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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.

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Ukraine Business News, Tuesday, March 26

 

 

 

 

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

   

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

 

post

Ukraine Business News, Tuesday, March 19

 

 

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

 

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Ukraine Business News, Tuesday, March 12

 

 

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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Ukraine Business News, Tuesday, March 05

 

 

 

 

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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, February 26

 

 

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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