, Hungary, arriving on Sunday. The train enters Ukraine at Zernove, Sumy, and then runs in a southwest diagonal to Batevo, Zakarpattia. Promoters of the service — Rail Cargo Logistics of Russia and KTZ Express of Kazakhstan — say the train opens a “southern corridor” from China to Hungary, Austria, Romania, Italy, and Balkans.

Planners are drawing up blueprints for a €600 million industrial park and logistics hub to turn Kovel into a gateway for Chinese goods to the EU. Trains from China to the EU face two railroad gauge breaks. The first is at Dostyk, Kazakhstan, where the wide Soviet gauge starts. The second is at Poland’s eastern border, where the narrow European gauge starts. Currently, the main gauge transfer point – Brest, Belarus / Małaszewicze, Poland – is overloaded, says Yevhen Kravtsov, CEO of Ukrazalinytsia.

With five rail lines radiating out of Kovel, Western Ukraine’s rail hub, Ukrzaliznytsia is electrifying the 85 km stretch southwest to Izov on the Polish border and planning to use EU loans to rebuild the 65 km of European gauge section that runs due east to Chelm, Poland. The rail route from Dostyk, on the Chinese-Kazakh border, to Kovel is only 4% longer – 206 km – than the rail route to Brest. By shipping products by rail, some Chinese factories can cut shipping times to the EU in half, compared to sending by sea.

“The [Kovel] region has a unique opportunity to turn into a transport and logistics hub and become the western gateway of Ukraine to Europe,” Oleksandr Savchenko, Ukraine’s chairman of regional administration, recently told a meeting in Kovel of the Volyn Regional Development Council, according to Zalіznichne postachannya magazine. He estimated construction of an international “dry” cargo port with a track side industrial park would create 3,500 jobs.

One year after restoring its Zurich-Kyiv route, Swiss International Air Lines increased its frequency last week by 50%, to six times a week. In July, the flight will increase to daily, says Rene Koinzack, country manager for Lufthansa Group, the parent company for Swiss. The flight had been dropped Oct. 1, 2014, due to the hostilities between Ukraine and Russia.

Ukraine new discount airline SkyUp starts flying to France in the first half of June, company CEO Eugene Haynatsky tells U Vidpustku travel site. SkyUp will fly three times a week from Kyiv Borispol to Paris Orly and two times a week from Kharkiv to Orly. It will also fly twice a week to Nice, competing with a UIA flight on that route. In a reciprocal deal, discount French carrier Aigle Azur, starts flying between Kyiv Boryspil and Orly on April 18.

Metinvest, Ukraine’s largest steelmaker, plans $1 billion capital investments this year, a 20% increase over last year, the company tells analysts. Metinvest CEO Yuriy Ryzhenkov, says more than 60% of CapEx will be for maintenance and 35% will be for strategic development projects. Concorde Capital’s Dmytro Khoroshun reviews the company’s spending on debt, dividends, and CAPEX and writes: “We think that it is realistic for Metinvest to cover this deficit with investment-related debt facilities and with withdrawals from its $1.9 billion in working capital.”

Metinvest made $1.2 billion in net profits last year – almost double the 2017 level, the company reports. “Underpinned by favorable steel and iron ore prices and ongoing economic growth in Ukraine…revenues soared by 33% year-on-year,” Metinvest CEO Yuriy Ryzhenkov, writes of the 2018 company results. “In 2018, Metinvest delivered some of its best results in the last four years.” After the report, Ryzhenkov told S&P Global Platts in London that Metinvest’s crude steel output should rise by about 1 million tons this year, to 8.5 million tons.

Nearly $900 million of investments in Metinvest’s two Mariupol steel mills last year helped push Ukraine’s steel production up 4.5% during the first quarter, to 5.5 million tons. Last month, Metinvest launched a new continuous casting machine with an annual capacity of 2.5 million tons at its Illyich Steel MMKI mill. Next month, Metinvest’s other big project goes on-stream: a modernized blast furnace at Azovstal will increase the plant’s annual hot metal capacity by up to 1.6 million tons. Dragon Capital writes: “Domestic steel production keeps recovering gradually, driven by a pipeline of CAPEX projects that are likely to continue powering the steel sector through 2020.”

Exports of steel products through Mariupol were down 30%, to 455,000 tons, in January and February, compared to the same period last year. By contrast, at Mykolaiv, the Black Sea alternative for Mariupol’s steel mills, steel exports were up 20%, to 615,000 tons. Last year, Mariupol was the nation’s top steel exporting port, shipping out 4.1 million tons of steel. But last May, Russian border controls ships started harassing shippers in the Azov, causing some companies to stop serving Ukraine’s largest port on the Azov. At Kherson, a smaller Black Sea port closer to the Azov, cargo handling during the first two months of this year was up 27.5% y-o-y. From Mariupol, Kherson is 420 km or seven hours by truck.

The EU and the European Investment Bank are preparing new concessional loans to finance the rebuilding roads and railroad tracks from Mariupol northwest to Zaporizhia and west to Mykolaiv, reports the EU Delegation to Ukraine. The move comes after a high level EU delegation visited Ukraine’s Sea of Azov ports and reported on Feb. 18 to a EU Foreign Affairs Council’s discussion dedicated to Ukraine. Soon, the EU will open in Mariupol an office dedicated to promoting decentralization and curbing corruption.

In the latest investment in Mariupol port, a successful auction was held last week for dredging 2 million cubic meters of sediment from the approach channel and port. Five previous auctions failed due to a lack of bidders. Companies feared their dredges and barges could be bottled up in the Azov due to Russian control of the Kerch Strait. Azimut, a Ukrainian company, won the ProZorro auction with a bid of $13.3 million. Now, the Sea Ports Administration plans to issue a tender for dredging Berdyansk port.

The World Trade Organization, or WTO, has upheld Russia’s “national security” justification for banning the transit of Ukrainian exports through Russia to Central Asia and Mongolia. Russia imposed restrictions on a truck and train cargo in 2016. Since then, Ukraine’s trade plummeted with the “Russian-speaking world.” Concorde Capital’s Alexander Paraschiy writes of the ruling: “It will hardly have any economic implications for Ukraine. Even if the WTO experts had decided that Russia did something wrong by limiting Ukrainian transit, the Russian side would hardly have changed its behavior in the short term.”

 The EU will finance almost two thirds a €208 million project designed to expand Poland’s sole LNG terminal by 50%, reports Polish Radio. Located in Świnoujście, a Baltic port on the German border, the project is due for completion in 2021. Separately, Poland’s government announced last month that they will build a second, floating LNG landing terminal at Gdansk. In the 2020s, Poland is to become Central Europe’s hub for LNG from the United States.

 By 2023, a pipeline is to bring Norwegian gas through Denmark to Poland. With American LNG and Norwegian pipeline gas, Poland plans to stop buying gas from Russia in 2023. Currently, Russia supplies two third of Poland’s gas needs. Alluding to Ukraine and other countries dependent on Russian gas, Peter Naimsky, Minister for Strategic Energy Infrastructure, told Poland’s Senate: “We want to give our neighbors access to gas through the Polish gas transmission system.”

 Created by a Ukrainian, Nigeria’s largest online marketplace for classifieds, has acquired its main competitor on the African market, OLX and its businesses in Kenya, Ghana, Uganda, and Tanzania. Founded in Lagos in 2014 by Kyiv native Anton Wolyansky, Jiji lists 1.1 million items and has six million active users. With these acquisitions, Jiji’s population base expands by 50%, to 300 million. In face of Jiji’s growth, South Africa-based OLX pulled out of Nigeria last year.

 Inc.com, the New York-based business news site, ranks Kyiv’s UICE Group at the top of its list of “the Top 10 Fastest-Growing Private Companies in Europe.” The Ukrainian Interbank Currency Exchange became an authorized exchange platform in the early 2000s. Led by Oleksandr Ginzburg, the exchange trades stocks, derivatives, oil, gas, and coal. The site reports: “Inc. 5000 Europe rank No. 1: Three-year growth 24,845% 2017 revenue €79.3 million.”

 Setting an ambitious goal for air travel, the government wants to nearly quadruple air passengers in the 2020s, to 80 million in 2030. Building on a 25% jump last year, to 20.5 million air travelers, the Infrastructure Ministry sets this 2030 target in its new Aviation Transport Strategy. By comparison, Poland with roughly the same size population of Ukraine, but half the territory, carried only 38 million air passengers in 2017.

 Kyiv Boryspil passenger traffic was up 15% during the first quarter, to 2.6 million people, compared to Jan-March of last year. Ukraine International Airlines, the airport’s main tenant, carried 8% more passengers in the first quarter, about 1.5 million. With the fast growth of discount airlines, UIA lost $100 million last year.

Foreign companies and investment funds now can open accounts in Ukrainian banks, without setting up representative offices, the National Bank of Ukraine reports on its website. Part of a wider currency liberalization started in February, foreign companies have greater freedom in using their Ukraine bank accounts.

Foreign companies are invited to bid in a project to build a half kilometer long cable way in Lviv, taking sightseers from Na Valakh park to Vysoky Zamok, or High Castle Park. Mayor Andriy Sadovy says the project is being coordinated with UNESCO and is expected to cost around $12 million. A ProZorro tender will be issued.

This spring, the April winds blowing across Ukraine are spinning wind turbines. Currently $1.3 billion worth of onshore wind projects is underway across Ukraine. By comparison, $100 billion was spent worldwide last year on onshore wind, Bloomberg reports. Worldwide, wind energy was the second fastest growing renewable energy source in 2018, adding 49 GW. In the first place was solar, adding 94GW, the International Renewable Energy Agency announced last week.

Here are Ukraine’s major projects:

NBT has signed an agreement with Unit Venture Investment Fund develop a €1 billion 742 MW wind power plant along the northern shore of the Azov, in Yakymivka district, Zaporizhia. With the working name of ‘Zophia,’ this would be the largest onshore wind power plant in Europe. Currently, the largest is a 600 mw plant, Fântânele & Cogealac, in Romania. The second largest is Whitelee, a 539 MW plant in Scotland.

By June, DTEK plans to complete construction of the first 100 MW phase of Prymorsk, or ‘Seaside,’ on the north shore of the Azov, in Zaporizhia region. As of Friday, 18 of the 26 planned GE turbines were generating electricity, with a capacity of 69 MW. A second 100 MW phase of the plant is under construction. Separately, DTEK is building Oryol, a €135 million, 100 MW plant, powered by Vestas turbines from Denmark. The three projects add up to a €400 million investment in 300 MW of wind power on a 50 km stretch of Azov coast, west of Berdyansk.

Belgium-based GreenWorx Holding N.V. broke ground two weeks ago on a €188 million, 110 MW wind power plant on the north shore of Kherson’s windswept Gulf of Dnipro. Located in Oleksandrivka, Bilozerka district, the project is to use 25 Nordex turbines of 4.4 MW each. According to Eco Town news site, GreenWorx CEO Tom Hanson said at the groundbreaking that construction will create 300 jobs and the plant will create 40 fulltime jobs.

Germany’s eab New Energy Group has opened an office in Lviv and is helping Ferozit Wind Energy build a total of 85MW of wind power capacity at three sites in Lviv region, in Pustomyty and Radekhiv districts. A leader in wind energy, Germany drew 34.4% of its electricity in March from wind power plants.

The Ukraine partner of German’s Fuhrländer AG is starting to make 4.5-4.8 MW wind turbines at its Kramatorsk plant, double the size of the first turbines made by Fuhrlaender Windtechnology LLC when it started production in 2012. With 15-20 of these turbines to be built this year, a special crane will be imported to erect them, Andriy Sergienko, a director of Wind Parks of Ukraine, tells ExPro Consulting site. While electronics are imported, largely from Siemens, about 70% percent of the turbine/tower package is produced in Ukraine, he says.

About 15 km south of the Belarus border, 189 MW of wind power capacity is to be built in three stages at Pokaliv, Zhytomyr by Wind Solar Energy, of Cyprus. Called Lisova, or forest, the plant’s first stage is to be 111 MW, reports Interfax-Ukraine.

About 15 km east of the Polish border, a 100 MW wind power plant is being planned for the Volyn region village of Myshiv. The plan is to raise 35 turbine towers on a 150-hectare site. As a first step, the developer, Wind Power GSI Volyn, is erecting this spring a 120-meter high wind gauge, according to bug.org.ua news site.

Near the Danube, a five-turbine, 19.5 MW wind power station is planned for Kiliya, Odesa region, Pavel Boichenko, head of the unified territorial community, tells Oblesvesti.com.

Building on the Dniester estuary, Turkey’s Güriş Construction plans to inaugurate this month Ovid 1, a 34.4 MW wind farm powered by GE turbines. Güriş is obtaining permits for the second phase of 50.4 MW, also on land 40 km south of Odesa.

 

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

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Ukraine Business News, Tuesday, April 9

 

 

 

 

  • New Trains and Planes to Poland
  • Ukraine Tops Russia in Black Sea Container Cargo
  • Ukraine’s Danube: Ferry to Romania, Austrian Tourists and LNG
  • Next Month: European Cruise Ships Return to Odesa, Come to Kyiv
  • Cell Phones: More Internet, Less Talk
  • No More Corporate Jets to Moscow
  • NATO Pressures for Shipping Freedom in Azov
  • Berry Exports Jump 5X
  • With Flights to 38 Cities, Lviv is Western Ukraine Air Hub
  • China Extends $1 billion Cover For Naftogaz to Buy Chinese Equipment
  • Ukraine Cuts Gas Imports
  • US Incubator for Tech Startups
  • Turkish, Norwegian Investors Study Hydro
  • Wages up 11%
  • Ukrainians With Cash Go Cashless
  • Saudi’s SALIC Buys $51M of Farm Machinery
  • Grain Exports to be Up 25%
  • TurkStream to Bring Russian Gas thru Bulgaria to Central Europe
  • Solar, Wind Projects Up 5X in Q1
  • Worker Remittances up 17.5%, Russia Lags
  • Boryspil Cuts Crowding by Opening 2nd Terminal
  • New Flights to France

Starting tonight, customs and passport controls for Kyiv-Warsaw trains will be conducted on the train, at Kyiv’s Central Station. Eliminating the border stop at Yagodyn Station, Volyn, is the latest step to streamline travel between Ukraine and Poland. Passengers are asked to board the 19:13 train by 18:45 to have their passports and bags checked on board.

Poland and Ukraine plan to launch a Lviv-Lublin train this summer. Initially, passengers will ride in a Ukrzaliznytsia train to the Lviv border town of Rava-Ruska, and then change to a European gauge Polish train. For most of the 20th century, trains plied the 225 km route, connecting Lviv, the largest city of Western Ukraine, with Lublin, the second largest city of Lesser Poland.

On June 30, Wizz Air starts twice a week, Kyiv Sikorsky-Lublin flight. Today, Wizz Air starts a Kyiv-Kraków flight. With these two new routes, Wizz Air will fly from Kyiv to seven Polish cities.

Ukrzaliznytsya is launching a weekly, 1,400 km, east-west container train from Dnipropetrovsk to Sławków, Poland. The freight train takes advantage of Poland’s longest broad gauge track, a 1970s-era line that reaches 400 km into southern Poland to Sławków, 50 km west of Kraków. In Nizhnedneprovsk, the train will collect containers from Ukraine’s eastern industrial cities of Zaporizhia, Mariupol and Nikopol. The train will cut travel time in half, to 40 hours, says Yevhen Kravtsov, chairman of Ukraine’s state railroad. The line is the railroad’s 19th container train, a fast-growing service.

Dedicated container trains cut train travel times by 70%, Igor Tkachuk, Odesa port chief, tells the Center for Transportation Strategies. From Odesa, port of entry of two-thirds of containers handled by Ukraine’s Black Sea ports, container trains now fan out to Dnipro, Ivano Frankivsk, Kharkiv and Kyiv.

“Ukraine ports eye larger share of Asia cargo” headlines The Journal of Commerce, the New York-based shipping and logistics news site. Focusing on competition between Ukraine’s Black Sea ports and Russia’s port of Novorossiysk, reporter Eugene Gerden writes that since 2017 Ukraine has cuts its container clearing times and fees to half those of Russia. Topping Novorossiysk for the first time, Ukraine’s container traffic jumped by 19% last year, to 846,485 TEU. Novorossiysk’s container traffic increased by 2.5%, to 754,890 TEU.

Starting April 16, Euro Marine Logistics NV plans to start a twice a month roll on roll off cargo service between Piraeus, Greece and Chornomorsk. Served by an EML vessel, the City of Amsterdam, the route is designed to facilitate the export of new and used cars from the EU to Ukraine. The ship will follow a triangular route around the Black Sea: Piraeus-Chornomorsk-Novorossisk. Based in Belgium, EML is jointly owned by Norway’s Höegh Autoliners and Japan’s Mitsui O.S.K. Lines.

Cross-Danube ferry service is to start this summer, linking Isaccea, Romania and Orlivka, Ukraine. It will create Odesa region’s first border checkpoint with the EU. The 500-meter ferry crossing will replace a 100 km road detour through Moldova’s southern tip. On both banks, the roll on roll off facilities are built to handle 250 cars and 1,000 trucks a day. After 20 years of government discussions, a private Ukrainian company built Ukraine’s ferry terminal and customs control buildings. On the Romanian bank, Navrom SA Galati built the terminal at a cost of €12 million, reports Romania Libera. To promote trade, local residents are to be allowed to cross without passports and circulate freely within 30 km of the ferry docks.

Reni, Ukraine’s northernmost port on the Danube, is planning to build an LNG terminal and floating berth for bunkering, or fueling, river ships, reports the local branch of the Sea Ports Authority. To cut emissions by riverboats, the EU encourages natural gas-powered vessels. Reni is five kilometers south of the Moldovan border, and about 150 kilometers upriver from the Black Sea. By 2025, ExxonMobil and other multinationals plan to double Romania’s annual gas production — to 20 billion cubic meters — by developing gas fields on the continental shelf of the Black Sea. Ukraine’s Sea Ports Authority is looking for investors to build the LNG terminal by 2025.

Ukraine’s Danube River cruise season opened this week with the docking of the Victoria on Monday in Ust-Dinaisk, Vylkove, a Danube delta city of canals sometimes called ‘Ukraine’s Venice.’ The local port authority reports: “There are 140 tourists on board who arrived in the Ukrainian Venice from Austria.” This season, 40 Danube cruise ships are expected to call at Ust-Dunaisk, an increase over 2018. Last year, cruise ship visitors hit 5,338, an 18% rise over 2017.

After dropping to zero last year, two European cruise ships return to Odesa this summer. On May 10, the Maltese-flag Aegean Odyssey is to call at Odesa, bringing 380 passengers. This fall, on Oct. 30, the Bahamian-flag Amera is to call with 800 passengers. In 2013, the modern peak, 106 cruise ships called at Odesa. Russia’s attacks on Ukraine killed the business, followed by sanctions rendering off limits the two cruise ports of call in Crimea – Yalta and Sevastopol.

A turnaround is coming with nine cruise ships booked for 2020, Igor Tkachuk, Odesa port director, tells the Center for Transportation Strategies. His boss, Infrastructure Minister Volodymyr Omelyan tells Black Sea News: “I recently returned from negotiations with large Arab companies [in the UAE]. They are interested in investing in Ukraine. They see the seaport in Odessa not just as a port, but as a convenient place for a marina, where it will be possible to create a wonderful public space, and all the amenities for cruise liners.”

Viking River Cruises returns to the Dnipro on May 27 with 11 cruises between Odesa and Kyiv through Sept. 24. With prices for the 11-day cruises ranging from $3,700 to $10,000, most of the staterooms priced under $5,000 are sold out through June. Based in Basel, Viking beckons: “Cruise the Dnieper River to the Black Sea, an ancient and splendid trade route lined with rich cultural treasures, onion-domed churches and rural folkways that recall the days of Vikings, Tatars and Cossacks. Visit Kiev’s Cave Monasteries. Marvel at the riding skill of Cossack horsemen. And trace the footsteps of history at Odessa’s Potemkin Steps.”

Boosting foreign direct investment from the current level of 2% of GDP should be a core task for Ukraine’s next president, Andy Hunder, president of the American Chamber of Commerce in Ukraine, writes on the Atlantic Council Ukraine blog site. “Whoever wins, either Poroshenko or newcomer Volodymyr Zelenskiy, he will need to focus on attracting FDI,” Hunder writes. “Since both candidates are successful businessmen, the next president should watch closely that investors are welcomed and treated well.” At a meeting with business leaders two weeks ago, he says: “Zelenskiy focused on assuring us that his views and intentions are aligned with the business community’s priorities, specifically on rule of law, macroeconomic growth, and fighting corruption.”

In a reversal, Ukraine’s mobile phone operators now earn more money from the Internet than from voice. Last year, the nation’s cell phone companies earned 46% of their revenue from the Internet –$600 million. Voice accounted for 42% or $550 million. By contrast, in 2016, operators earned three times as much from voice as from the Internet, according to the National Commission for the State Regulation of Communications and Informatisation.

The government is banning business jet flights between Ukraine and Russia. Commercial flights were banned in Nov. 2015. On Wednesday, Cabinet of Ministers extended the ban to private planes in response to a March 22 flight to Moscow by two pro-Russian politicians – Yury Boiko and Viktor Medvedchuk. The expanded ban does not apply to flights by such international organizations as the Red Cross, the United Nations and the Organization for Security and Cooperation in Europe, or OSCE. Prime Minister Groysman vowed the ban would only be lifted when Russia “ceases to be an aggressor country and turns into a civilized state.”

In response, Rosaviatsiya, Russia’s federal air transport agency, told Interfax: “We propose to conduct negotiations and resume air traffic on a regular and charter basis between Russia and Ukraine in full…We are confident that such a decision is in the interests of our peoples and air passengers.” Traffic on ‘sanctions-busting’ flights through Minsk is increasing. On Monday, Motor Sich resumed daily flights between Minsk and Zaporizhia, the busiest airport in Ukraine’s heavily Russian speaking southeast. Belavia now has direct flights from Minsk to Ukraine’s seven busiest airports: Dnipro, Kharkiv, Lviv, Odesa, Zaporizhia and Kyiv’s two airports.

Since 2014, Ukraine’s berry exports have increased five-fold, to 23,500 tons, Olga Trofimtseva, acting agriculture minister, said Wednesday at an industry conference in Kyiv organized by Berries of Ukraine. She said: “Ukrainian fresh berries are exported to Belarus, Poland, Moldova, the United Kingdom and the Netherlands. The largest consumers of frozen berries have become EU countries.” Ukraine’s top harvests are: strawberries – 62,300 tons; raspberries – 35, 600 tons; and currants – 29,600 tons.

Almost $1 billion was invested last year in food processing in Ukraine, Prime Minister Groysman said at a recent agricultural fair, Agroport West Lviv. Noting that this accounted for about 28% of the $3.3 billion invested in farming last year, he said: “Our task is to change this structure…We must increase the in-depth processing of Ukrainian products.”

Consolidating its role as Western Ukraine’s air hub, Lviv airport saw its passenger flow jump by 53.5% during the first quarter of this year compared to last year. Growing faster than last year’s rate of 48%, Lviv could handle 2.5 million passengers this year, more than triple’s the city’s population. Boosting to 38 the number of cities with direct, scheduled flights to Lviv, the city added in the last month: Wizz Air to Copenhagen; Motor Sich to Uzhgorod; and airBaltic to Riga.

To help Western Ukraine residents use the airport, Lviv started on Monday an hourly bus to the airport from Lviv’s Main Railroad Station, the second busiest rail station in Ukraine, after Kyiv Central Station. To cash in on the tourist flow, the city also started on Monday a tourist tax, with rates up to 0.5% of hotel bills.

In a big switch, China’s state export credit agency is extending $1 billion of insurance cover to allow Naftogaz to get low-cost credit to buy high tech Chinese equipment. Known as Sinosure, the Beijing-based agency covers political risk such as currency devaluations and war. Only two years ago, Beijing discouraged state companies from investing in Ukraine, citing the war with Russia in Ukraine’s southeast corner.

The first $160 million will allow Naftogaz to get cheap financing for 13 drilling rigs bought last year from Honghua International Co., Ltd. Ukrgazvydobuvannya, the Naftogaz gas production unit, bought the rigs with a five-year payment delay. Ukrinform reports that the use of the other $840 million to cover purchases of Chinese equipment “will be agreed in the near future with the Chinese side.”

Russian gas flowing through Ukraine’s pipelines to Europe increased by 5.3% during the first quarter of this year, compared to last year, reports Ukrtransgaz, the pipeline system operator. Interfax-Ukraine calculates that Russia sent 20 billion cubic meters through Ukraine. One year from now, Russia plans to open two bypass gas lines around Ukraine – Nord Stream 2 through the Baltic Sea and TurkStream through the Black Sea. With these new lines, Russia says it will not need Ukraine’s pipelines.

Ukraine cut gas imports for domestic use by 15% during the first quarter, compared to the same period last year. Tilting toward Poland, which imports liquefied natural gas from the US, Ukraine increased Polish imports by one quarter. Imports from Slovakia dropped 24% and imports from Hungary dropped by 9%. Most gas from Slovakia and Hungary originally comes from Russia. Ukraine stopped direct gas purchases from Russia in Nov. 2015. Due to the conservation and substitution of fuels, Ukraine cut gas imports last year by one quarter, to 10.6 billion cubic meters.

Norway’s international law firm Wikborg Rein Advokatfirma AS has signed a €14 million contract with Naftogaz to continue Ukrainian state oil company’s litigation with Russia’s Gazprom. In 2014, Wikborg Rein and Naftogaz signed a €50 million contract to pursue Naftogaz claims in the Arbitration Institute of the Stockholm Chamber of Commerce. As a result of this arbitration, Gazprom was ordered to pay Naftogaz a net $2.6 billion.

Israel’s Perion Network is buying Ukrainian startup Septa Communications for $3.75 million. Better known as Captain Growth, Septa has developed ‘Value Unlock,’ a patented artificial intelligence platform for analyzing advertising. The company was founded two years ago by Dmitry Bilash and Dmitry Pleshakov.

A US-funded Business Incubator project launches across Ukraine this week with the goal of providing intensive business training to 60 to 90 Ukrainian startups a year. Executives of selected startups and SMEs will go through four-month training sessions, learning business fundamentals, idea shaping and fundraising from mentors, largely Americans from the IT sector. Funded by USAID through the end of 2022, the program is directed by Charles K. Whitehead, a business law professor at Cornell Law School. Open to tech-based businesses, the program will be offered in Dnipro, Kharkiv, Kyiv, Lviv, and Odesa. Companies interested in the first session should apply by May 3 through: www.eo.in.ua.

Turkey’s Özaltın Holding is in talks with Ukrhydroenergo on completing two Soviet-era hydroelectric projects on the Dnipro. Near Kaniv dam, in Cherkasy, there are plans to resume construction of a 2,500 MW project. Further downstream, at Kakhovka, there is a plan to build a second power generating facility, the seventh and last on the Dnipro. Funding has not been obtained.

Norway’s AICE Hydro A.S. plans to bid in the first privatization of a small hydro plant in Ukraine, the State Property Fund reports. Next week an appraiser is to be chosen for the 2 MW hydro plant across the Southern Bug in Pervomaisk, Mykolaiv region. Soon after the appraisal, the 90-year-old plant will be put up for auction on ProZorro.Sale, promises Vitaliy Trubarov, head of the State Property Fund. Arne Jakobsen, CEO of AICE, says foreign investment can renew Ukraine’s small scale hydro production. Norway is Europe’s largest hydropower producer, drawing 98% of its electricity from hydro.

Real wages were up 11% y-o-y in February, reports the State Statistics Service. Nationwide, the average monthly nominal wage was UAH 9,429, or $350. The average wage in Kyiv city was 50% higher, or $530. And Kyiv wages, the highest in the nation, were twice as high as the lowest in Ukraine, $266 in Chernivtsi.

Horizon Capital, the U.S. private-equity firm specializing in Ukraine, is investing $10 million in Ajax Systems, a Kyiv-based producer of wireless security systems. A competitor to Amazon’s Ring, another Kyiv-based security system designer, Ajax makes sensors that detect intruders, fire, and flooding and remote controls for household appliances, locks, and lighting. Founded in 2011, Ajax employs 500 people in Ukraine and largely sells to the European Union.

The founders of Monobank, Ukraine’s mobile bank, are investing $1 million to bring a British version, Koto, to the UK market by September, Dmytro Dubilet, one of the founders, tells Novoe Vremya magazine. “We are trying to launch a project in England now,” says Dubilet who founded Monobank in 2017 with Oleg Gorohovsky and Mykhailo Rogalskiy, all former managers at PrivatBank. “The alpha version is ready. We are engaged in internal testing. I am already paying for purchases with a Koto card.” Less than two years after founding, Monobank has 826,000 clients in Ukraine.

Ukrainians are among Europe’s fastest adopters of mobile device payment systems and other non-cash transactions, Maria Babenko, regional director for Visa Inc., tells Focus magazine. “Of course, if we compare Ukraine with Europe in terms of the amount of money flowing through non-cash channels, we are still an emerging market,” says Babenko who handles CIS and Southeastern Europe. “But if we look at Ukraine in terms of adaptation of innovations, then I would say that we are seen as a leader in this direction…Apple Pay and Google Pay, which work in Ukraine, have not yet entered all European markets…contactless transactions in many countries are far less common than in Ukraine because of the unwillingness of retailers to receive such payments.”

Google Ukraine launches this week the Google Pay online payment service, a streamlined system that does away with re-entering payment card data with each online purchase. About 6,500 Ukraine-based online stores have adopted this option. About 200,000 physical stores now accept Google Pay.

The Ukraine offices of three international search firms – Odgers Berndtson, Pedersen & Partners and Ward Howell – have won mandates to identify candidates for six independent board members of Eximbank, Oschadbank and PrivatBank, Finance Minister Oksana Markarova writes on Facebook.

Saudi Arabia’s SALIC UK Ltd is investing $51 million this year in farm machinery to cultivate its 195,000 hectares of Western Ukraine farmland, split between two companies, MRIYA Agro Holding and Continental Farmers Group. According to Georg von Nolcken, the new chief operating officer of the combined companies, SALIC is buying almost 300 pieces of machinery, including tractors, combines, self-propelled sprayers, and transport trailers.

Corn was king according to the final breakdown of Ukraine’s record 2018 harvest of 70 million tons, 13% bigger than the year before. The State Statistics Service reports: Corn – 35.8 million tons; Wheat — 24.6 million tons; Sunflower seeds – 14.2 million tons; and Soybeans – 4.5 million tons.

Grain exports should hit 49 million tons this marketing year, up by almost one quarter from the comparable July 2017/June 2018 period. So far grain exports have hit 37 million tons, up 23% from the same period last year, according to the Agriculture Ministry.

In ‘test mode,’ the new Cargill-MV Cargo grain terminal has exported 1 million tons of grain since last summer. “In test mode, we handle 20,000, sometimes 30,000 tons a day!” Andrei Stavnitser, co-owner of the terminal writes on his Facebook page. Located in Yuzhne, Ukraine’s busiest Black Sea port, the $100 million terminal and 16-meter deep berth are designed to handle 10% of all of Ukraine’s annual grain exports.

Preparing for a cutoff of Russian gas through Ukraine next year, Naftogaz is expanding its storage reservoirs and looking for international financial aid to buy the gas to fill them, Andriy Kobolyev, CEO of Ukraine’s state oil and gas company told an energy meeting in Brussels on Friday. Asked what Naftogaz will do if talks with Gazprom collapse this on a new transit contract, he responded: “The short answer is: more storage and more liquefied natural gas.” Asked about last Wednesday’s request by the Danish Energy Agency for another environmental review of the Nord Stream 2 gas line, he said: “This is definitely not a ban. But it is another big delay.”

Arkad, an Arab-Italian consortium, submitted the lowest bid — €1.1 billion – to build a pipeline to take Russian gas across Bulgaria, from Turkey to Serbia, reports Novinite, a Sofia-based news service. Vladimir Malinov, executive director of Bulgartransgaz, said Friday the tender winner will be announced in April. The winner will have 250 days, about eight months, to build the gas line. Running under the Black Sea from Anapa, Russia, TurkStream made landfall last week on the Turkish coast near Kıyıköy. Gas is to start flowing on Jan. 1. Of the 15.8 billion cubic meters arriving at the Bulgarian-Turkish border, deliveries are to be: 11 bcm to the Serbian border, 9 bcm to the Hungarian border, and 4.3 bcm to Slovakia.

Hungary and Azerbaijan agreed Friday to work out a route for delivering Azeri gas to Hungary next year without going Ukraine. Noting that the Russia-Ukraine gas transit contract expires at the end of this year, Hungary’s Foreign Minister Péter Szijjártó said in Baku: “This is a particularly serious challenge for Hungary in view of the fact that more than half of Russian gas imports to Hungary go through Ukraine.”

Racing a Dec. 31 expiry deadline for the green tariffs, Ukraine commissioned 861 MW of renewable energy facilities in Q1 – five times the amount during the same period last year. Of the total, 172 MW were wind and almost 700 MW were solar, according to figures released Friday by the National Commission for Energy, Housing and Utilities Services Regulation. In the coming weeks, the Rada is to vote on an auction system that would replace the green tariffs, some of the highest in Europe.

Remittances by Ukrainian working abroad jumped by 17.5% last year to $11 billion, reports the National Bank of Ukraine. Russia traditionally the top destination for Ukrainian workers is fast being eclipsed by Western nations. Remittances from Poland increased by 16.4% to $3.6 billion, almost four times the level of Russia – $948 million. While remittances from Russia were down by 27%, money sent from the US increased by 28%, to $870 million. Money sent from the Czech Republic jumped by 50%, to $846 million. Italy was in fifth place, with $492 million, a 10% increase over 2017.

To cut crowding at Kyiv Boryspil, the airport re-opened Terminal F yesterday for discount and charter passengers. Refurbished after five years and newly equipped with passport control booths, Terminal F is for passengers prepared to walk to their planes. The terminal now handles Bravo, Lauda, Ryanair, SkyUp, Windrose and Yan Air. Soon, it will handle Aigle Azur, Bukovyna and FANair.

SkyUp, Ukraine’s new discount airline, is to receive three more Boeing 737s in April, part of a planned tripling of its all-Boeing fleet to 12 by the end of this year. Breaking with UIA’s Boryspil hub strategy, SkyUp is launching direct flights this spring from regional airports: Chernivtsi, Dnipro, Kharkiv, Kherson, Lviv, Mykolaiv, Odesa, Poltava, and Zaporizhia. The flights, largely to vacation destinations, are a mix of charters and regular flights, Dmitry Seroukhov, CEO of JoinUp! travel agency, told reporters Friday.

France will benefit from Ukraine’s low-cost air travel revolution as SkyUp negotiates launch dates for Kharkiv’s first flights to Paris, for Kyiv’s first regular flights to Nice and for a Kyiv-Boryspil-Paris flight. Stemming from a France-Ukraine partial air liberalization negotiated last winter, SkyUp won permission on Friday to perform the three routes. As part of a reciprocal deal, a second French carrier, Aigle Azur, starts Kyiv Boryspil – Paris Orly flights on April 18. Aigle Azur is adding the Ukrainian language to its website. For years, France-Ukraine flights were a monopoly of UIA and Air France.

UIA, Ryanair and Wizz Air are being investigated for possible collusion over new restrictions on carryon hand luggage, the Antimonoply Committee tells the Kyiv Post. Wizz Air and Ryanair announced stricter carryon rules on Nov. 1. UIA followed suit on Jan. 15.

Private passenger railroads are knocking-knocking on Ukraine’s western door. Czech’s RegioJet has “a great interest in going to Mukachevo,” Alexander Krasnoshtan, Ukrzalyznitsya’s director of long distance passenger service, tells the Center for Transportation Strategies. The train would travel between Košice, Slovakia and Mukachevo, Zakapattia. Tomorrow, UZ plans to test this European gauge route with Slovak rolling stock. For the last year, RegioJet has bused passengers from Mukachevo and Uzhgorod to Košice, where they board RegioJet trains heading west.

Separately, LeoExpress, another Czech private train operator, is applying to Polish Railway Transport Administration to run a train from Prague to Krakow to Medyka, on the Polish border. With Ukrainian permission, the train would then cross into Ukraine, traveling 20 km east, stopping at Mostyska-1, the eastern terminus of European gauge tracks in Lviv. UZ looks favorably on both proposals, Krasnoshtan told the Center for Transportation Strategies.

With ridership on trains to Russia falling by 20% a year, Ukrzaliznytsia has cut frequencies and may drop the Kyiv-St. Petersburg train entirely, Krasnoshtan says in the same interview. By contrast, west bound trains to Poland and Austria have high occupancies and are money makers. The new ‘Four Capitals’ train to Belarus and the Baltics is running at 40% occupancy, but UZ has hopes for more riders this summer.

 

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

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Ukraine Business Breakfast at Switzerland Global Enterprise

 

 

 

 

On 02 April, Henniger Winkelmann Consulting and quality partners held a business breakfast at Switzerland Global Enterprise. The subject was the current economic situation and outlook as well as current trends Ukraine.

 The seminar has started with an introduction by Michael Kühn, Senior Consultant CIS & Baltics at Switzerland Global Enterprise, and Julie Bächtold on cultural differences and business behaviour in Switzerland and CIS. After that, Andreas Bitzi, Managing Director at quality partners, held a speech which was followed by a practice case by Dmitry Konovalov, Sales Director Eastern Europe at Bucher Municipal. He told the audience about the challenges – and success – of Bucher Municipal’s.

 Sven Henniger, Partner at Henniger Winkelmann Consulting, gave an update on the Ukrainian market, outlook and trends. His speech was followed by a practice case on software development in Ukraine by Andreas Ganswindt, CEO at Evolvice Team.

 The large turnout shows the great interest of Swiss enterprises in the Ukrainian market which offers a wide range of opportunities.

 Thanks very much to Switzerland Global Enterprise and Michael Kühn, as well our co-organizer and practice speakers from Bucher Municipal and Evolvice Team.

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Ukraine Business News, Tuesday, April 2

 

 

 

 

  • Construction Jumps 17%
  • Foreign Investment in Ukraine Bonds Triples
  • Rollins Out at Ukrnafta
  • Eying Foreign Miners, New Geology Service Chief Schedules Mining Auctions
  • Migration: Poland’s Gain is Ukraine’s Pain
  • Poland Worries Germany Will Open Doors to Ukrainian Workers
  • Nurses, Machinists Head West
  • Remittances Up
  • Gov’t to Business: Adapt or Die
  • Black Sea Pearl Emerges From Shell With Flights to Italy, Germany and Spain
  • Ryanair Starts Flying in June From Kharkiv and Odesa
  • Wizz Air to Fly from Kyiv to 10 German Cities
  • China’s COFCO to Double Grain Purchases from Black Sea
  • Prior to Sunday’s Vote, Zelenskiy Gets Mixed Reviews in Business Press
  • Russia Predicts Gas Transit Contract by October
  • Foreign Investors Build Solar Stations Across Ukraine
  • Polish-Ukraine Ties Grow
  • Regional Airport Action: Chernivtsi, Kramatorsk and Rivne
  • Freight Rates Go Up 14% April 1
  • Ukraine GDP up 3.3% in 2018
  • Retail Grows by Almost 7%
  • Fearing Russian Cutoff of Ukraine, Hungary Fills up Gas Tanks for Next Winter
  • EU Focuses on Road, Rail Upgrades to Mariupol
  • UIA Lost $100 million Last Year

Of good news to rural voters, hundreds of thousands of hectares of state-owned farmland will be transferred this year 141 united territorial communities, reports that Government Portal. Last year, 1.5 million hectares of state owned land were transformed to 647 of these newly formed district governments.

Across the country, construction was up 17% for the first two months of the year, compared to January-February of 2018. Driving the building were good weather in February and a whopping 41% y-o-y increase in infrastructure construction in February.

Foreign investment in Ukraine government hryvnia bonds have tripled since the start of the year, hitting 20.3 billion hryvnia, currently about $740 million. Last year, foreign investments in the bonds only increased by 22%. Foreign investors may be shrugging off the political risk of an election year or may be positioning themselves for the opening of a Clearstream link in coming months. This will allow desktop trading.

Ukraine’s government wants to reduce the country’s public debt to below 50% of GDP, writes Finance Minister Oksana Markarova. The debt was 61% of GDP at the end of last year.

Mark Rollins, the British CEO of Ukrnafta, the nation’s largest oil producer, is being let go after almost four years in the job. By terminating Rollins on April 30, Naftogaz asserts control of a company, where it controls 50% plus one share. During his tenure running Ukrnafta, Rollins turned the company into one of the top five taxpayers of the nation. But he ran afoul of Naftogaz over unpaid debts by the state oil and gas company. Responsible for two thirds of Ukraine’s oil production, Ukrnafta has 43 drilling rigs, 168 gas wells, 1,936 oil wells and 537 gas stations across Ukraine.

Topping EU aid to Ukraine, the EU is allocating €104 million to winterize apartment buildings to cut gas consumption. “This is the largest amount of existing programs being implemented by the European Union in Ukraine,” Olha Borodankova, the EU energy coordinator, said Thursday at a 3-way ceremony with Ukraine’s Energy Efficiency Fund and the World Bank’s International Finance Corporation. By contrast, Ukraine is budgeting €53 million for the program this year.

Companies from Austria, Brazil, Canada, China, Japan and the US are interested in mining cobalt, lithium, manganese, nickel and niobium-tantalum in Ukraine. “Ukraine is interesting to the European Union, because today there is a supply problem of critical raw materials for the needs of industry in the EU,” says Oleg Kirilyuk, chairman of the State Geology Service. On Wednesday, the Cabinet of Ministers appointed Kyrylyuk to a five-year term as chairman of the Service, known as Gosgeonedr. On April 22, ProZorro.Sale will auction mining rights to nine deposits for beryllium, zirconium graphite, and coal.

“Turning Muslims Away, Poland Welcomes Ukrainians: Warsaw opens door to biggest recent wave of migration into the European Union,” The Wall Street Journal headlines about Ukrainians working in Poland. Reported from Warsaw, the article cites EU migration statistics indicating that Ukrainians moving to Poland account for 19% of all non-EU immigrants to the EU. Poles say Ukrainians blend in on ethnic, religious and linguistic lines. Presidential candidate Yulia Tymoshenko asks at last month’s Munich Security Conference: “How much time do we have to close our eyes to the fact that one million Ukrainians leave the country each year? Three, two, five years? How much creative class do we still have left before we allow them all to leave?”

 “Poland seeks to protect its Ukrainian connection” headlines Euractiv Poland. Noting job vacancies increase by 12% every quarter in Poland, reporter Michał Strzałkowski worries: “Changes concerning foreign workers that Germany wants to introduce by early 2020 are seen in Warsaw as a threat…Ukrainians will have easier access to the German labor market, where there are higher wages and more job vacancies.” The article notes that Ukrainians account for three quarters of all foreign workers registered with ZUS, Poland’s Social Insurance Institution. Noting that Poland’s economy grew by 5.1% last year, Andrzej Kubisiak, labor expert at the Polish Economic Institute, says: “If not for Ukrainians, the level of vacancies in Poland might have been a serious impediment for our economic growth.”

 Migration of Ukrainians to work abroad is the top threat facing the nation, said respondents to a poll conducted in January by Sociological Monitoring Center, Yaremenko Ukrainian Institute of Social Research, Info Sapiens and Rating Group Ukraine. Of 10,000 people polled across the nation, 55% identified labor migration as the biggest threat to Ukraine. Full-fledged war with Russia was cited by 35%.

 Remittances to Ukraine through 35 money transfer companies jumped by almost one quarter last year, to $2.3 billion, reports the National Bank of Ukraine. While this is 24% increase over 2017, it accounts for only one quarter of money sent home last year by Ukrainians abroad, according to the central bank. This year, using friends, relatives, bus drivers, banks and money transfer systems, Ukrainians are expected to send home $1 billion a month. Last year through money transfer systems, the top sources of remittances were: US – 17%; Israel – 13%; Russia – 9%; Italy – 8%; and Poland – 7%.

 Latvia, Poland and the Czech Republic are recruiting Ukrainian nurses to care for their fast aging populations. The Czech embassy in Kyiv is fast tracking work permits for nurses. In Riga, Ilze Aizsilniece, head Latvia’s Medical Association, tells The Baltic Times she advocates importing nurses from Belarus and Ukraine and teaching them ‘basic Latvian.’ In Poland, Katarzyna Kowalska of the Digital Association of Nurses, warns Gazeta Wyborcza: “Many nurses will reach retirement age in a year or two, and then things will snowball…There will be a lack that we won’t be able to fill.”

 About 20,000 rail workers – about 5% of Ukrzaliznytsia’s 400,000-strong work force – have left since 2016 to work in Central Europe, largely Poland, Yevhen Kravtsov, the railroad’s chairman, complains to reporters. Most damaging, he says, is the loss of trained machinists. Compared to other railroads in the former Soviet Union, Ukrzaliznytsia’s average salaries are: 10-15% below Kazakhstan, 20% below Belarus, and 20-25% below Russia. Last week, Infrastructure Minister Volodymyr Omelyan promised to raise rail worker salaries by 15%.

 Ukrainian employers should raise salaries – or risk losing their businesses, says Pavel Rozenko, a vice prime minister who once served as labor minister. “Employers and company executives must understand that today we are working on a completely open labor market, that we are competing today for labor potential not only domestically, but also with Poland, Germany, and other states, where there are even laws for attracting labor from Ukraine,” he says, reports UNIAN. “If you do not increase the real wages of your employees, then… in two or three years you will be forced to stop your business altogether, because you will not find a qualified employee.”

 Krakow joins Lodz, Poznan, Warsaw and Wroclaw this year in programming bus and tram ticket machines to sell tickets in Ukrainian. Tomasz Kunert, spokesman for Warsaw’s Public Transport Department, tells Poland Today: “We received a signal that we should think about an additional language – Ukrainian – because there are many Ukrainian students in Warsaw, people who come to work, and it will be easier for them to buy a ticket.”

 Ukrainians accounted for 60% of the 77,200 foreigners not allowed into Poland last year, Polish Border Guard spokeswoman Agnieszka Golias tells Polskie Radio. At the land border with Ukraine, 46,700 Ukrainians were turned back, a tiny fraction of the 21.6 million border checks. Ukrainians were leaders in trying to use fake documents to enter Poland or to work there – 1,138 people. Ukrainians also accounted for 95% of cases of people detained for working illegally in Poland – 19,600.

 Ukraine should double its road border checkpoints with its four EU neighbors, Petro Tsyhykal, head of the State Border Guard Service, tells Channel 5 TV. “There only 18 — but we need almost twice as many,” he said, noting that many facilities date back to the Soviet era. He said cross border car traffic with Poland increases every year by 400,000 to 700,000 vehicles. Speaking on a TV channel controlled by President Poroshenko, he said the President is taking steps “to increase the number of staff at all checkpoints. The priority is the border with EU countries.”

 Odessa joins Ukraine’s low cost air revolution, starting flights to Italy, Germany, Poland and Spain. On April 19, Ernest Airlines launches Odessa-Rome. On June 2, SkyUp starts Odesa-Rimini. SkyUp also starts Odessa-Barcelona on May 25. On Wednesday, Ryanair announced flights from Odessa to Berlin and to three Polish cities – Katowice, Krakow, and Wroclaw. The Krakow flight starts June 16.

 With a new runway to be completed this summer, Odessa is shedding its isolation and working to catch up with Kyiv and Lviv on flights to EU cities. “Opening four new destinations is only the beginning of our cooperation with Ryanair – we are already actively working on the possibility of opening new flights to Germany, Spain, Greece and other countries,” Vyacheslav Cheglatonev, the airport’s marketing director, told reporters Wednesday. “One of our main priorities for the near future is to make trips for Odessans and residents of the south even more accessible.”

 Ryanair, Europe’s largest airline, starts flying in June to Kharkiv and Odesa, expanding from its current Ukraine destinations – Kyiv Boryspil and Lviv. The expansion is cautious, catering to Poland-bound workers and students, launching flights to Krakow from Kharkiv and Odesa in mid-June. In response, discount rival Wizz Air immediately moved up the launch of its Kharkiv-Krakow flight by two months, to August 2. In October, Ryanair launches flights from Odesa to Wroclaw, Poland and from Kharkiv to Vilnius, Lithuania.

 With these new flights, and 11 new ones from Kyiv Boryspil, Ryanair will double its Ukraine routes this year to 32. Speaking in Kharkiv on Tuesday, Mikhail Kachmazhik, executive director of Ryanair Sun, the Polish unit operating the flights, said: “In 2019 we plan to connect Ukraine with 24 cities in 11 countries and transport 1.4 million passengers per year.” Kharkiv airport, serving Ukraine’s second largest city, aims to increase passenger traffic this year by 25%, to 1.2 million. This month it welcomed two other low cost airlines: SkyUp with a flight to Sharjah; and Ernest Airlines with flights to Rome and Milan Malpensa.

 With Germany’s Bundestag working on a law to allow temporary Ukrainian workers, Wizz Air is betting on Germany. On July 5, Kyiv launches flights from Kyiv Sikorsky to Leipzig, its 10th German destination from Kyiv. The other cities are: Berlin, Bremen, Cologne, Dortmund, Frankfurt, Hamburg, Hanover, Memmingen, Nuremberg. From Kyiv, Wizz Air flies to five Polish cities: Katowice, Poznan, Warsaw-Chopin, Wroclaw, and on April 5, Krakow.

 French discount airline Aigle Azur aims to attract 10% of the 160,000 passengers now flying between Paris and Kyiv, Frantz Yvelin, the airline’s CEO, told reporters in Kyiv on Tuesday. With only UIA and Air France flying between Kyiv and Paris, Yvelin predicts the airline will expand beyond its April 18 launch with three flights a week.

 In May, regular flights are to start between Mykolaiv and Kyiv, ending a six-year gap in service, Infrastructure Minister Volodymyr Omelyan said Tuesday in Mykolaiv. With the flight, Mykolaiv will compete with Kherson, 75 km to the south, which also has a flight to Kyiv. SkyUp airlines, which recently started regular flights from both airports to Sharm El Sheikh, Egypt, plans to launch regular flights from both airports to Antalya, Turkey.

 China’s COFCO plans to double its Black Sea grain purchases by 2022, Jingtao Chi, chairman of the agricultural trading group, said Tuesday in Lausanne at the FT Commodities Global Summit. COFCO plans to increase the amount of crops it buys around the world by 50%, to 60 million tons in 2022, Reuters reports. COFCO’s emergence as an international merchant challenges the ABCD quartet of Western farm commodity giants: Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus.

 Chicken exports jumped 43% in January-February y-o-y, reports the Association of Food Industry Manufacturers. Of the 69,000 tons in sales, the biggest buyers were Saudi Arabia, the Netherlands and Slovakia. Last year, exports to the EU jumped by 54%, more than double the overall increase of 21%. Last year, Ukraine exported 329,000 tons of poultry meat, earning half a billion dollars.

 A four lane, 500 km divided highway connecting Mariupol, Berdyansk, Kherson and Mykolaiv, would cut today’s eight hour truck drive to five hours in the early 2020s. That vision of a modern east-west ‘autobahn’ linking Ukraine’s Azov Sea ports with Black Sea ports was presented Tuesday by Infrastructure Minister Volodymyr Omelyan in Kherson. Omelyan’s goal is a feasibility study this year and construction next year.

 Russia’s Energy Ministry predicts a gas transit contract will be reached this year with Ukraine. “We expect that, to some extent, we will be able to reach an agreement with Ukraine on the transit of gas after 2019. If this does not happen in May, it will probably happen in October,” Deputy Energy Minister Anatoly Yanovsky told TASS in Kemerovo, a Siberian coal mining town. Fearing a deal will not be reached, Hungary and Ukraine plan to stockpile gas for next winter.

 Hungary can store all the gas it needs for next winter at five Ukrtransgaz reservoirs located within 150 km of the Hungarian border, says Ukraine’s gas transmission system operator. Last fall, Ukraine used 55% of its storage capacity to prepare for the winter heating season. This year, the remaining 14 billion cubic meters of storage space will be up for rent, the state company says in a press release. Hungary consumes 10 bcm a year and can store only 6 bcm. Ukrtransgaz says it can pump 68 million cubic meters a day to Hungary, four times the daily volume that can pass through Austria’s Baumgarten hub to Hungary.

 American, Belgian, French, Irish, Lithuanian and Ukrainian companies are building a total of seven solar plants in different districts of Zhytomyr region, reports Ihor Hundych, regional administration head.

 Canadian companies plan to break ground this spring on a major solar plant in government-controlled Luhansk. PV Solar news site has described the project as a 150 MW, US$180 million solar farm in Rubizhne, 50 km north of the front line. After meeting with Desmond Burke, director of Lugansk Solar (Canada) Inc., and David Angus, senior partner of the Capital Hill Group, Yuriy Klymenko, deputy head of regional administration, said: “The project, which will be implemented in Luhansk region with the support of Canadian companies, has strategic importance for our region.” Last month, Rada Member Hanna Hopko said the plant will be built by a Canadian consortium: Capital Hill Group, DAI, and GoldLeaf EGF.

 New York’s VR Capital Group and ICU, the Kyiv investment house, plan to put on line this year 225 MW of solar power stations, costing $180 million, Richard Deitz, VR’s founding president, tells Interfax-Ukraine. Already completed are a 64 MW plant in Kamianets-Podilskyi and a 35 MW plant in Kherson. By the end of this summer, a third project, for 127 MW, is to be ready in Mykolaiv.

 By holding online auctions for land leases, the government will force large agro businesses to pay “five times” more in rent, President Poroshenko promised Monday. Appealing to rural voters prior to Sunday’s election, Poroshenko said state land leased through electronic auctions now fetches double the rents paid for adjoining privately owned land. He also called for fixing Soviet-era irrigation systems, which now only delivery water to one third of the 2 million hectares covered.

 Polish and Ukrainian officials discuss in Warsaw today the restoration of a 90-km rail route between Khyriv, Lviv and Zagórz, Poland. A train connection between the two Carpathian foothill towns would reflect steadily growing east-west trade, tourism and labor ties between Ukraine and Poland. Zagórz is the most southeasternmost railroad hub of Polish State Railways. Noting that a new border checkpoint is to open at Nyzhankovychi, Lviv and Malhovice, Poland, Alexander Ganushin, chairman of the Lviv regional council, writes in LB.ua: “Together with our Polish colleagues, we have to look for options on how to increase the possibility of points that will unite us.”

 About 1.2 million Ukrainians now work in Poland, according to Polish Central Bank figures cited in an Associated Press feature on Ukraine’s labor migration. Monthly “average wages are about three times higher than in Ukraine, around $1,050,” according to the report from Teresin, 55 km west of Warsaw. The story features Andriy Lytvynenko, a Ukrainian war veteran who works in a supermarket warehouse where 43% of the 600 workers are Ukrainians. Lesya Benko, 25, a headset sales manager in Warsaw, tells the AP she runs into so many Ukrainians — in stores, coffee shops and offices — that sometimes “you can’t tell if you are in Ukraine or Poland.”

 Wizz Air wants to fly from EU cities to Chernivtsi, President Poroshenko said last weekend on a visit to the city, a growing tourist destination. Last year, passenger service to Chernivtsi increased by 51% to 73,075, almost entirely on the UIA flight from Kyiv Boryspil. On May 2, SkyUp starts flying from Chernivtsi to Antalya, Turkey. Poroshenko also said that Vulkan Air, a Kyiv-based cargo airline, is studying service from Chernivtsi. On Saturday, Bukovina started a weekly flight from Rivne to Sharm-el-Sheikh, Egypt. A weekly flight to Antalya starts in May.

 To restore air service to Donetsk region after a five-year gap, Infrastructure Minister Volodymyr Omelyan toured Kramatorsk airport Saturday. With a 2.5 km landing strip, the airport currently works as a military airfield for the region’s provisional capital. “Following the President’s order, I inspected Kramatorsk airport – we must renovate it and resume regular operations. Like in Mariupol,” Omelyan wrote on Facebook. State aviation safety are cautious about allowing civilian flights to Mariupol, only 30 km west of the front line. For the Azov, one alternative is the airport in Berdyansk, Zaporizhia, 100 km west of the front line. Kramatorsk is 100 km north of the front line.

 To promote cargo traffic through Ukraine’s Sea of Azov ports, Ukrzaliznytsia will offer a 20% discount on goods shipped by rail to Berdyansk and Mariupol. Due to Russian harassment of ships going to the Ukrainian, shipping volumes dropped last year. The state railroad agreed to the discount at a meeting at the Infrastructure Ministry, Alexander Barchan, director of Berdyansk seaport, tells the Center for Transporation Technologies.

 Rail cargo rates go up 14% on April 1, Ukrzaliznytsia CEO Yevhen Kravtsov writes on Facebook. The State Regulatory Service did not approve subsequent automatic hikes of 2.5%. Concorde Capital’s Alexander Paraschiy writes: “This approval is definitely positive for Ukrainian Railway, which generates all its operating profit from its cargo segment. With such rate adjustments, the company’s plan to increase profitability becomes realistic, which eases attracting new debt for the company.”

 In face of UNESCO opposition, work is suspended on a 210 meter long pedestrian-bicycle bridge joining Kyiv’s Volodymyrska Hill and Friendship of Peoples arch, reports Liga.net. Designed to be completed for the summer tourist season, the bridge now depends on talks in April between the city and a visiting UNESCO representative. One decade ago, Ukraine applied to extend World Heritage status to St. Andrew’s Church. In a February letter to the city, UNESCO reportedly asserted that it must be consulted on alterations to territories adjacent to World Heritage candidate sites. It is not known why it takes two months for a UNESCO representative to travel from Paris to Kyiv.

Ukraine’s GDP grew by 3.3% last year, the highest level since 2011, reports the State Statistics Service. This year, economists forecast Ukraine will see a fourth consecutive year of growth, although at a lower level than 2018. Forecasts are: National Bank of Ukraine + 2.5%; IMF + 2.7%; World Bank + 2.9%; Cabinet of Ministers +3%.

Main growth drivers last year were: investment +14.3%; private consumption +8.9%; agriculture +7.8%; and construction +7,2%. Laggards were: manufacturing +0.6% and exports – 1.6%. Surprising economists, economic growth accelerated in the fourth quarter to 3.5%, compared to 2.8% in the third quarter. Dragon Capital writes: “Quarterly dynamics suggest Russia’s military aggression in the Sea of Azov in Nov. 2018 and Ukraine’s ensuing temporary imposition of martial law had limited negative impact on economic activity and was fully offset by an upsurge in agricultural production.”

Retail trade grew by 6.8% in January-February y-o-y. Adjusted for inflation, the high growth areas were: Zakarpattia +15%; Kyiv +14%; Vinnytsia +10%: and Lviv +9.5%. With real salaries up 9.5%, election season pension hikes, and continued wage remittances, analysts predict that retail sales will be up 6-7% this year. Dragon Capital calls household consumption “the major driver of 2019E GDP growth of 2.5%.”

Decathlon, the world’s largest sports goods retailer, opened its first store in Ukraine, the French chain’s 50th country. The store opened Saturday at Retail Park Petrivka on Stepan Bandera Avenue, near Pochaina metro station on the Blue Line. Decathlon follows other major global retailers into Ukraine. Last year, H&M opened its first two Ukraine stores. This fall, IKEA is to open in Kyiv.

Preparing for a possible shutoff of Russian gas through Ukraine next January, Hungary and Gazprom concluded an agreement Friday to fill to capacity Hungary’s newly expanded 6.3 billion cubic meter storage reservoirs. “A situation might arise when Russia will no longer supply gas to the European continent via Ukraine — we have to prepare for this scenario,” Péter Szijjártó, Hungary’s Foreign and Trade Minister, said after meeting in Moscow with Alexei Miller. “Today, the CEO of Gazprom and I have concluded an agreement that Gazprom will ensure gas supplies to Hungary, regardless of whether a transit agreement is concluded between Russia and Ukraine.”

Almost all of Russia’s gas to Central Europe goes through Ukraine in three pipelines: Friendship, Brotherhood and Soyuz. The alternative is a long, northern route: Belarus-Poland-Germany-Czech Republic-Austria. By stocking up this year, Hungary hopes to get through next winter in time for construction of a 600 km northwestern extension of TurkStream. This would bring Russian gas from Turkey through Bulgaria to Niš, Serbia. There, an existing gas line connects to Hungary. Also preparing for a Russian gas cutoff, Andriy Kobolev, CEO of Naftogaz, said last week that Ukraine will raise its gas stocks this year by 18%, to 20 billion cubic meters, to ensure supplies for next winter.

Preparing to place Eurobonds later this year, Naftogaz is posting an international tender for auditing services. Last October, the Cabinet of Ministers approved the issuance of up to $1 billion in Naftogaz Eurobonds. But in November, negative fallout from Russia’s Kerch Strait attack and the declaration of martial law prompted Ukraine’s state oil and gas company to suspend the launch. The audit is expected to cost $250,000. ProZorro will hold the auction May 29.

Hungary traded more last year with Ukraine than with Russia, Hungary’s ambassador to Ukraine tells Focus magazine. “Ukraine is our greatest neighbor,” says Amb. István Iyardto. “Despite the cool relations between the two countries, our trade turnover with Ukraine in 2018 was €4 billion.” To boost bilateral trade, Hungary is working on two north-south road projects with Zakarpattia. Hungary is paying to repair the 40 km road section from the border to Berhove and on to Mukachevo. Nearby, Hungary is completing a highway north to Ukraine’s border town of Chop. “Obviously, the Chop Bridge can not cope with the flow of traffic,” Iyardto said of the Soviet-era bridge over the Tisa River. With cargo projected to grow, Hungary is negotiating with Ukraine to build a second bridge.

The EU is prepared to help improve road and rail access to Mariupol, Infrastructure Minister Volodymyr Omelyan said Friday after meeting with EU Ambassador to Ukraine Hugues Mingarelli. With an eye to attracting financing from the European Investment Bank, the Ukrainian side will prepare feasibility studies for two upgrades. One is the 500 km east-west highway between Mariupol and the port of Mykolaiv, currently an 8-hour drive. The other is to improve the 375 km rail link between Mariupol and Zaporizhia, a 7-hour journey. Reportedly, the EU has budgeted €50 million for the work.

This year, the Infrastructure Ministry is spending €4.5 million to double the last stretch of single track on the rail line and is spending $37 million to upgrade the road to Zaporizhia. With Russian forces harassing shipping in and out of Mariupol, protesters last year demanded road repairs, calling it ‘the road of life.’

To preserve cargo flows through Mariupol and Berdyansk, Ukrzaliznytsia is preparing to offer discounts on cargo bound for Ukraine’s Sea of Azov ports. At Mariupol, the larger port, ship calls and cargo were down about 15% in January and February y-o-y. As of March 22, volumes and ship calls were same as during the first three weeks of March. Since the start of the year, Mariupol has handled 1 million tons of cargo, the port says.

UIA, Ukraine’s flag carrier, lost $100 million last year, almost nine times the net loss of 2017, Interfax-Ukraine reports, citing a filing to the National Securities and Stock Market Commission. Compared to 2017, Ukraine International Airlines performed 9% more flights – 61,500 – and carried 15% more passengers – 8 million. Seat occupancy was 81%. Transfer passengers accounted for 53%.

Expansion by low cost airlines from Kyiv to 62 European cities is driving UIA’s losses. This spring, at UIA’s Boryspil hub, newcomer SkyUp is launching flights to 13 cities, largely in Europe. By this fall, Ryanair plans to fly from Boryspil to 21 EU cities – only one year after launching flights from Ukraine. At Kyiv Sikorsky, Wizz Air adds three new cities this spring, for a total of 28 EU cities.

 

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