post

Ukraine Business News, Tuesday, June 11.

  • Prime Interest Unchanged
  • Bond Sales Recover on FX Confidence
  • EU Used Cars Flood Ukraine
  • South Korean Cars Coming
  • Naftogaz to Cut Gas Price by One Quarter
  • Norwegians and Chinese Build Big Solar Plant in Mykolaiv
  • MHP Builds Largest Poultry Plant in Europe
  • UZ Mulls Private Trains on the Boryspil Express
  • Russia Cuts Diesel, LPG Exports to Ukraine
  • Spring Planting Indicates Another Bumper Crop
  • Grain Traders Invest in Rail Cars, Port Expansions
  • Turkey-Ukraine FTA: 99% Done
  • Ukraine Starts Flying to the Balkans
  • Energy Prices To Go Up After Russia’s Export Ban
  • 5 Western Oil Cos. Bid for Ukraine Production Blocks
  • Chinese Interested in Ukrposhta

 

 

The dominance of Ukrainian state companies in tender bids for nine oil and gas production sharing agreements is “a major concern,” says the US-Ukraine Business Council. Noting that state-owned UkrGazVydobuvannya participated in nine of the 22 bids, the USUBC writes: “A major concern has been expressed by many energy experts about state-owned companies like UGV, being allowed to bid in a program designed to attract private international and domestic investors…State-owned companies do not need any additional privileges and incentives.”

 

The surge of foreign buying of government hryvnia bonds does not threaten to Ukraine’s finances, Yakiv Smoliy, governor of the National Bank of Ukraine, told reporters Thursday. “Since the beginning of the year, the inflow of foreign funds from foreign investors in comparison with the previous year has increased by almost seven times, and has reached about 40 billion UAH,” the central bank head said, citing the equivalent of $1.5 billion. “This portfolio is diversified in terms of time, and we do not see the simultaneous outflow of foreign investors from this portfolio…we do not see risks.”

 

Ukraine’s central bank kept its main interest rate unchanged at 17.5% on Thursday, citing the need to contain inflation risks that increased since the bank cut the rate in April. Pushing the National Bank of Ukraine to the side of caution were diesel fuel price hikes caused by Russia’s June export cuts and the understanding that an IMF second tranche would only come in the fall, after talks with a new government.

 

‘Green bonds’ could allow Ukraine to raise $73 billion in the 2020s, Andriy Frolov, deputy head of the Energy Efficiency Reform Office, told reporters Thursday, citing an International Finance Company estimate. Accompanied by Jean-Erik de Zagon, European Investment Bank representation for Ukraine, Frolov said draft regulations under review by the Cabinet of Ministers envisage launching Ukraine ‘green bonds’ as early as next year.

 

In the latest EU-Ukraine rail link, Ukrzaliznytsia and Slovak Railways Company start Sunday a daily train between Košice, Slovakia, and Mukachevo, Zakarpattia region. Slovak trains will run on the cross border European gauge track, originally laid during the Austro-Hungarian empire. The four-hour train will cost €7.5 and will stop in Chop (Ukraine) and Čierna nad Tisou (Slovakia).

 

The Finance Ministry doubled its bond sales at last Tuesday’s weekly auction, raising in equivalent UAH 8.4 billion, compared to UAH 3.8 billion last week. Purchases of hryvnia bonds recovered by 43%, compared to last week, hitting UAH 2 billion. Reflecting growing confidence in exchange rate stability, two bidders bought 3 year bonds for UAH 573.4 million at 17%. One third of auction receipts — UAH 609 million – came from the sale of 1 year bonds to seven bidders at 18.5%.  On Wednesday, Finance Minister Oksana Markarova told the Cabinet: “We are increasing our debt share in the national currency.”

 

Dragon Capital writes: “Modest demand likely reflects a combination of technical issues related to Clearstream’s launch, UAH weakness -3.6% in the past two weeks, to UAH 27.13:USD…we expect demand for UAH bonds to pick up in the coming weeks, including on the side of non-residents.”

 

Over the next four years, the hryvnia will gradually devalue against the dollar, moving from UAH27/$1 today, to almost UAH31/$1 in 2022.The projection is part of the government’s debt management strategy adopted Wednesday by the Cabinet of Ministers. In Feb. 2016, the exchange hit UAH27/$1. Since then, it has varied within a narrow band. According to the government forecast, the US dollar will cost: 28 hryvnia at the end of this year; 29.4 hryvnia in 2020; 30.5 in 2021; and 30.7 in 2022.

 

GDP growth is forecast at: 2019 – 2.8%; 2020 – 3.3%; 2021 – 3.8%; and 2022 – 4.1%.

 

Ukraine plans to cut government debt ratio to 52% of GDP this year and to 43% of GDP by 2022, Finance Minister Oksana Markarova told a televised Cabinet meeting on Wednesday. Building on a stable foreign exchange outlook, the government also plans to increase its share of hryvnia debt.

 

The EU is renewing its offer of €500 million in aid this year, contingent on Ukraine fulfilling the requirements set out last year in the EU’s fourth macro-financial assistance program to Ukraine. Valdis Dombrovskis, a European Commission vice president for financial affairs, reviewed the conditions Tuesday in a meeting in Brussels with Ukraine’s new president. Earlier, in March, Finance Minister Oksana Markarova with Dombrovskis and said later that Ukraine had fulfilled more than half of the commitments required to receive the €500 million tranche.

 

Through May, first time registrations of used imported cars were seven times higher than registrations of new imports, reports Ukravtoprom, the industry association. Boosted by a January-February tax amnesty for illegally imported cars, the used car registrations hit 231,000, seven times the number for the January-May period of 2018. Ukraine’s lowered import duties and Germany’s phase out of diesel cars keep the used car market hot. In May, used cars accounted for three quarters of the 31,000 cars registered for the first time.

 

Used Hyundai and KIA cars will be imported from South Korea by the AIS Group of Companies, a major auto dealer in Ukraine. Starting this month, AIS will import ‘global models’ fabricated between 2011 and 2014, with mileage below 200,000 km. “Unlike US auctions, which mainly offer cars after an accident, official Korean suppliers offer cars that do not require rebuilding,” Sergei Borovik, AIS marketing director, said in a company press release.

 

Naftogaz is lowering its gas prices by 23% from May to July. This government-mandated drop comes after the EU natural gas import price has fallen to one half of last fall’s levels. Today, the EU price is $4.34 per MMBtu, the lowest level since Sept. 2016. But Ukraine price has been stuck at last fall’s peak, $8.3 per MMBtu. At that time, the government sought to eliminate subsidies by moving Ukraine’s prices toward EU levels.

 

Teaching business executives how to avoid corruption and how to run a business transparently are the goals of ZmiNEW, Business Ombudsman Council’s new education project. After dealing with 5,600 complaints from business managers in three years, Algirdas Šemeta, the Ombudsman, believes training can head off corruption conflicts before they arise. At the project launching on Wednesday, he said: “Our new project aims to resolve issues between the business and government by providing a platform to communicate properly and thus breaking a systemic logjam.”

 

Norway’s Scatec Solar and PowerChina Guizhou Engineering Co. Ltd. have started to build a €124, 148 MW solar power plant in Prohressivka, 100 km west of Mykolaiv city. PowerChina is covering 65% of the construction costs of the station, which is to be ready by next June. For commissioning this year, before the ‘green’ tariffs expire, Scatec is building two other solar plants: a 47 MW station in Mykolaiv and a 30 MW station in Kamyanka, Cherkasy.

 

Ukraine could start exporting eggs to the United States this year, part of a major drive that sends Ukrainian egg products to 60 countries worldwide. Last year, exports were up 20% y-o-y, to 1.8 billion eggs, according to an industry overview in World-Grain.com. UkrLandFarming, parent of Avangard, a major egg producer, plans to invest over $200 million in a terminal to handle its egg exports to 40 nations worldwide.

 

Through April, poultry meat exports were up 40% to $199 million, compared to January-April of last year, reports Ukraine’s Association of Food Industry Producers. During 2018, poultry exports rose 21% in volume, to 329,000 tons and by 30% in monetary terms, to $507 million, according to the State Fiscal Service. So far this year, the top buyers are: Saudi Arabia – $55 million; Netherlands — $33 million; and Slovaki $20 million.

 

MHP is building in Vinnytsia the largest poultry farm in Europe, World-Grain reports, citing Yuriy Kosiuk, the company founder/CEO. Located in central Ukraine, this project represents a major expansion of an existing poultry farm to 560,000 tons of broiler meat a year.

 

Thanks to MHP exports, Ukraine became last year the third largest supplier of poultry meat to the EU and the sixth largest poultry exporter worldwide. According to Sergey Karpenko, general director of the Ukraine Poultry Union, the nation’s biggest sales markets are: The Netherlands, Iraq, Saudi Arabia and Slovakia.

 

The EBRD is reviewing a €100 million loan request from MHP to buy a 91% stake in Perutnina Ptuj, Slovenia’s main poultry producer. “Some media reports that the EBRD allegedly rejected this project are not true,” Anton Usov, the EBRD’s regional spokesman, tells Interfax-Ukraine.

 

Prior to Austria’s May 26 European Parliament elections, Kurier, a major Vienna newspaper, ran an article charging MHP was ducking EU quotas on chicken fillet imports by sending half-processed chicken cuts to its EU factories for final processing. The newspaper announced: “The KURIER managed to uncover the export tricks of MHP…when cutting the birds in Ukraine, a bone remains on the chicken breasts.”

 

In response, Sergii Karpenko, executive director of the Poultry Union, said Ukraine’s goal is to “deliver quality poultry products at affordable prices for our consumers.” He told GlobalMeat news site: “Unfortunately, we have seen a rise in anti-Ukrainian rhetoric ahead of the European elections later this month. We regret that fake news, misinformation and willful inaccuracies are freely used now in the debate about European poultry.”

 

Investing in increased ridership, Ukrzaliznytsia is building a multimodal station at Vydubychi, the southernmost stop on the Metro’s Green line, before it crosses the Dnipro. Due for completion this fall, this covered station will allow bus riders from the south and metro riders from the north to transfer at Vydubychi to the train Boryspil.

 

Russia has slashed monthly diesel exports to Ukraine to 25% of normal levels and liquefied petroleum gas exports to 40% of normal levels, reports Sergey Kuyun, director of Ukraine’s A-95 energy consulting group. To maximize market tension, Russia’s Economic Development Ministry will set levels of permitted exports each month.

 

In the face of Russia’s cuts, Ukraine’s diesel prices could go up another 5% this summer, to 31 UAH the liter, Kuyun writes on Facebook. With most consumer goods moving around the country by a truck this could imperil Ukraine’s goal to end this year with inflation at 6.3%. After the Kremlin announced the restrictions on April 18, diesel prices rose by 4%. With the June 1 export restrictions, Ukraine loses 25% of its diesel and 15% of its LPG. “Is it a lot or a little?” asks Kuyun.For diesel fuel – a lot. For gas – less, but also not easy.”

 

Easing economic pressure on Ukraine, European oil prices have receded to February lows. August futures for Brent on the London Stock Exchange ICE Futures traded Monday evening at $61.62 per barrel.

 

Pumping gas into storage at record rates, Ukrtransgaz has filled Ukraine’s 12 storage reservoirs to 37% of their 31 billion cubic meter capacity. After the national heating season ended April 5, the state pipeline company started filling the reservoirs, preparing for a possible end of Russian gas transit across Ukraine on Jan. 1. Separately, from January to April, natural gas production in Ukraine grew by 3.6% y-o-y to 7 billion cubic meters, the Energy and Coal Industry Ministry tells Interfax-Ukraine.

 

DTEK Group cut its coal imports by 24% during the first quarter, compared to the same period last year. The 225,000 ton drop in imports was partly covered by switching to gas and partly by expanding DTEK’s coal production by 1.35%, to 6.5 million tons.

 

Last year’s record 70 million-ton harvest may be the new normal for Ukraine’s top export – grain. With spring sowing completed, farmers seeded 14.8 million hectares, the same amount as last year, reports the Agrarian Policy and Food Ministry. Noting that favorable weather allowed farmers to start planting one month earlier than last year, Deputy Minister Volodymyr Topchiy says: “The period of hibernation was favorable, and the spring weather conditions were better than in 2018one can expect that the harvest of early grains in 2019 will not be lower than last year’s.”

 

The ministry predicts this year grain harvest will hit 70.8 million tons. The USDA predicts 72.1 million tons.

 

While this year’s grain harvest may match last year’s in size, the crop mix will shuffle as farmers look for highest prices. King corn will shrink by 7%, to 33.1 million tons, predicts APK-Inform consultancy. Wheat will increase to 26.2 million tons and barley will increase to 7.9 million tons. Sunflower seed harvest will stay virtually the same, at 14.9 million tons. As a result, sunflower oil exports will be unchanged – 5.9 million tons. Soybean production is to drop by 20%, to 3.7 million tons. In compensation, canola production is to go up by 29%, to 3.6 million tons.

 

Ukraine could export a record 50 million tons of grain in the 2018/ 2019 marketing year that ends this month, predicts Dragon CapitalWith 46.1 million tons of grain exported as of June 1, Dragon sees: “exports for the full marketing year to 49-50 Mt, up 23-25% y‑o-y and a new record high.”

 

Grain exports through Ukraine’s ports have grown by 45% since 2012, Andrew Shklyar, head of CTS-Consulting said last week at the Ukrainian Ports Forum. “Over the past five years, grain is the only type of cargo that has been growing annually,” he said in Odesa. “The volume of grain shipments since 2012 has increased from 27.5 million tons to 40 million tons in 2018. Grains make up almost a third turnover of Ukrainian ports.”

 

To catch up, companies are investing to move the grain to ports and to export the grain to the world.

 

Examples:

  • Risoil SA increased grain exports from its terminals by 150% to 1 million tonsduring the first five months of this year, compared to the same period last year.
  • South Korea’s Posco International plans to inaugurate next monthin Mykolaiv a grain handling terminal with 140,000-ton storage capacity.
  • Posco, France’s Soufflet Group and Ukraine’s Astartaare in various stages of creating their own fleets of grain hopper wagons for rail transport.
  • Holland’s Louis Dreyfus Company expects to win from the EBRD a $35 million loanto buy 1,000 rail grain wagons for use in Ukraine. Louis Dreyfus has warehouses in Vinnytsia, Cherkasy and Zaporizhia and a port complex in Odesa with a storage capacity of 240,000 tons.
  • Ukrzaliznytsia held two ProZorro auctions in March, auctioning 24 grain routes, with a total 1,296 cars.Although the new electronic system bids up shipping costs, it gives shippers peace of mind, knowing that freight trains are to arrive on time, in working order.
  • UZ says its working fleet of grain cars has expandedto 13,180 grain wagons, enough to handle 40 million tons of grain a year.

 

The Turkey-Ukraine free trade pact is ‘99%’ negotiated, Vasiliy Bonday, deputy foreign minister tell Ukrainian Radio. Sticking points are several agricultural products and some services, he said. Last fall, Turkish President Recep Tayyip Erdogan said talks should be completed by the end of 2018.

 

Air Serbia flew from Belgrade to Kyiv last Monday, renewing a route dropped three years ago. The return of flights to the largest city in the Balkans is part of a mini-boom in flights to the long-overlooked region. This summer, Windrose has flights from Kyiv to Pula, Croatia and to Tivat, Montenegro. SkyUp has seasonal charters to Tivat; Tirana, Albania; and, starting Thursday, to Split, Croatia. This spring Ryanair and Wizz Air launched flights from Kyiv to Athens, competing with UIA. Ten days ago, Wizz Air launched flights from Kyiv Sikorsky to Thessaloniki, northern Greece.

 

Diesel and butane prices are to rise this week in the wake of Russia’s June 1 bans on energy exports to Ukraine. Last week, Ukrainian producers of liquefied petroleum gas increased their prices by 30%, Sergei Fedorenko, commercial director of UkrGazVydobuvannya, writes on Facebook. Kazakhstan’s Tengizchevroil had to suspend shipments of LPG to Ukraine last week after Russia refused to allow transit. The company accounts for about 15% of Ukraine’s LPG.

 

Burisma Group plans to build a $25 million plant capable of producing 50,000 tons of liquefied petroleum gas a year, reports Nefterynok. The natural gas would come from Burisma’s field in the Kharkiv region.

 

After no foreign energy companies bid for oil and gas licenses at two auctions this spring, five Western companies are among the 13 bidders for the 50-year oil and gas production sharing agreements. With bidding closed, the foreign bidders are Vermilion of Alberta, Canada; Aspect Energy of Denver, Colorado; SigmaBleyzer of Houston, Texas; Nafta of Slovakia; and EPH or Energetický a průmyslový holding, a.s., of the Czech Republic. WorldOil.com reports that Ukraine’s Intergovernmental Commission is to evaluate bids in June and make its recommendations for winners to the Cabinet of Ministers.

 

Alibaba and other large Chinese companies are interested in taking part in possible privatization of Ukrposhta, Igor Smelyansky, CEO of the national postal operator, writes on Facebook. “Alibaba warehouses and its logistics are being built in Russia, Belgium, Latvia, Estonia (and soon in Africa), but not here,” Smelyansky writes of the world’s largest retailer and e-commerce company. “Alibaba likes to work through partners and share risks with them. But they want certainty, understandable strategies and clear rules at customs.”

 

During the first four months of this year, Ukraine’s agricultural exports increased by 19% to $7.1 billion. Sales were up $1.1 billion from January-April of last year. With farm products the nation’s top export item, the main destinations were: Asia – 42%; EU 33.5%; Africa – 16%; and former Soviet Union – 7%.

 

Dragon Capital’s Ukraine real estate fund earned a net profit of $3.17 million last year, turning around a 2017 net loss of $4.85 million. According to a filing on the London Stock Exchange, net asset value fell by 15%, to $36.2 million, due to a distribution of $9.8 million to shareholders of the Ukrainian Real Estate Investment Fund Dragon Ukrainian Properties and Development Plc. Dragon Capital Investments owns 61% of the fund.

 

Kristina Kvien, the U.S. new acting ambassador, or Charge d’Affaires, started work in Kyiv last week. Moving from Paris, where she had the number two job at the US embassy, Kvien has served as an economic counselor at the US embassies in Paris, London, and Bangkok. She has served at the US embassy in Moscow and has an MS in Strategic Studies from the U.S. Army War College.

 

Bolstered by a surge in ‘e-Residents’ of Estonia, the Ukrainian-Estonian Chamber of Commerce has opened in Tallinn. Aimed at IT entrepreneurs, the e-Residency program gives non-Estonians access to Estonian services such as banking, company formation, and payment processing. To date, 3,431 Ukrainians are e-Residents of Estonia, the third largest group of foreigners. Ukrainian e-Residents have founded 729 companies, the largest for any nationality. Wizz Air flies to Tallinn from Kyiv Sikorsky and Estonia’s Nordica flies from Kyiv Boryspil.

 

Lviv Airport handled 51% more passengers during the first five months of this year than during the same January-May last year. With 90% of passengers flying on international routes, the airport served 722,300 passengers. For comparison, the airport handled 708,000 for all of 2013. Lviv now has direct flights to 32 foreign cities, largely in the EU. On June 14, Earnest launches a Lviv-Venice flight. On July 21, Jonica launches a Lviv-Athens flight.

 

Flixbus, Europe’s largest bus operator, plans to announce next week the major expansion of its bus service between Ukraine and the EU. Based in Germany, Flixbus operates in 28 countries, serving 2,000 cities. In 2017, it started several routes to Ukraine. Last year, it opened in the United States, largely serving American border states from Los Angeles.

 

Die englische Originalversion stammt von unserem Partner UBN – Ukraine Business News. Weitere Informationen und ein Nachrichtenarchiv finden Sie unter: www.ubn.news.

 

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, June 4.

 

 

 

 

  • IMF Team Goes Home on Good Note
  • Foreign Investors Eye Hryvnia Bonds
  • Black Sea Ports Draw World Class Operators
  • Shipbuilding Revives
  • Regional Airports Discover Europe: Kharkiv-Paris, Odesa-Rimini, Zaporizhie-Barcelona
  • Canadian Gas Co. Joins UGV To Bid for 50-year PSAs
  • US to Russia: Hands off Cyprus Gas
  • Danes, Americans Plan $250 million for Georgia’s Poti – a Russia Bypass Port
  • More Sun Oil Tankers For the Dnipro
  • Chinese Electric Buses to be Assembled in Ukraine
  • Real Wages, Real Retail Sales Show Solid Growth
  • Baltic-to-Black Sea Container Train to Start
  • Singapore’s Delta Wilmar Bets on Food Processing, Buys Chumak
  • World Bank OK’s $200 Million Ag Loan
  • After EU Gas Prices Drop in Half, Naftogaz Cuts Prices 8%
  • Halliburton Eyes $100 Million Fracking Deal with UGV
  • Foreign Bankers Named to State Bank Boards
  • Industrial Output Jumps 5%
  • As IT Eats Up Kyiv Office Space, Plans Unveiled for $50 Million Business Center

 Although the IMF review mission stayed in Kyiv for half of the expected two weeks, it left Wednesday on a positive note. “The IMF staff team has had very productive discussions with the Ukrainian authorities, including with President Zelenskiy,” team leader Ron van Rooden said Thursday. “The team has found that fiscal and monetary policies remain on track, and it stands ready to return to Kyiv to continue discussions after the forthcoming parliamentary elections as soon as a new government has clarified its policy intentions.

Foreign investment in Ukrainian government treasuries inched up again with Tuesday’s weekly auction, rising 2.1%, to UAH 42.3 billion, or $1.6 billion. Attracted by high interest rates and a stable currency, foreign investors have increased their holdings in the internal state bonds almost seven-fold since the start of the year.

Foreign investor interest in hryvnia bonds, combined with the political transition period mean that the Finance Ministry plans to focus this summer on hrvynia bond sales, pushing off new Eurobonds until late summer or early fall, Liga.net reports, citing Wednesday’s Finance Ministry/IMF conference call with investors.  With demand strong, the Finance Ministry cut the interest rate on its 3.5 month treasuries from 18.5% last week to 17.89% this week.

With Naftogaz needing cash to fill reservoirs with 20 billion cubic meters of gas before the winter, US Energy Secretary Rick Perry told reporters in Kyiv last week that the US could provide guarantees to Naftogaz for the placement of Eurobonds for $2 billion. “This is one of the possible solutions,” he said.  “However, there may be other financial sources. There are different ways to finance the purchase of gas.”

World class port operators are starting to work in Ukraine’s Black Sea ports, Serhiy Vovk, director of the Center for Transportation Strategies, told Odesa’s Ukrainian Ports Forum 2019

  • P & O Maritime entered Ukraine over the last year, first towing vessels in Pivdennii (Yuzhne), then in Chornomosk, and this month, in Odesa.
  • South Korea’s Posco International bought 75% of a grain terminal in Mykolaiv.
  • Cargill will open in September a joint venture terminal in Pivdennii capable of handling half a million tons of grain a month.
  • The Louis Dreyfus company and its Ukraine partner, Brooklyn-Kyiv, signed an agreement at the Forum to build a 3 million ton a year grain terminal in Odesa.

As bigger and bigger ships serve Ukrainian ports, a record load of 63,000 tons of Ukrainian sunflower meal is approaching China. In mid-May, the JY Lake, a Panamax-class vessel, took on the load, partly at Mykolaiv’s Nika-Tera terminal, and partly in the waters off Ochakiv, with floating cranes. Ukraine’s previous record was 62,000 tons of meal shipped in January.

Aiming to transform Pivdennii port into ‘the Black Sea-Mediterranean vegetable oil hub,’ the Allseeds Group has more than doubled its storage tank capacity for sunflower and soy oil to 100,000 tons. Pumping 1,200 tons of cooking oil an hour, the company can now simultaneously load six ships docked at its Pivdennii six quays. Under its investment plan, the company plans to triple its oil handling capacity by the end of 2021.

Catering to Ukraine’s surging market for used cars from the EU, Euro Marine Logistics has started regular service between Greece and Chornomorsk of the “City of Amsterdam,” a roll-on/roll-off vessel. Just as Ukraine lowered import duties on late model year used cars, European countries and cities started imposing restrictions on diesel cars. In Ukraine, sales of used car imports now outstrip sales of new cars.

Shipbuilding and ship repair – a 200-year-old business in Ukraine – are reviving after a deep post-Soviet decline, according to statistics posted on sudostroy.com news site. Revenues for the industry climbed by one third last year, to $113 million. Last year, 108 boats were repaired and 25 boats were built.

Examples:

  • Smart Maritime Group, which has shipyards in Mykolaiv and Kherson, is building a third 110-meter, €2 million chemical tanker for Holland’s Veka Group. Smart Maritime Group revenue doubled last year, to $23 million.
  • The Danube Service Company shipyard in Izmail completed its second barge for the Grain-Transshipment Company. This Mykolaiv-based company is using the Izmail shipyard to renovate its entire fleet of eight barges for use on the Dnipro and the Southern Bug.
  • Nibulon puts to work in September, ‘Nibulon Max,’ a new transshipment vessel that will allow the company to transfer total of 40,000 tons of grain a day from river boats to sea vessels, without using land ports. Nibulon has a fleet 75 vessels, largely built in the company’s Mykolaiv shipyard.
  • Artel-Stroy of Mykolaiv is building a third tourist catamaran for Nibulon. Designed to carry 120 passengers, the 3-deck vessel will make summer excursions on the Dnipro, the Bug estuary and the Black Sea coast.

Regional airports received a boost last week as SkyUp started regular flights from Kharkiv, Odesa and Zaporizhie to Barcelona. Through June 11, SkyUp rolls out new flights from Kharkiv to Odesa, Rimini, Kutaisi, Larnaca and Paris. Next week, SkyUp starts flying from Odesa to Kutaisi and Rimini. On June 15, UIA starts flying three times a week between Odesa and Vilnius.

Targeting the Ukrainian market, Ryanair has unveiled a Ukrainian language version of its reservations website. By Nov. 1, Europe’s largest airline plans to double its Ukraine routes, to 33. On June 16, Ryanair starts flying from Odesa to Krakow and on June 17 from Kharkiv to Krakow.

Canada’s Vermilion Energy Inc. is pairing with UkrGazVydobuvannia to jointly apply for product sharing agreements to develop four oil and gas fields. If they win the 50-year contracts this month, the two companies are obliged to invest and take profits on a 50/50 basis. Based in Calgary, Vermilion already has projects in eastern Europe, in Hungary and Slovakia. Tuesday was the deadline for filing bids for the nine onshore production sharing agreements.

“This is the first major oil and gas company since Shell to invest in Ukraine for the purpose of extraction of natural gas,” said Andriy Favorov, gas business director for Naftogaz, the parent of UGV. Andriy Kobolyev, Naftogaz CEO, writes on Facebook: “Vermilion is ready to provide the latest and unique technologies of geological exploration, drilling, development, environmentally friendly technologies for the development of oil and gas fields.”

“Ukraine announces massive licensing rounds in 2019,” headlines a story on WorldOil news site. The story notes that concession licenses for nine more oil and gas blocks will go up for auction on June 18. In the two auction rounds this year, licenses were awarded for only nine of the 17 blocks offered. Only Ukrainians gas producers won acreages: UGV, Burisma Group, DTEK Oil & Gas, and Yedyna Oil & Gas Company. By the end of June, winners are to be chosen for the 10 production sharing blocks up for bid.

In the latest step to restore the Dnipro as a working river, TransShipOil plans to increase its river fleet from three ships to five this summer, reports the Center for Transportation Strategies. TransShipOil tanker ships work the lower 700 km of the Dnipro, picking up sunflower oil at six river stations — between Svitlovodsk and Ochakiv, the Black Sea port. The new tankers, with average cargo capacities of 3,000 tons, have been imported and reflagged for use in Ukraine. Ukraine is the world’s largest exporter of sunflower oil.

 On June 19, the EBRD board is expected to approve leading an €80 million syndicated loan to support renewable energy and energy efficiency in Ukraine. The EBRD would cover half of the loan, which would go to Ukreximbank, the nation’s third-largest bank in terms of assets. With many buildings and factories built in the era of cheap Soviet gas, Ukraine is investing to modernize and winterize.

Retail sales are up 7.9% in real terms for January-April, compared to the same period last year. Sales grew by 9.1% in April, fueled by the highest level of consumer confidence since Januar 2014. April’s consumer confidence level of 72 points, seems to reflect optimism surrounding the presidential election. Noting that first quarter real wages were up 10.9% q-o-qICU writes: “Consumer demand keeps rising thanks to solid growth in real household income.”

Chinese Skywell electric buses will be assembled in Ukraine under an agreement reached Tuesday, reports Elektrovesti.net. Produced by Nanjing Golden Dragon Bus Manufacturing Co., Skywell buses are now in use in Kyiv and Vinnytsia. Initially, the buses are expected to arrive here in SKD, or semi knocked-down, form.

A weekly Baltic-to-Black Sea container train will start this summer, according to an agreement signed Tuesday in Odesa by executives of the railroads of Lithuania, Belarus, and Ukraine. Called Containerships, the Klaipeda-Brovary-Odesa train will be the 18th regularly scheduled container train in Ukraine, according to Yevhen Kravtsov, Ukrzaliznytsia CEO. In March, a similar north-south container train starting rolling on a Belarus-Ukraine-Romania route. In April, UZ launched an east-west container train on a 1,400 km route between Nizhnedneprovsk and Sławków, Poland. Also in April, a test container train passed through Ukraine on a China-Hungary route.

To speed Ukraine-EU rail freight, Poland is investing in upgrading two rail crossings – Medyka-Mostyska, on the Lviv region border, and Dorohusk-Yahodin, on the Rivne border. Within the framework of the Germany-Poland-Ukraine transport corridor, tracks, switches, and traffic control devices are being upgraded. The goal is for the lines to carry longer and heavier freight trains, reports the Center for Transportation Strategies.

 Increasing investment in food processing, Delta Wilmar has bought Dragon Capital’s stake in Chumak, Ukraine’s leading producer of ketchup, mayonnaise, and tomato paste. It perfectly fits our group strategy of further downstream integration into food processing with high added value,” said Yuriy Golianych, general director of Delta Wilmar, the Ukraine unit of Singapore’s Wilmar International Ltd, widely considered to be Asia’s largest agribusiness group.

Separately, Delta Wilmar is building a $32 million vegetable oil processing plant at at Pivdenii, Ukraine’s largest port. Also at the port, formerly called Yuzhne, Delta Wilmar plans to build a plant capable of processing 2,000 tons of soybeans a day.

Setting a target of boosting Ukraine’s farm productivity by 30% by 2025, the World Bank approved Friday a $200 million loan for wide-ranging support to small and medium farmers. Noting that agriculture accounts for 42% of exports, the program aims to help farmers meet import requirements of the EU, China, the Gulf, the US, and Canada. An advocate of a private farmland market for Ukraine, the World Bank will pay for preparatory steps: transparency in land lease markets; registration of all state land; and strengthening land rights by raising owner awareness of their rights.

With European gas prices falling, Naftogaz is cutting gas prices by 8% for households and industrial users, to about $220 for 1,000 cubic meters. Since September, the EU natural gas import price has almost dropped in half. This came too late for President Poroshenko who took a highly unpopular move in November to raise gas prices 23.5% toward European levels. He lost the election in April.

Halliburton Ukraine has signed an initial agreement for a $100 million deal with Naftogaz to introduce modern ‘fracking’ techniques to Ukraine, 3D modeling of gas fields and lateral drilling for 26 wells. The deal between the Ukraine unit of the Texas company and UkrGazVydobuvannya, the Naftogaz production company, is designed to unlock 2 billion cubic meters of gas, the equivalent of 13% of UGV’s production last year.

Following Monday’s launch of government bond trading through the Clearstream depository, primary placements of hryvnia government bonds are to be also handled by the international trading platforms Refinitiv and Bloomberg Tradebook by the end of this summer, according to the National Bank of Ukraine. Currently, Ukrainian stock exchanges handle most primary and second trades of Ukrainian government bonds, about 100 billion hryvnias in trades during the first quarter of this year. Interfax-Ukraine reports that Ukraine’s Securities and Stock Market Commission says foreign-based trading platforms need to get permission to handle the trades.

With all air passengers counted for last year, Ukraine stands out as the air traffic leader of the former Soviet Union, ex-Russia. Of the 20 airports handling 1 million passengers of more, five are in Ukraine. Kyiv Boryspil leads the list with 12.6 million. Here is the ranking, in millions of passengers: Kyiv Boryspil — 12.6; Riga – 6.1; Almaty – 5.7; Vilnius – 4.9; Minsk – 4.5; Baku – 4.4; Astana — 4.3; Tbilisi – 3.8; Tallinn and Tashkent – 3; Kyiv Sikorsky – 2.8; Chisinau – 2.8; Yerevan – 2.7; Ashgabat – 2.5; Bishkek – 2; Lviv – 1.6 ; Odesa – 1.4; Dushanbe – 1.3; Kaunas and Kharkiv – 1.

 The European Investment Bank is loaning €200 million for the restoration of key infrastructure in government-controlled parts of Donetsk and Luhansk, Jean-Erik De Zagon, the bank’s Ukraine representative, tells reporters. The government has selected 293 projects totaling €110 million, largely for the repair of hospitals, clinics, schools, kindergartens, and apartment buildings. Loaned at concessional low interest, long term rates, the loan is part of the bank’s total Ukraine loan portfolio of €5.8 billion.

 Veteran bankers from Citibank, ING, EBRD and BNP Group are among the foreigners appointed to supervisory boards of three state-owned banks – Oschadbank, Ukreximbank and PrivatBank. Steven Fisher, formerly Citi’s Ukraine director, and Dominique Menu, formerly of BNP, have been named for Ukreximbank. Sevki Acuner, former EBRD director for Ukraine, and Peter Briggs, formerly of ING Group, go to Oschadbank. For the full list: https://www.minfin.gov.ua/en/news/view/uriad-pryznachyv-novi-nahliadovi-rady-pryvatbanku-ukreksimbanku-ta-oshchadbanku?category=derzhavni-banki-ukraini.

 Industrial output unexpectedly jumped by 5.2% y-o-y in April, the biggest increase in over two years, reports the State Statistics Service. The locomotive was construction, growing by 30% y-o-y. While residential construction was almost flat, infrastructure construction was up 45% and commercial was up 41%. Other hot spots identified by Alfa Bank are: food processing up 6.6% y-o-y; steel up 9.9%; machine building up 10.8% and chemical production up 14.7%.

 Kyiv’s tightening office real estate market is prompting Alexander Yaroslavsky’s DCH Group to revive a $50 million business center project at the northern end of Podol’s Mezhyhirska street. With construction planned for next year, the Class A office center would have 40,000 square meters of leasable space. The business center would be a 5-minute drive from Sergei Tigipko’s planned $600 million Rybalsky Peninsula ‘Lipki Island City Resort.’ This complex is to have 36 buildings with 6,200 apartments, 43,500 square meters of office space and 33,300 square meters of retail space.

 Both projects are to benefit from the Podolsko-Voskresensky Bridge which is to open for road traffic next year, according to Kyiv Mayor Vitali Klitschko. Under construction since 1993, the two-level, 7 km bridge is designed to carry 60,000 cars a day between Podol and the Left Bank. “Podolsko-Voskresensky is the largest arched bridge in Europe and will be one of the most durable in terms of loads,” Klitschko writes on Facebook. “It will be equipped with six lanes for automobile traffic and two railway tracks.”

 With a major bottleneck removed for EU-Ukraine rail traffic, the number of freight trains passing through the new Beskyd tunnel was up almost 19% in the first quarter of this year, compared to the same January-March period last year. Since the two-track tunnel opened under a Carpathian mountain ridge one year ago, on May 24, 10,500 freight trains with more than 500,000 cars have passed through, reports Yevhen Kravtsov, CEO of Ukrzaliznytsia.

 

 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, May 28

 

 

 

 

 

  • Clearstream to Allow Worldwide Desktop Trading of Ukraine Bonds
  • Nibulon Launches Largest Ship of Independent Ukraine
  • Ukraine to Top Russia as No. 1 Grain Exporter
  • Russia’s Energy Supplier Rep Dims
  • Kyiv Sikorsky Doubles Main Terminal
  • Israeli to Build 8-Story Hotel at Boryspil
  • Political Turmoil, Exchange Rate Serene
  • Air France To Suspend Flights from Paris
  • Green Light for Skyscrapers in Ukraine
  • DTEK Wants Private Freight Trains
  • Oslo-Kyiv Flights to Return
  • Poroshenko Signed Green Auction Bill for Solar, Wind Energy
  • With Emigration Growing, Zelenskiy Appeals: Come Home
  • 5G Mobile to Start Next Year
  • First Tenders for Public-Private Partnerships by June

 

On Monday, Clearstream, the international securities depository of Deutsche Börse Group, connects to Ukraine, making all Ukraine government hryvnia bonds tradable be desktop traders around the world. Citibank will act as cash correspondent bank and local operator of Clearstream’s account at the National Bank of Ukraine. The Finance Ministry says the link will increase demand for Ukraine government bonds.

Expecting a boom with Clearstream, foreign investors increased their holdings of Ukraine bonds six-fold this year, to $1.5 billion. With foreigners holding only 5% of this debt, investment is expected to grow. Oleg Churiy, the central bank’s deputy governor, predicts: “Creating easy access for foreign investors to Ukrainian government securities will foster long-term investments in hryvnia instruments, reduce the state’s need for financing in foreign currency and respectively currency risks.”

Nibulon launched Wednesday the largest ship made in independent Ukraine – a 140-meter long loading ship designed to move grain from Dnipro river boats to ocean-going Panamax freighters in the Black Sea. When fully completed four months from now, the Nibulon Max will have two German-made Liebherr grab cranes capable of moving 18,000 tons a day. With the autonomy of working offshore for 90 days at a time, the ship will help Nibulon’s 75-ship fleet double its annual cargo handling to 5 million tons, the company says. Launched from Nibulon’s shipyard in Mykolaiv, the ship was partly funded by loans from the EBRD, the European Investment Bank and the International Finance Corporation.

Ukraine is on track to top Russia as the world’s largest grain exporter in the marketing year that ends June 30. As of Wednesday, Ukrainian farmers have exported 45.4 million tons of grain, reports Ukraine’s Agrarian and Food Policy Ministry. This year, Ukraine expects to export 49 million tons. Russia forecasts exports of 44-46 million tons. Last year, Ukraine exported 39.9 million tons and Russia exported 43 million tons.

Air travelers at Kyiv Sikorsky start using a $24 million expansion of the airport’s main terminal. The expansion doubles checkin counters and passport control booths, allowing the airport to handle 1,000 passengers an hour. Widely known as Zhuliany, the airport is Ukraine’s second busiest, after Kyiv Boryspil. A hub for Wizz Air, the airport saw its traffic grow by 52% last year. During the first quarter of this year, traffic was up 44% q-o-q, to 638,100.

Denis Kostrzhevsky, co-owner of Master-Avia, the airport leaseholder, tells reporters he lobbies for a $100 million public-private project to expand the single runway by one quarter, to 3,000 meters. This would be long enough to handle Wizz Air’s new Airbus A321 jets.

Israeli developer Ofer Kerzner is to start building this year an 8-story, 264-room hotel near Kyiv Boryspil’s Terminal D, Georgy Zubko, the airport’s deputy director for development, tells reporters. Owner of property development company City Capital Group, Kerzner built Art-Zavod Platforma, recycling a former weapons plant into a popular cultural center.

Foreign and national air freight companies are interested in a public private partnership to build a new cargo terminal for Boryspil, Zubko said. The Infrastructure Ministry’s competition will launched this summer, too late for completion in time for the Christmas/ New Year’s seasonal surge in packages. Last season, the airport outraged shipping companies by closing Boryspil to cargo for 10 days. Even without a new cargo terminal, officials say new cargo tracking software and modernized logistics will allow them to handle this year’s crunch.

Next to Boryspil’s increasingly popular ‘Train to the Plane’ rail station, airport officials plan to build a $1 million covered bus station. With 16 bus platforms and capacity for 300 passengers an hour, the station would make air travel easier for residents of regions surrounding Boyspil. The airport accounts for two thirds of Ukraine’s air traffic.

Why did President Zelenskiy’s dismissal of the Rada and Prime Minister Groysman’s surprise resignation have zero impact on the hryvnia/ dollar exchange rate?For the stability of the hryvnia, we must thank the multi-million army of Ukrainians who have left for work in different European countries,” economist Andrei Starovoitenko tells Glavred, citing the estimated $1 billion in worker remittances injected into Ukraine’s economy monthly. The 26.3 hryvnia to the dollar exchange rate changed little in the last week. Through the presidential campaign and handover, Ukraine’s currency appreciated 5.5%. Analyst Alexander Okhrimenko tells Glavred that Ukraine’s “politics are [now] outside the economy.”

 Air France joins British Airways as the second European flag carrier to announce this week that it will suspend flights to Ukraine. This winter, from Oct. 27 to March 28, Air France will suspend its Paris Charles de GaulleKyiv Boryspil flights. Flights are to resume March 29, with the current twice a day frequency. Air France and UIA face new discount airline competition on the Paris-Kyiv route. One month ago, French carrier Aigle Azur started flying between Kyiv Boryspil and Orly. On June 11, Ukraine’s SkyUp starts flying between Kyiv Boryspil and Paris Charles de Gaulle.

 Last week, British Airways announced it will end flights between London Heathrow and Kyiv Boryspil on Oct. 3. Facing competition from Ryanair and Wizz Air, British Air said its flights to Kyiv are “no longer commercially profitable.”

 In his second visit to Ukraine in six months, Perry met Monday evening with President Zelenskiy and Naftogaz CEO Andriy Kobolyev to discuss ways for Ukraine to get through next winter in the event of Russian gas shut off on Jan. 1. Both sides discussed promoting foreign investment in gas production, financing of gas stocks prior to the winter, and building “a permanent path of import of liquefied natural gas through the re-gasification terminal in Poland to Ukraine,” reports Naftogaz. Perry was joined by Kurt Volker, Washington’s special envoy for Ukraine, and US Senator Ron Johnson, Republican of Wisconsin, a prominent sanctions backer.

An IMF review mission started work in Kyiv on Tuesday, meeting with outgoing Prime Minister Groyman and Finance Minister Oksana Markarova. On Monday, President Zelenskiy asked the Rada to approve a new law against illegal enrichment, a key IMF demand prior to approving a second tranche. Analysts predict this tranche, probably for $1.3 billion, would only be disbursed after the July 21 Rada elections. After these elections, Ukraine could start negotiating a new program with the IMF, Oleg Ustenko, a Zelenskiy advisor tells Interfax-Ukraine.

The EBRD is moving toward loaning €250 million to Ukrainian cities to modernize mass transit systems. On July 24, the EBRD board of directors is to review the project. It would largely involve paying for new buses, trolley buses, trams and subway cars. “The EBRD will sign loan agreements with relevant utilities transport companies, as well as agreements on guaranteeing and supporting projects with the cities,” the EBRD writes. “Each loan will be guaranteed by the municipality.”

This summer, anti-dumping duties are to go on imports to Ukraine of cement from Russia, Belarus and Moldova. Scheduled to last for five years, the duties, as a percent of value, are: 115% for Russia; 94% for Moldova; and 57% for Belarus. Separately, virtually all cement imports from Russia are banned starting Aug. 1, reports Economic Development and Trade Ministry.

Betting on the future of cement, Concorde Capital has bought HeidelbergCement Ukraine. On May 14, Overlin Limited, a Cyprus company associated with Concorde, bought 99.8% of the Dnipro unit of the German building materials company.

Height restrictions on new buildings are being increased by 50%, to 150 meters, or 50 stories, Lev Partskhaladze, deputy minister of Regional Development, Construction and Housing, writes on Facebook. Design requirements for tall buildings are being adopted. Ukraine’s tallest building, Klovski Descent 7A in Kyiv is 48 stories high. The two runners up, both in Kyiv, are: Gulliver – 35 stories, and Parus – 34 stories.

Pushing the boundaries of the state rail monopoly, DTEK Holding proposes using one of its leased Estonian locomotives to move cargo down a 69-km stretch of Ukzraliznytsia track between the Zaporizhzhya Thermal Power Plant and Tavriches station. SCM’s Lemtrans, owner of 20,000 cargo wagons, has leased several locomotives to use on internal company tracks. Infrastructure Minister Volodymyr Omelyan has promised to start a pilot project with private locomotives this year.

Suspended for five years, Oslo-Kyiv flights return this fall with SAS Airlines flying three times a week from Norway’s capital to Kyiv Boryspil.This decision is another reflection of the significant strengthening of Ukrainian-Norwegian relations in recent years,” Vyacheslav Yatsyuk, Ukraine’s ambassador to Norway, said of the flights which start Oct. 26. Dispensing with stopovers in Copenhagen or Stockholm, SAS will fly directly, making the 1,660 km trip in 2h45 minutes.

Hours before the inauguration, then-President Poroshenko signed into law the bill providing for the transition from ‘green’ tariffs to auctions for renewable energy facilities commissioned next year. The move came after ‘green’ energy accounted for 2% of energy produced in 2018, but 8% of the nation’s electricity bill. In the new law, the solar tariff drops next year by 25%, followed by an annual 2.5% decrease for three years. For wind, the tariff drops by 10%. The auction regime, which is to start July 1, is to work in parallel with the ‘green’ tariff regime.

Estimating that one third of the 65 million people born in Ukraine now live outside the country, Zelenskiy appealed in his inaugural address:We really need you. To all who are ready to build a new, strong and successful Ukraine, I will gladly grant Ukrainian citizenship. You must come to Ukraine not to visit, but to return home. We are waiting for you. There is no need to bring souvenirs from abroad, but please, bring your knowledge, experience and values.”

The appeal comes as emigration looms as a problem for the 2020s.

EU competition for Ukrainians workers is expected to increase, according toLosing Brains and Brawn: Outmigration from Ukraine,” a Kennan Institute Focus Ukraine blog by Denys Kiryukhin. After aggressively recruiting ethnic Hungarians from Zakarpattia, he writes: “It’s likely that the Hungarian authorities will ease immigration laws for migrants from Ukraine instead of opening borders for Middle Eastern and North African refugees.”

Germany is expected to compete with Poland for Ukrainian workers in the 2020s. To hire skilled non-EU workers, Germany’s Skilled Labor Immigration Act is to start in early 2020, according to Deutschland.de, a government information site. “Currently around 1.2 million [German] job places are unfilled,” the site reports. “A new law is therefore intended to open access to the German labour market for skilled workers from countries outside the EU. It is an immigration law…skilled workers are welcome to stay.”

No longer will the Federal Employment Agency have to check if there are suitable German or EU applicants. Priority will be given to graduates of overseas German language – PASCH – schools. Ukraine has 46 of these German government accredited schools, the fifth largest number in Europe, after Poland, Croatia, Romania and Hungary.

5G mobile service should start next year in Ukraine, according to a decree signed Friday by President Poroshenko. The decree sets a schedule for releasing the necessary frequencies. Separately, Oleksandr Zhyvotovsky, head of the National Commission for Communications Regulation, writes on Facebook that this work will be done by fall. The Rada will have to pass implementing legislation.

Given Ukrainians’ low cell phone bills, construction of 5G would take “decades” to pay off, warns Oleksandr Kohut, director of regulator support for Kyivstar, the nation’s biggest mobile phone company. “Implementation of 5G could require the purchase of a large number of frequencies, the costs of which, given the subscriber’s low mobile check and investment risks, could be paid back in decades,” he tells Interfax-Ukraine. “It is necessary to create conditions for improving the country’s economy, reducing tax pressure on the industry and adapting it to European regulatory practices.”

One year after the launch of 4G, about half of Ukrainians have access to the fast service, according to separate reports from the nation’s two largest mobile phone companies, Kyivstar and Vodaphone. Kyivstar, which has 26.4 million subscribers of all levels of service, plans to invest about $110 million a year through 2022 to expand 4G service, Alexander Komarov, company president, told reporters recently. By comparison, Vodaphone has about 20 million subscribers of all service levels.

Tenders for Ukraine’s first two big public-private partnerships – Kherson and Olvia Ports – are to be launched by the end of June, reports the Infrastructure Ministry. Both ports are located 15 km from the Black Sea – Kherson on the right bank of the Dnipro, and Olvia on the left bank of the Dnipro-Bug estuary.

The winner of the 35-year concession at Olvia is expected to invest $650 million to develop of the port, starting with construction of a grain terminal capable of handling 2 million tons a year, reports InfraPPP news site. The 30-year concession of Kherson requires investment of $53 million. The EBRD, World Bank and International Finance Corporation have worked with Ukraine to write feasibility studies for international standard public-private partnerhips.

Looking ahead, Infrastructure Minister Volodymyr Omelyan is working with the International Finance Corporation to develop concessions to manage airports – possibly Kyiv Boryspil or Lviv, with two or three regional airports. In addition, the government is talking about concessions for management of rail stations and for construction of highways. If there are no early Rada elections, most current ministers are expected to remain in place until the end of this year.

Omelyan is asking the Rada to put an additional $2 billion in the government’s 2020 budget to continue systematic repair and rebuilding of major roads connecting the 24 regional capitals. Noting increased roadwork this year, he said: “It is possible to repair 10,000 kilometers a year.” Prime Minister Groysman has set a national goal of connecting all regional capitals with ‘high-quality’ roads by the end of 2021.

 

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

post

HWC at the Charity Run in Kyiv

As part of our CSR activities, some of our employees took part in the 27th Kyiv Chestnut Run for charitable purposes.

This year the proceeds will be used for necessary equipment and medical aids for the Scientific and Practical Medical Center of Pediatric Cardiology and Cardiac Surgery MoH Ukraine.

post

Vienna, May 20, HWC Partner Sven Henniger, Host of the Panel “Legal, Tax and Financial Aspects of Doing Business in Ukraine” at the Ukraine Forum

 

 

 

 

On 20 May, the Austrian Federal Economic Chamber (WKO) in cooperation with The Ukrainian Chamber of Commerce and Industry held the UKRAINE FORUM at the premises of WKO in Vienna.

After opening words held by Richard Schenz, Vice-President, WKO, Valeriy Korol, Vice President, Ukrainian Chamber of Commerce and Industry and  H.E. Oleksandr Scherba, Ukrainian Embassador to Austria the „Latest developments in agriculture and food industry in Ukraine” where presented by the deputy of Olga Trofimtseva, Acting Minister of Agrarian Policy and Food of Ukraine.

The opening was followed by an roundup about the “Economic situation and business conditions in Ukraine” held by Gabriele Haselsberger, Head of Advantage Austria, Kyiv, followed by an Practice Panel: “Doing Business in Ukraine & trends in key sectors“ moderated by Gabriele Haselsberger with the following speakers and topics

Industrial Modernization

Robert Reisebauer, VP Sales & Marketing Ukraine, Primetals Technologies Austria GmbH

Ukraine’s Untapped Agricultural Potential

Ursula Bittner, Secretary General and Spokesperson, Donau Soja

Real Estate, New Working Environments & Digitalization

Wolfgang Gomernik, CEO, Delta Holding, CEO & Partner Delta Ukraine

Tourism Development

Christopher Hinteregger, Managing Director, PKF tourismexperts

Dr. Michael Angerer, Regional Manager Eastern Europe/ Central Asia, Aussenwirtschaft Austria, Austrian Federal Economic Chamber was the host for the Panel „Regions of Ukraine Present their priorities communal infrastructure projects” with the following speaker:

Economic development of Ukrainian regions

Gennadiy Boldyr, Director for International Relations, Ukrainian Chamber of Commerce and Industry

Sumy Region

Mykola Klochko, Head of Sumy Regional State Administration

Lviv Region

Markian Malskyy, Austrian Honory Consul in Lviv, Partner, Law Firm Arzinger

Khmelnitskyi Region

Nataliya Bielyakova, President, Khmelnitskyi Chamber of Commerce and Industry

Our Partner at Henniger Winkelmann Consulting (HWC LLC), Kyiv, Sven Henniger was the moderator for the last Panel “Legal, Tax and Financial Aspects of Doing Business in Ukraine”.

Andreas Kettlgruber, Head of Cross-Border Business Management, Raiffeisen Bank International (RBI) provided a presentation about the current Macroeconomic Situation in Ukraine.

With Andreas Kettlgruber, Markian Malskyy, Partner Arzinger Law Firm, and Wilfried Serles, Managing Partner IB Interbilanz, Sven Henniger discussed the current legal framework and challenges, such as the relatively new LLC Law, Language Law, Judicial Reforms and fighting Corruption and the upcoming changes at the Renewable Energy Law. Followed by the tax and financial topics, recent changes in the area of currency control, the currency stability in Ukraine, FX Headging possibilies, the current tax environment in Ukraine and still existing burden of doing business in Ukraine.

The whole event was closed with a Networking-Cocktail and a B2B Meeting. Around 150 participants used this great opportunity to get informed about the legal, tax and financial framework of Ukraine and some practical points of doing business in Ukraine.

Many thanks to Dr. Michael Angerer and Gabriele Haselsberger and their Teams for the well organized event and the opportunity to be as a Moderator a part of this event.

post

Ukraine Business News, Tuesday, May 21

 

 

 

 

  • Hryvnia Bond Fan Club Expands
  • Ukrposhta’s Maidan HQ: A Hotel?
  • Flights Return to Uzhgorod June 3
  • Ukraine Slaps Import Duties on Russian Imports
  • Exports to EU Grow
  • Half of Rail Stations Generate 2% of Revenue
  • FT: Kyiv, Lviv Are Cost Effective “Smart Locations
  • UIA Doubles Flights to Canada
  • Kyiv to Start Towing Illegally Parked Cars
  • IMF Arrives today
  • Exports Through Sea Ports up 20%, River Traffic up 60%
  • Slovakia Upgrades Rail Links with Ukraine
  • USDA: Ukraine To Match Last Year’s Record Grain Harvest
  • Marketers Needed to Promote Processed Food on World Markets
  • China-Ukraine Jets Fly Full

By using presidential powers, Zelenskiy plans to take “very concrete steps” in coming days to fight corruption, Oleksandr Danylyuk, his chief economic advisor, told Concorde Capital’s international investment conference Thursday. These include: relaunching the National Agency on Corruption Prevention; making the new High Anti-Corruption Court “operational as soon as possible”; winning Rada approval for a new law on criminal responsibility for illicit enrichment; and “protecting whistleblowers on corruption.”

DTEK’s energy holding has purchased controlling interests in two of Ukraine’s largest power generation companies, Odesaoblenergo and Kyivoblenergo, the company tells Interfax-Ukraine. The companies were bought from VS Energy International NV.

Naftogaz sees September as the earlier date for going into the Eurobond market, Kobolyev told the Concorde Capital conference. First, the state energy company wants to see the level of demand and prices for a Eurobond launch planned by the Finance Ministry by mid-June. Noting high foreign demand for hryvnia treasury bonds, Kobolyev said local bonds could be a good source of financing.

The recent jump in foreign purchases of hryvnia bonds also has caught the eye of Ukrzaliznytsia, the state railroad.We are seeing a high level of interest, a lot of activity on this instrument from the Ukrainian and international players,” Yevhen Kravtsov, CEO of UZ, said at the Concorde conference. Referring to issuing Eurobonds and borrowing money from EBRD and EIB, he added: “Our strategy is to use such a mix and continue to replenish our portfolio with hryvnia instruments.”

The International Finance Corporation carried out its debut issue of hryvnia bonds, denominated at 15.75% per annum, to support its operations in Ukraine. The bonds were issued Monday, redeemable in 2020, said Jason Brett Pellmar, IFC manager for Ukraine, Moldova and Belarus. IFC, a World Bank unit, has a AAA rating.

Ukraine’s Central Post Office, a Stalinist landmark on Kyiv’s Maidan, should be sold, possibly for use as a hotel, recommends Igor Smiliansky, director of Ukrposhta. Noting that he rents out street level space in the building to Rozetka, the e-commerce company, and to Pf Retail LLC, a Vodafone Ukraine unit, he says the historic post office wastes space and slows mail delivery when demonstrations block the Maidan. Offering opportunities to real estate developers, he says post office sorting centers should move from traditional locations near rail stations to suburban locations near ring roads. Near train stations, “you can open wonderful offices and hotels – there is absolutely no need for Ukrposhta trucks to go there and clog traffic,” he told reporters Thursday while presenting the state postal company’s annual report.

In June 3, Motor Sich Airlines resumes Kyiv-Uzhgorod flights, says Mikhail Rivis, head of Zakarpattia’s regional council, according to Mukachevo.net. The flights are to be direct, on Mondays, Wednesdays and Fridays, and coordinated with Motor Sich flights from Kyiv Sikorsky to Odesa. With an eye to the start of the tourist season, the Zakarpattia council decided on an unspecified “mechanism of financial support for the flight.”

A four-year, $90 million road safety program is start this summer in Kyiv. Features are: more traffic lights and crackdowns on speeders, drunk drivers, and driving without seatbelts. Coping poorly with a growing number of cars, the capital has seen a 48% increase in the number of road traffic deaths since 2016, the city reports. Separately, the Rada voted Thursday to delay for 90 days, until Aug. 24, the imposition of fines on the owners of illegally imported cars from the EU. Fines will be as high as $6,400.

Accelerating Ukraine economic divorce from Russia, Ukraine imposes a new duty on most imports from Russia, starting Aug. 1. The unspecified duty, levied as a percentage of value, will apply to all imports, but five exceptions considered strategic: anthracite coal, coking coal, gasoline, liquefied gas and pharmaceutical drugs. In addition, the Cabinet of Ministers banned all imports of cement and plywood from Russia – $37 million of goods last year. The Economic Development and Trade Ministry backs a wider import ban on Russian industrial goods, fertilizers, food and vehicles. Prime Minister Groisman told the Cabinet: “We will impose an embargo on goods that we produce today or that we can replace.” The new duty and bans come as Ukraine’s trade deficit with Russia grew last year to $4.4 billion, 38% of Ukraine’s overall trade deficit. Revenue generated from the new import duties are to go to a new fund for “import substitution” investments, Ukraine’s Cabinet of Ministers said. The decision also comes two weeks before Russia imposes a series of restrictions on exports – largely energy products – to Ukraine.

During the first quarter of this year, Ukraine’s overall trade deficit increased by 13%, compared to Q1 2018, to $1.5 billion, the State Statistics Service reported Wednesday. Exports were up 7.4%, to $12.3 billion. Imports were up 7.9%, to $13.7 billion. The EU took 43% of Ukraine’s exports of goods and one third of its exports of services in the first quarter, the State Statistics Service reported Wednesday.

Sales of food to the EU increased by 24% during the first quarter. Exports hit $1.9 billion, giving Ukraine a surplus of $1.1 billion, according to Mykola Pugachev, deputy director of the Institute of Agrarian Economics. By April 1, Ukraine had fully used its annual EU quotas for honey, corn, sugar, apple juice and grape juice. Separately, Hugues Mingarelli, EU ambassador to Ukraine, told a conference in Kyiv on Wednesday: “I hope that there is an opportunity to discuss the issue of quotas, especially in agriculture.

European farmers alarmed over EBRD’s loan to MHPheadlines GlobalMeatNews about European Bank for Reconstruction and Development approval of a €100m loan to the Kyiv-based poultry giant to acquire Slovenian poultry processor Perutnina Ptuj. European poultry farmers complain to Brussels that MHP is using a legal loophole to flood the EU with their breast fillets. MHP says its exports were up 47% Q1-o-Q1, to 93,000 tons. It does not say how much went to the EU.

Half of Ukrzaliznytsia’s stations generate only 2% of its revenue, a rail executive says as part of a campaign to pressure local governments to save 300 underperforming freight loading stations. About 46% percent of the network’s 1,700 stations and halts cost $300 million to service, but generate only $20 million in revenue, says Andriy Ryazantsev, finance director of the state railroad. The world’s seventh largest rail freight transporter, Ukrzaliznytsia has 23,000 km of track.

Twenty EU-Ukraine projects in the Danube river corridor were approved by the Cabinet of Ministers Wednesday under the EU’s Danube Transnational Program. With €5 million in seed money, the projects in transportation infrastructure, energy, environment and tourism are to benefit communities of Zakarpattia, Ivano-Frankivsk, Chernivtsi and Odesa regions.

In a worldwide ranking of ‘cost effective cities’ for foreign investment, Kyiv came in fifth and Lviv came in eighth, according to fDi Intelligence, a Financial Times unit. In this annual ‘smart locations of the future’ survey, the two Ukrainian cities made the top 10 ranking in the category of ‘cost effectiveness.’ Kyiv came in after Skopje, Sofia, Kaunas and Gdansk, rated on such criteria as: cost per square meter of class A office space, wages of skilled workers, price of hotel rooms, tax rate on profits, cost of setting up a company, registering property rights, and connecting to electricity grids.

President-elect Zelenskiy told executives of foreign banks Tuesday that Ukraine’s macroeconomic stability depends on an independent central bank, continued cooperation with the IMF and following sound financial policies, his press service reports. Judicial reform and protection of the rights of investors and creditors are cornerstones for economic growth and attracting foreign investment, he said. Talking to the bank executives, largely Ukrainians, he said: “Reducing interest rates will be a boost to economic growth. For now people are scared and do not trust the banks.Joining Zelenskiy were: Aivaras Abromavicius, Oleksandr Danylyuk, Andriy Bogdan, Ivan Bakanov, Victoria Strakhov. Banks participating were: Alfa Bank, Citibank, Credit Agricole, Credit West, Deutsche Bank, Piraeus, Pravex Bank Intesa Sanpaolo, ProCredit Bank, Raiffeisen Bank Aval, SEB, and Ukrsibbank BNP Paribas.

Lviv is taking steps to win a €50 million loan to buy 100 electric trolley buses and to modernize the city’s 210 km of electrified routes for trams and trolley buses. On Monday, the Lviv City Council a letter of intent to take the loan from the World Bank’s International Finance Corporation on concessional terms – an interest rate around 5%, 13-year repayment period, and a 3-year grace period. A tender for the buses is to made public later this year, with the goal of receiving buses next year. The City Council calls the loan “one of the largest in the history of attracting funds from an international institution to the development of the city.”

UIA starts to double the frequency of its Kyiv-Toronto flights, to four a week. A third Wednesday flight started last week. A fourth, Thursday flight, starts on June 13. Eying profit in long haul routes, UIA President Yuri Miroshnikov tells avianews that later this year, he would like to start a direct flight from Kyiv Boryspil to Guanzhou or Shanghai.

To ease train travel to Ukrzaliznytsia’s new top international destination, tickets for all trains to Poland may be bought online, starting today, Yevhen Kravtsov, the railroad’s CEO writes on Facebook. The railroad also is working on online bookings for auto transportation by train. Meanwhile, passengers traveling to CIS countries, including Russia, may pay for tickets on line, but they have to pick up paper tickets at rail stations.

To change the face of Kyiv from ‘post Soviet’ to European, Mayor Klitschko plans to start towing illegally parked cars next month. A team of parking inspectors has been hired and trained, he tells Interfax-Ukraine. “We will tighten the screws on parking issues – it will be expensive to park illegally, especially in the city center,” said the Mayor of a city where drivers enjoy free parking on sidewalks. Without fines and towing, public garages sit half empty. To cut the number of cars going into the center, Kyiv is building parking lots near key metro stations.

The IMF review mission arrives in Kyiv today and will work here for two weeks, says Mikhail Dovbenko, a Rada finance and banking committee deputy chairman. A favorable review should lead to disbursement this summer of a $1.3 billion loan tranche from the IMF – and unlock more loans on concessional terms from other international financial institutions.

Exports through Ukraine’s ports were up by 20% from January to April, compared to the first four months of last year. Imports and transit cargo were down, making for an overall cargo increase of 12%, to 49 million tons. Containers were up 19%, iron ore up by one quarter and grain up by one third. Confirming the trend toward bigger ships, the number of cargo ships docking at Ukrainian ports was down 1%, to 3,787. Winners were: Yuzhne, with cargo handling up 20% to 15.5 million tons; Mykolaiv up 20% to 10.7 million tons; and Chornomork up 21% to 8.4 million tons. Losers were: Odesa up only 5.5% to 8 million tons, slipping to fourth place nationwide. The two Azov seaports saw cargo diverted to Mykolaiv to avoid delays caused by Russian ‘inspections’ of ships serving Ukrainian ports.

Dnipro river cargo is up 60% through April, compared to the same period last year. The surge in cargo, to 2 million tons, is due to three factors: a mild weather allowing an early start to the river shipping season; last year’s bumper grain harvest straining trucks and trains; and Nibulon’s investment in river ports and barges. Grain cargoes nearly tripled, to 1 million tons. Construction cargo and metal products doubled.

In the latest use of EU gauge tracks dating back to the Hapsburg empire, Slovakia and Ukraine start direct service June 9 between Košice, Slovakia and Mukachevo, Zakarpattia. Running twice a day along a 146 km route, the trains will cut travel time by 40%, to four hours, reports Britain’s Railway Gazette. The trains will be jointly operated by ZSSK, Slovakia’s state passenger rail company, and Ukrzaliznytsia. Six months ago, using the same EU gauge tracks, UZ started a dedicated Mukachevo-Budapest train.

Separately, after a seven-year break, ZSSK restores service June 9 to a 26 km local route in eastern Slovakia. Running four times a day from Bánovce nad Ondavou, the trains will end at Veľké Kapušany, five km west of Ukraine’s border, near Uzhgorod.

Former Finance Minister and current Zelenskiy advisor Oleksandr Danylyuk tells Liga.net that top priorities of Zelenskiy’s first 100 days will be torestart the anti-corruption bodies” and “restart the recruitment and certification of judges.” Other priorities will be to reform the State Security Service, or SBU, to eliminate the Tax Police, and to create the Financial Investigation Service.

Judging by spring plantings and favorable weather, Ukraine will export slightly more grain next year than its forecast record 50.4 million tons of exports for this year, predicts the US Department of Agriculture. Bolstered by a record harvest last fall, Ukraine exported 43.5 million tons of grain and legumes as of Friday – 25% more than this time last year. The marketing year ends at the end of next month.

Looking at this year’s harvest, the USDA predicts that wheat exports will be up 15%, to 19 million tons. Corn exports will recede 8.5% from their record level, to 27 million tons next year. Barley exports will be 4.5 million tons, almost the same as this year. Overall, grain exports will be 50.7 million tons, 300,000 tons over this year. The harvest will slightly surpass last year’s record, hitting 72.1 million tons, up 3% over last year, the USDA says.

With the EU predicting its lowest harvest of rapeseed in five years, Ukraine’s strong crop could fill the gap, Bloomberg reports. Known for fields of bright yellow flowers at this time of year, rapeseed is crushed for cooking oil and marketed as canola. The EU has cut its official production forecast to 19.2 million tons. But one British oilseeds trader interviewed by Bloomberg predicts EU production will fall below 18 million tons. Ukraine and Australia will fill the EU production shortfall, the USDA predicts.

To shift from global breadbasket to global supermarket, Ukraine has to train world class marketers and open its promised Export Credit Agency to provide risk insurance for processed food exports, according to analysis by Yelizaveta Dorontseva of UNIAN. Last year, commodities accounted for 80% of Ukraine’s $19 billion in food exports, according to the Ukrainian Club of Agrarian Business.

Butter, honey, and soybean oil offer the best prospects for export as processed, pre-packaged products. With food exports growing every year since 2015, Ukraine has done a good job in diversifying from its historic reliance on Russia, UNIAN says. Since 2014, Ukraine’s food exports to China have increased nearly seven times. Last year, Ukrainian producers opened 85 new foreign markets for their products.

Oleh Bakhmatiuk owner of Avangard Holding, one of Ukraine’s largest egg producers, tells UNIAN that after losing assets in Crimea, Donetsk and Luhansk in 2014: “We decided to reorient ourselves to foreign markets. We export our products to Iraq, the UAE, Qatar, Saudi Arabia, Bahrain, Kuwait, and Hong Kong. Now we plan to enter the market of Singapore, and about 20 African countries.”

UIA’s Kyiv-Beijing flight makes a 4-hour detour around Russia, costing Ukraine’s flag carrier $120,000 extra for each flight, says Pavel Ryakivin, general director of Kyiv Boryspil, UIA’s hub. Infrastructure Minister Volodymyr Omelyan tells Interfax-Ukraine he is looking for a ‘non-discriminatory mechanism’ to compensate Ukrainian carriers hurt by Russia’s overflight ban.

The daily Kyiv-Beijing flight run at 95% occupancy and SkyUp’s new flight from Kyiv Boryspil to China’s Hainan resort island runs at 97% occupancy, Omelyan’s deputy, Viktor Dovhan, writes in the Kyiv Post. He says China-Ukraine air passengers traffic hit 200,000 last year, double the level of 2015. With Chinese now eligible for Ukraine’s e-visas, air passenger growth with Ukraine is expected to keep growing at 25% a year.

 

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, May 14

 

 

 

 

  • Arcelor to Invest $350 million in Steel Production
  • Zelenskiy Vision: ‘State in a Smartphone’
  • Targeting Migrant Workers, Ryanair Unveils More Ukraine Flights to Germany, Poland
  • Food Export up $1 billion in Q1
  • Limits on Dividend Remittances Nearly Double
  • Reuters’ Analysts: More Interest Rate Cuts This Year
  • With Bond Rates Double Inflation, Foreign Buyers Abound
  • Outgoing Korean Ambassador Says Hyundai To Bid on Kharkiv Metro
  • Used Imports Flood Car Market
  • Kolomoisky Airline Wins Odesa-Tel Aviv Route
  • VR Capital Invests in Ukraine Solar
  • GDP Growth dips to 2.4%
  • 5G Auctions Next Year
  • Azeri, Kazakh Airlines Profit from Russia’s Ban on Ukrainian Overflights
  • 25-Year Growth Plan for Boryspil

Ukraine’s largest integrated steel maker, ArcelorMittal Kryviy Rih, will reinvest its entire 2018 profits – $350 million – into upgrading production, the company reports. The decision was taken at the company’s annual general meeting of shareholders on April 25.

Poland displaced Russia as the top buyer of Ukrainian goods, as Ukraine’s trade with Russia dropped 11% q-o-q, to $2.4 billion. In the January-March period, Ukraine sold $818 million worth of goods to Poland, compared to $759 million to Russia. Ukraine’s trade with Russia is expected to further drop this summer after the June 1 start of Moscow’s second trade embargo list with Ukraine in six months. While trade with Russia fell, Ukraine’s trade with the EU grew by 10% to $9.5 billion. The EU accounts for 38% of Ukraine’s foreign trade.

In Sarajevo, Finance Minister Oksana Markarova says Ukraine is “either on track or well positioned” to meet all requirements of the IMF standby program. Talking to Bloomberg Thursday after a panel at the EBRD Annual Meeting, she declined to discuss timing of the next IMF tranche, saying most important thing is to “stay on track.” On the panel, she said Ukraine’s macroeconomic situation is “very good.”

To cut corruption, „our goal is the state in a smartphone, Zelenskiy told visiting Canadian Foreign Minister Chrystia Freeland on Wednesday. “We don’t want to be talking about fighting corruption, we want to defeat it,” he said. To do this, his team wants to minimize Ukrainians’ contacts with bureaucrats.

Nibbling away at Ukraine’s massive inventory of idle state-owned properties, ProZorro has auctioned off 552 state properties since July, earning $37 million for the treasury. Real estate accounted for the overwhelming majority of sales of these ‘small privatisations’. Last December, Kyiv court rulings froze privatisations of large state companies.

Ukraine’s new oil and gas production sharing agreement mechanism is drawing blasts from from the American Chamber of Commerce – days before tenders are due and awards are to be made.PSAs are not used in any EU country, and their use in Ukraine only underlines the urgent need for reforms in the existing oil and gas fiscal and regulatory regime,” the ACC says. “The criteria discriminating PSA and other [license] blocks are unclear. The current PSA process is seriously flawed. A single, fair, stable and non-discriminatory environment for oil and gas is one of the key factors in attracting major international investment.”

In an aggressive bid for Ukraine’s migrant worker market, Ryanair unveils a fall Ukraine schedule with flights to five new German cities and eight new Polish cities. From Odesa, Ryanair launches flights to five Polish cities: Krakow in July, then Gdansk, Katowice, Poznan and Wroclaw on Oct. 29-30. From Kharkiv, Ryanair starts flights to Krakow and Poznan, and Vilinius Lithuania. From Kyiv Boryspil, Ryanair starts a flight in the fall to Katowice and doubles its frequencies to Warsaw to twice daily. Ryanair already flies from Borsypil to five other Polish cities.

Targeting Germany, Ryanair starts flights in October from Boryspil to Hahn, Karlruhe/Baden-Baden, Nuremberg and Weeze; and from Odesa to Berlin-Tegel. Its Austrian unit, Lauda, starts flights in November to Stuttgart.

With three year head start, rival Wizz Air’s Ukraine flight network already includes 12 Ukraine-Poland routes and 13 Ukraine-Germany routes. This summer Wizz Air launches three new flights: from Kyiv Sikorsky to Lublin in June and to Leipzig/Halle in July; and, in August from Kharkiv to Krakow, a new Wizz Air base.

Motor Sich suspends its weekly Kyiv-Lviv-Uzhgorod flight, inaugurated only two months ago. The Infrastructure Ministry is working with the airline and regional officials to promote the route, aiming to establish daily direct Kyiv-Uzhgorod flights for Zakarpattia’s summer tourism season.

In time for the summer travel crush, Kyiv Boryspil opens on May 23, the airport’s first multilevel parking garage. Connected by a covered walkway to Terminal D, the garage will offer long term and short term parking, video surveillance, and digital signs indicating where spaces are free in the 1,000-space facility. Short term parking will be about $1 an hour. Frustrated by years of construction delays, airport officials will celebrate May 23 with a ‘musical festival’ on the roof, billed as “KBPAEROPARTY.”

Ukraine’s food exports increased by 22.5% during the first quarter, adding almost $1 billion in sales, compared to the same period last year, reports Olga Trofimtseva, acting Minister of Agrarian Policy and Food. The top three export groups were: grain – 45%; oil – 22%; and oilseeds – 7%. Top products were: corn – 33%; sunflower oil – 21%; and wheat – 11%. Top destinations were: Asia – 41%; EU – 35%; Africa – 15%; and CIS – 6%.

After last year’s record 70-million ton crop, Ukraine’s grain harvest this year is to recede by 2.3% this year, to 68.4 million tons, predicts the Institute of Agrarian Economics. While livestock production is to be flat, egg production is to grow by 3.4%, and poultry meat by 7.4%. Last year, company farms were the locomotives of Ukrainian agriculture, with their output growing by 12.1%, compared to family farm output growing by 2.2%.

The Grain Ukraine conference will gather producers, international traders and government officials in Odesa on May 24-25. In addition to an address by Trofimtseva and panels on Ukraine’s prospects in world grain markets and strategies for easing domestic transportation bottlenecks, there will be a field trip to M.V. Cargo’s new grain terminal in Yuzhne, a one-hour bus ride south of Odesa.

Effective last Wednesday, the central bank raised the monthly limit on dividend repatriation to €12 million, from €7 million per company. “€12 million, satisfies the needs of all companies with foreign investments operating in Ukraine,” says Oleh Churiy, deputy head of the National Bank of Ukraine. “However, we realize that this limit is a certain barrier for new investors, and our goal is to lift the limit.”

Concorde Capital’s Evgeniya Akhtyrko writes: “This is the latest step by the central bank in its ForEx liberalization campaign. It reflects the NBU’s increasing confidence in the situation on Ukraine’s ForEx and the market’s ability to regulate itself.”

Ukraine will receive the next IMF loan tranche, for $1.3 billion, by mid-July, Alexander Paraschiy, Concorde Capital’s head of research, predicts in an interview with UNIAN. He says that Ukraine has fulfilled three of four basic provisions for the tranche. This month, the Rada may pass a fourth: a new, constitutionally sound illegal enrichment law. “Based on our history, this is a very good result,” he says. Lowering gas prices should not be an issue because parity with imports is maintained. The biggest cloud, he sees, is Igor Kolomoisky’s attempts to reverse the 2016 nationalization of PrivatBank.

Ukraine’s central bank will make at least one more cut in its prime interest rate this year, indicates a Reuters poll of 12 analysts. Five analysts expect the rate to end this year at 16%, down from 17.5% today. Three see the year-end rate at 17%. Two weeks ago, the National Bank of Ukraine cut prime from 18%, its first cut in two years. ICU writes: “In case of successful negotiation on the new [IMF] tranche and continuing decline of the CPI, the NBU is likely to cut the rate again during June meeting (-50 bps), eventually lowering it to 16% by the end of the year.”

Inflation in April was 8.8% compared to one year ago, the State Statistics Service reports. The central bank predicts inflation will taper to 6.3% at the end of this year. The median forecast of Reuters’ analysts is 7.8%.

The interest rate cut led to a 19% drop in bond sales Wednesday at the central bank’s weekly auction, compared to the pre-cut auction on April 23. At the May 7 auction, the bank sold $411 million worth of bonds — $166 million in dollars and the rest in hryvnia. In addition to selling puttable dollar bonds at 3.85%, the bank sold 18-month bonds to 18 bidders for $8.3 mln at 7.25%. The largest demand was for four-month bonds — UAH 4.5 billion sold in 43 bids, with interest rates of 18.25 to 19%.

Concorde Capital’s Evgeniya Akhtyrko writes:We expect the demand for UAH-denominated bonds will remain high as yields will still significantly exceed the current inflation rate. In addition, investing in UAH-denominated bonds looks like a very lucrative opportunity for non-residents, given the hryvnia’s ongoing stability.”

With inflation expected to hold below 9% and the hryvnia/dollar exchange rate at 26.5, little changed in three years, foreign investor interest remains strong. Foreign investors now hold UAH 36.3 billion ($1.37 billion) in bonds. ICU writes: “In our view, a large portion of bills was purchased by foreign investors, most likely with longer maturities from offered yesterday.”

As the presidential transition nears, the US-Ukraine Business Council stresses the importance of Ukraine’s new oil and and gas production sharing agreements. “Tender bids are due in May and the awards are expected in June,” the Council said Wednesday. This process “is being watched around the world as a strong and serious signal that Ukraine is expanding the energy investment climate and providing real opportunities for the private sector to invest in Ukraine.”

South Korea’s outgoing ambassador heard a pitch from Infrastructure Minister Volodymyr Omelyan that Hyundai build an electric car factory in Ukraine. In response, Amb. Lee Yang-goo said Hyundai plans to build on the success of its Rotem trains on Ukraine’s InterCity service and participate in a tender for 85 new subway cars in the Kharkiv Metro expansion plan. The EBRD and the European Investment Bank are financing half of the €320 million project.

With EU’s electric car market booming, Omelyan says that if lawmakers pass bills to stimulate the electric car and battery industry, “the next day we send a delegation to Tesla on construction of their first European plant in Ukraine.” Ukraine has Europe’s largest known supplies of lithium, a key imponent for car batteries. A Tesla battery weighs 540kg, giving Ukraine a supply advantage for Europe, argues Omelyan.

First time registrations of used imported cars totaled 207,000 for the first four months of this year, eight times the number of the same January-April period last year. By contrast, 25,300 new passenger cars – all imports – were registered during the same period, 3% fewer than during the first four months of last year. The flood of imports is due to lower taxes in Ukraine and growing restrictions in Germany against diesel cars. Of new registrations of used imports, 53% were for diesels, according to Ukravtoprom, the industry association.

Analysts from JP Morgan and UBS predict that political maneuvering in advance of parliamentary elections will delay Ukraine’s receipt of a second tranche this year. “PM Groysman clearly signaled that he is moving away from IMF requirements as he announced he will be running in parliamentary elections,” JP Morgan economists Nicolaie Alexandru and Trang Nguyen write in a note. “Both Zelenskiy and most politicians are likely to call for populist measures rather than IMF-required reforms.” Separately, analysts at Swiss investment bank UBS predict that if the Rada does not approve new anti-corruption legislation, this summer’s $1.4 billion IMF tranche will be delayed.

Ukrainian companies again won all auctions for oil and gas blocks conducted under the rules of ProZorro. On Thursday, in the second round of auctions, UkrGazVydobuvannya, the state gas producer, won six of the seven licenses, which are valid for 20 years of exploration and production. A small, private company, Unified Oil and Gas Company, won the seventh license. In March, in the first round of electronic auctions, UGV and two private gas producers, Burisma Group, DTEK Oil & Gas, won three licenses. The third licensing round, for nine blocks, will be June 18, reports WorldOil website.

Richard Deitz’s VR Capital Group is expanding its investments in Ukraine, establishing a joint venture with Investment Capital Ukraine and buying a 50% stake in 11 solar plants with a total capacity of 127 MW in Mykolaiv region. This is the third joint venture in renewable energy between Kyiv-based ICU and VR, according to Avellum, which provided legal advice to ICU. An investor in Russia since 1994, Deitz was based in Moscow for many years. According to Barron’s, his flagship hedge fund, VR Global Partners, L.P., had assets under management of $4.4 billion at the end of 2017.

Ukrainians driving home en masse Sunday from their ‘no visa’ May holidays caused lines as long as 500 cars at Polish-Ukraine border crossings, reports Ukraine’s Border Service. With automobile crossings on the Polish border increasing by 500,000 a year, Ukraine needs to double its land crossings with the EU from the current number of 18, Petro Tsyhykal, head of the border service, recently told Channel 5. He said that last year 100 million people crossed Ukraine’s borders.

With the record harvest pushed through the economy, Ukraine’s real GDP growth slowed to 2.4% in Q1 2019, compared to 3.5% in Q4 2018. Metals, the largest export after agriculture and labor, was ‘close to zero’ due to planned repairs at major mines and steelmakers, reported the National Bank of Ukraine. Retail, travel and construction were up, fueled partly by labor remittances. The central bank predicts the economy will grow by 2.5% this year, down from 3.3% last year.

Ukraine will auction 5G mobile frequencies next year, Infrastructure Minister Volodomyr Omelyan told reporters after meeting Friday with the National Communications and Information Regulatory Commission. “They see a great prospect of this technology,” said Omelyan. “It is their position, that Ukraine will be able to sell the first licenses for 5G next year.” Last month, Omelyan launched a 5G pilot project “Internet of Things on Highways.” Last year, 4G service was launched in Ukraine. Last month, Verizon, the leading American mobile company, and South Korea’s three mobile carriers launched 5G service.

If Western partners – including the IMF – maintain cooperation, Ukraine can get through this year, a peak year for foreign debt repayments, Yakiv Smolii, governor of the National Bank of Ukraine, told G7 ambassadors and IMF representatives in Kyiv on Friday. When the Rada returns to work in two weeks, parliamentarians are to consider a key IMF demand: reorganizing the State Fiscal Service into a tax service and a customs service. If Ukraine passes its IMF review in late May, it should win an IMF tranche of $1.3 billion.

Taking advantage of Russia’s ban on overflights of its territory by Ukrainian airlines, Azerbaijan’s low-cost carrier Buta Airways, is expanding flights from Baku to three Ukrainian cities: Kharkiv, Kyiv and Odesa. After flying to Kyiv Sikorskiy for two years, Buta added Kharkiv on Friday and will add Odesa on May 16. on Friday, May 3, made its first flight to / from Kharkiv airport. UIA has a lone flight to Baku, from Kyiv Boryspil, which must fly south over the Black Sea, around Crimea and across Georgia to reach Azerbaijan.

Kazakhstan’s new discount carrier, FlyArystan, plans to fly to Ukraine in the near future, Peter Foster, president of the parent company, Air Astana, tells the Center for Transportation Strategies. According to the British CEO, FlyArystan plans to carry 700,000 passengers this year and to expand its fleet in two years to 15 passenger jets. UIA, faced with longer and costlier flight routes to Kazakhstan, has cut its frequencies to Almaty and dropped its flights to Astana, now called Nur-Sultan.

Over the next 25 years, Kyiv’s Borsypil airport is to undergo a major €3.4 billion expansion to handle 54 million passengers – four times today’s level. Under a long range development plan approved last week by the government, the airport’s land area would increase by two thirds, to 1,538 hectares, Viktor Dovhan, deputy Infrastructure Minister, posts on Facebook. Terminal D, the main international terminal, would be greatly expanded and the second runway would be rebuilt. After registering a 19% increase last year, to 12.6 million passengers, Boryspil expects to see a 14% increase this year, to 14.4 million passengers.

Starting Friday, Ukrzaliznytsya will double the size of its Boryspil Express train, allowing the airport railroad shuttle to carry 200 passengers at peak hours. Ridiculed by the Kyiv press at its launch last November, the 80 hryvnia shuttle from downtown Kyiv has proved so popular, passengers often stand for the 35-minute ride.

Online purchases now account for 56% of long distance rail tickets sold, up from 50% last year, reports Evhen Kravtsov, CEO of Ukrzaliznytsia. More than 100 million rail tickets have been bought online since the service started in 2015.

 

 

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, May 7

 

 

 

 

  • May Rains Set the Stage for Good Crops
  • Double Digit Growth for Sunflower Oil, Poultry, and Eggs
  • Germans, Danes Plan Pig Farms
  • Norwegian Investor Successfully Exits Farm Investment, Now Looks for More
  • Biggest Trucks In Ukraine Haul Iron Ore in Kryvyi Rih
  • Iron Exports Up
  • Canadian Iron Mine Progresses
  • Russia and Ukraine Gird for Gas Transit Talks in May
  • Regional Airports Revive
  • French to Supply Water Purification to Mariupol
  • Solar, Wind: Rada Votes to Move from Europe’s Highest Tariffs to Auctions
  • Investments Make Renewables Ukraine’s Fast Growing Energy Segment
  • Taking Move to Auctions in Stride, Investors plan Billions in New Solar Investments Through 2020

With rain forecast across Ukraine for the next week, farmers are happy. Early spring grain was completed on 2.1 million hectares – 10% more than last year. This is 94% of the planned area, reports the Agrarian Policy and Food Ministry.

Moisture in the soil may put Ukraine on track to match last year’s record grain harvest of 70 million tons. In neighboring Russia, similar weather could boost the grain crop by as much as 14%, to 129 million tons, reports Reuters in a story headlined: “Good Weather Puts Russia, Ukraine on Track for Large Grain Crop.” Kazakhstan, the region’s other big producer, expects to match last year’s harvest of 20 million tons.

With two months left in the grain marketing year, farmers have exported 41 million tons – topping the 40 million tons exported during all of the previous marketing year. Ukraine has exported: 23 million tons of corn, 14 million tons of wheat, and 3.3 million tons of barley. Underlining Ukraine’s role as a world food power, total grain exports could hit 50 million tons this year.

Despite farmers complaining about rail tariffs, the amount of grain moved by freight trains increased by 7% during the first quarter, to 28.6 million tons of grain. Over the last decade, Ukrzaliznytsia has doubled its grain volumes, from 15.5 million tons in 2008 to 33 million tons last year, Andrey Ryazantsev, the state railroad’s financial director, tells the Center for Transportation Strategies.

Sunflower oil production was up by 14%, to 1.5 million tons, during the first quarter, compared to last year’s in January-March period. In March alone, sunflower oil production jumped to 23% y-o-y, to 527,000 tons, reports that State Statistics Service. Ukraine is the world’s largest exporter, with India the top buyer of the cooking oil. In 2018, production dropped by 8% y-o-y, to 4.8 million tons.

Kernel, Ukraine’s largest sunflower oil producer, saw its oil sales jump by 40%, to 389,600 tons in the first quarter, compared to January-March last year. Behind the jump, Kernel’s numbers underline Ukraine’s slow progress in creating a sunflower oil brand and selling oil in bottles– a higher value export. Kernel’s bulk sales were 11 times greater than its bottle sales – 32,000 tons. During the first quarter, bulk sales grew by 41%. Bottle sales lagged, growing by 30%.

Low sugar prices and rising production costs are prompting sugar producers to cut plantings of sugar beets this spring by about one quarter, to 210,000 hectares, the lowest level in five years, reports Ukrtsukor, the sugar producer association. During the first half of the sugar marketing year, sugar exports were down by 10% to 304,000 tons, the association reports. During the last sugar refining season, sugar production was down by 15% to 1.7 million tons.

At Astarta, Ukraine’s largest sugar producer, sugar sales dropped by 42% y-o-y during the first quarter. Sugar prices were down by 15%. By shifting land last year to corn, wheat, barley and sunflower, Astarta’s revenue increased by about 21% to to €110 million, calculates Concorde Capital analyst Alexander Paraschiy.

Ukraine’s fruits and nuts export revenues rose by 22%, to $25 million, during the first two months of this year, compared to January-Febuary period of last year. February’s exports of $25 million were double the level of two years ago, according to EastFruit information and analytical platform.

Pig Progress news site reports that Danish and German companies are planning to launch pig farms in Ukraine, despite outbreaks of African swine flu. The site’s ‘World of Pigs’ feature reports that Danish company Agro East is building a farm in Zhytomyr with a capacity for 25,000 pigs. In Lviv region, two farms, for a total of 10,000 pigs, are planned by German pig producers Poels Mastschweine and Tierproduktion Alkersleben. In Ivano-Frankivsk region, Goodvalley Ukraine, another Danish company, plans to invest €4 million to build a meat processing plant.

Two new cases of African swine fever – one in Ternopil and one in Chernivtsi – were reported Thursday by the State Service for Food Safety and Consumer Protection. Since 2015, about 400 outbreaks involving dozens of farm have been reported. Last year, 145 cases reported in Ukraine of the virus which is fatal to pigs. If infections continue to spread, Ukraine will lose 1.2 million pigs, or $150 million, by 2020, predicts the Food Safety agency.

After spending almost $250 million to buy a poultry producer in Slovenia, MHP, Ukraine’s largest poultry producer, plans to continue to buy producers in the EU and to expand to the Middle East and Africa, according to a statement posted on the Warsaw Stock Exchange website. At home, MHP is investing to increase its production capacity in Vinnytsia by one third, to 840,000 tons in 2022. Between now and 2022, MHP plans to spend $420 on foreign purchases and increasing domestic production.

With little room for sales growth at home, MHP plans to expand exports this year by 15%, to 330,000 tons, Victoria Kapelyushnaya, MHP chief financial officer, tells GlobalMeatNews. During the first quarter, poultry volume sales totaled 164,000, up 21% y-o-y. Exports were 93,000 up 47% y-o-y to 57% of total sales. Concorde Capital’s Andriy Perederey writes: “The company’s key EBITDA driver in 2019 will be a rise in poultry export volumes.”

Ovostar Union, a top manufacturer of eggs and egg products in Ukraine, opened a subsidiary in Dubai and spent $3.3 million to buy two Kyiv region companies last year, the group reported in its annual financial report. Last year, sales destinations were: Ukraine – 55%; Middle East – 26%, EU – 16%, and other countries – 3%. Last year, export revenue increased by 17% to $56 million.

This year, Ovostar, plans to increase laying hens by 13%, to 7.9 million head, and to increase egg production by 14%, or 1.8 billion eggs. List as OVO on the Warsaw Stock Exchange, Ovostars reports are scrutinised closely by analysts in Kyiv. Calculating that the company first quarter revenue was $30 million, or a 9% y-o-y decrease, Concorde Capital’s Androy Perederey writes: “We are keeping our neutral view on Ovostar stock.”

A Norwegian company partly owned by the Norwegian government sold its 3,000-hectare farm in Sumy region last week for an undisclosed price. “The results of the investment were impressive; now we are looking forward to additional opportunities to invest in Ukraine,” said Hans Christian Dall Nygard, regional advisor to Norways State Investment Fund, an investor in the farm. Andrew Kinsel, an American lawyer who advised on the deal, said: “Farm property sale is common, land rental agreements are signed with a corporate entity, and the corporate entity is sold. Land itself is (usually) not sold, only rental agreements.” Even without a private farm land market, he said: “There is strong demand in the farming sector. I see that buyers are quite active through the planting and elections season.”

The Ukrainian Agro-Industrial & Food Forum, the largest such conference outside of Ukraine, will take place May 28 in Rotterdam. Expected to draw executives from 150 agribusiness companies, the forum unites two of the world’s leading exporters and innovators of agri-food products – the Netherlands and Ukraine. Now in its second year, the forum will focus on trade, logistics and infrastructure, financing, ag tech, export markets, trade and investment, and promotion of the value chain.

The biggest trucks in Ukraine now haul iron ore Metinvest’s Northern Iron Ore Dressing Works in Kryvyi Rih. The $2 million BelAz dump trucks can carry loads of almost 300 tons of rock at the quarries, part of one of Europe’s largest iron ore mining enterprises. This year, Metinvest is buying 16 of these monster trucks. Until these purchases, the biggest dump trucks in Ukraine could carry 220 tons. BelAz says that Ukrainian mining companies use 2,000 BelAZ trucks, accounting for 90% of the oversized dumptrucks in the nation.

ArcelorMittal Kryvyi Rih, Ukraine’s largest integrated steel company, plans to increase iron ore concentrate output by 10.5% this year, to 10.3 million tons. This would be a 23% increase over the 2017 level. To reach this level, the company is increasing its investments in mining trucks and bulldozers this year by 46%, to $7 million.

Alexander Yaroslavsky plans to invest $150-200 million over the next five years in two properties he bought since 2017 Sucha Balka, an iron mine in Kryvyi Rih, and Dnipro Metallurgical Plant, a steel plant in Dnipro. At the iron mine, the Kharkiv-based businessman plans to buy new equipment, mine reserves at deeper levels, and build a processing plant. At the steel plant, he plans to build a continuous casting plant.

In March, Ukraine’s ports handled 30.4% more iron ore than in the same period last year – more than double the 12.6% growth recorded for all freight, reports the Sea Ports Administration.

Toronto-based Black Iron (TSX: BKI) has raised almost US$1.2 million in a private placement on the heels of a March land agreement with Ukraine’s Defense Ministry. Under the deal, the Canadian mining company will compensate the Defense Ministry for taking over a troop training area to build an ore processing and tailings site for its Shymanivske iron ore project in Kryvyi Rih. According to Black Iron, the deposit has 646 millon tons measured and indicated resource, at 31.6% iron.

Concorde Capital’s Dmytro Khoroshun notes that in February, Glencore signed an MOU with Black Iron. Speculating that the Swiss-British mining and commodities giant might be the investor in the private placement, he writes: “This news is positive for both Black Iron and Ukraine’s image as an investment destination because it demonstrates the seriousness of foreign investors in projects such as Shymanivske.”

Some skilled miners working at Donetskstal now earn more than their counterparts in Poland and the Czech Republic, Ildar Saleev, company general director tells Channel 24. Competing with Central European mines for labor, he said Donetskstal is raising salaries by an average of 15% for the 10,000 workers at the company’s eight units. He said miner salaries in the Pokrovskoe mine are 76% higher than Ukraine’s average and 43% higher than the Donetsk region average. At present, the company has “hundreds of vacancies” for drivers, pipe fitters, welders and miners, with monthly salaries ranging from $370 to $1,300.

Due to repairs on Russia’s Yamal-Europe gas line, the volume of Russian gas shipped across Ukraine to the EU increased by 5.3% during the first quarter, to 20 billion cubic meters. In one week in April, shipment volumes jumped by 25%, to 300 million cubic meters a day. This flexibility makes Ukraine’s gas line system essential to Europe’s energy security in the 2020s, Naftogaz CEO Andriy Kobolyev writes on his Facebook page.

Ukraine and the EU plan to offer Gazprom a 10-year contract, with a guarantee of 60 billion cubic meters a year in transmission.Ukraine will provide capacity at 90 billion cubic meters per year,” Yuriy Vitrenko, executive director of Naftogaz, briefed reporters last week. “Thirty billion cubic meters will be free capacity, which will be available for booking by other companies.” He calculates that at this level, Ukraine would keep its annual gas transit fees at the current level, $3 billion.

If Russia cuts off gas to Ukraine next year, Naftogaz plans to reverse flows in the main pipeline, allowing Slovakia to pump gas east to Ukraine, Vitrenko tells NV Business. To this end, workers are rebuilding a key compressor pipeline station in Bar, 70 km southwest of Vinnytsia city. To strengthen its negotiating position with Russia, Naftogaz plans to fill all reservoirs this summer, allowing Ukraine to get through the heating season of a normal winter. Ukraine has the largest gas storage capacity in Eastern Europe – 31 billion cubic meters.

In coming days, President Poroshenko is to sign into law the energy bill approved last week by the Rada, moving Ukraine next year from ‘green’ tariffs to ‘green’ auctions. Effective next year, the bill requires that all solar plants over 1 MW and all wind farms over 5MW participate in energy auctions. An existing 10% tariff increase for use of Ukrainian-made equipment is retained. The bill aims to establish a fair market price for ‘green’ electricity, to promote competition among producers, and to cut the cost of ‘green’ power to consumers, according to Sergey Savchuk, head of the State Energy Efficiency Agency.

The new legislation “corrects an error — the highest rates in Europe,” Igor Naslik, Energy and Coal Industry Minister, told the Rada. The goal is to cut news feed-in tariffs for solar plants by 25% next year, and by 2.5% a year from 2021 to 2023. For wind plants over 2 MW, the feed-in tariff is to go down next year by 10%. Biomass and biogas energy rates stay unchanged. Feed-in tariffs are prices paid to producers for selling into acommon electricity pool.

Renewable energy – largely solar and wind – will be the fastest growing energy source in Ukraine this year, predicts the Energy and Coal Industry Ministry. Renewables will more than double – increasing by 127% – to six gigawatts. Nuclear will decline by 1.2%, to 83.4 gigawatts. Thermal – coal and gas – will drop by 2% to 46.5 gigawatts. Combined heat and power plants will increase by 6.6% to 11.7 gigwatts. Large hydro will fall by 23% to eight gigawatts.

During the first quarter of this year, solar accounted for 80% of the 860 MW of newly installed renewable energy capacity, reports Savchuk, the Energy Efficiency director. Of Ukraine’s three gigawatts of installed renewable capacity, solar accounts for 71%.

Sky high ‘green tariffs’ boost the cost of power but generate little renewable electricity, Katya Gorchinskaya writes in a Politico article titled: “Ukraine’s Green Oligarchs.” Current rates paid producers, in euro cents per 100 kilowatt hours, are: solar – 15 to 16 cents; wind – 10.2 cents; small hydro 10 to 17 cents; thermal – 5.8 cents; nuclear 1.7 cents. As a result, renewables provided 1.9% of the nation’s electricity last year, but accounted for 8.6% of the nation’s €5.5 billion power bill.

Asserting that five years of subsidies were needed to jump start Ukraine’s renewable energy industry, DTEK, now Ukraine’s largest solar producer, tells Politico: “Investments in renewables have become the third most attractive sector for direct investments in Ukraine besides the agricultural and IT sector.” DTEK, owned by Rinat Akhmetov, adds: “As in other countries, the introduction of a specific regulatory framework was instrumental for DTEK’s and other investors’ decision to kickstart investments in this sector, and a precondition to attracting foreign long-term debts for the financing of the imported equipment required.”

Michael Yurkovich, CEO of TIU Canada, has two solar plants, totalling 24 MW, in southern Ukraine. Working on two more plants, in Odesa, for an additional 32 MW, he recently told Renewables Now: “Investors need confidence that there is an ongoing commitment to renewables; a consistent level of support during the investment cycle; a supportive regulatory and permitting environment; transparency in the distribution of support; and a level playing field for investors.”

Over $1 billion in solar projects are under construction this spring, racing the Dec. 31 sunset of the sky high green tariffs. Adjusting to a new auction regime, investors plan billions of dollars in additional investments through 2020. The investment action largely focuses on Ukraine’s three sunniest southern regions – Mykolaiv, Kherson and Odesa.

Here is a partial roundup:

In Mykolaiv, 400 MW of solar capacity is under construction or in the planning phase. Foreign investors nvestors include: Estonia Energy Invest, Turkey’s Eko Yenilenebiler Enerjiler AS, and Norway’s Scatec Solar. With EBRD financing, Scatec is building two Mykolaiv solar plants, investing a total of €232 million to build 197 MW capacity.

In Kherson, Scatec, through its Atlas Capital Energy LLC, is building this spring a 50 MW solar station in Hola Prystan. With about a dozen companies in Ukraine, Scatec is working on 414 MW of projects – 251 MW under construction and 163 in the design and permitting stage, reports Interfax-Ukraine.

The Arab Investment and Development Authority, AIDA, signed a deal in Dubai last month with STC Energy Ukraine to invest $2 billion in solar power plants in Ukraine. The first phase is to build solar plants totaling 170 MW, under the agreement signed by AIDA chair Adil Al Otaiba, STC Energy CEO Natalia Tykhonova, reports Emirates News Agency.

In Kirovohrad region, there are plans to commission 46 solar stations with a generating capacity of 500 MW by 2023, reports EcoTown news site. Almost half of this will come from three solar plants, totaling 190 MW, that DTEK plans to commission by the end of this year.

In Nikipol district of Dnipropetrovsk region, DTEK inaugurated earlier this month a 200 MW solar farm, the second largest in Europe. Now DTEK Renewables is building nearby a €200, 240MW solar polar plant, due for commissioning this year.

Companies from Belgium, Denmark, Ireland, Lithuania and Turkey are among the investors building about a dozen solar projects for over 100 MW in central Ukraine’s Zhytomyr region. Establishing the region’s reputation as solar friendly, the Zhytomyr Regional Administration signed 14 memorandums with solar investors last year.

Turkey’s Emsolt is building this spring 20 MW of solar capacity at two sites, in Zhytomyr and Khmelnitsky. The company has 85 MW ready for construction and another 50 MW under development, reports UNIAN.

Kness Group, the Vinnytsia-based engineering, procurement and construction firm, is building 500 MW of solar capacity across Ukraine this year. This adds to 500 MW in projects completed by the company in earlier years, Yevhen Didichenko, co-founder of Kness, told a recent renewable energy conference organized by GOLAW firm in Kyiv.

Two Japanese companies, Green Power Development Japan and Deloitte Touche Japan, are talking with the Energy and Coal Industry about building solar plants with a total capacity up to 1.2 GW in the Chornobyl exclusion zone, reports Interfax Ukraine. In addition to the symbolic value of building solar at the site of the 1986 nuclear disaster, solar developers want to plug into existing power transmission lines.

Odesa region now has 500 MW of installed solar capacity, including a 260 MW project commissioned in January. From Danube to the Mykolaiv border, Odesa now has 23 solar plants in the below 50 MW size. Spain’s Acciona Energia Global is seeking to win permission to buy majority control of two solar projects in Izmail owned by UDP Renewables of Vasyl Khmelnytsky.

With the spread of solar, southern Odesa increasingly faces the problem of excessive daytime power for local electricity grids. To address this, France’s RTE International and Ukrenergo are designing Ukraine’s first energy storage system. RTE International is a unit of RTE, the French electricity grid operator. The first phase of work is financed by a €560,000 grant from France’s Economy and Finance Ministry.

A “radical regional airports development program” is a key to Ukraine’s official plan to quadruple air passenger traffic to 80 million in 2030, reports Aviation Voice news site. To increase regional traffic from 25% today to 50% in 2030, the plan calls for investing €450 million to upgrade the airports of Kharkiv, Kherson, Lviv, Odesa and Zaporizhia to accommodate wide body jets. The airports of Bila Tserkva, Cherkasy, Chernivtsi, Dnipro, Ivano-Frankivsk, Kryvi Rih, Mariupol, Mykolaiv, Poltava, Rivne, Sumy, Ternopil, Uzhgorod and Vinnytsia would be upgraded to handle Boeing 737s and Airbus A320s.

Bolstered by the arrival of its seventh Boeing 737, SkyUp launches an ambitious summer schedule this week. From Kyiv Boryspil, Ukraine’s new low cost airline will start flights to: Alicante, Batumi, Bodrum, Burgas, Catania, Faro, Heraklion (Crete), Naples, Palma de Mallorca, Pula (Croatia), Odesa, Rimini, Split, Tenerife-South, Varna, and Yerevan. From Lviv, SkyUp starts flying to: Alicante, Antalya, Monastir (Tunisia) and Tivat (Montenegro). From Kharkiv, SkyUp’s new flights will be to: Barcelona, Kutaisi, Larnaca, Monastir, Odesa, Paris-CDG, Rimini, Tirana and Tivat.

SkyUp starts flying from a new regional airport last week – Kryvyi Rih. SkyUp starts flights to Sharm El Sheikh and to Antaliya. Later this year, SkyUp would like to fly from Cherkasy.

Poltava’s newly reopened airport, plans to start flights to Poland this year, and to Spain and Israel next year, Volodymyr Okary, the aiport director, tells Zmist newsite. This spring, the airport reopened with SkyUp charters to Sharm el Sheikh and Antalya, Turkey.

After re-opening last December, Mykolaiv airport carried 4,300 passengers during the first quarter. Growth is to continue, with SkyUp starting a flight on Wednesday to Antalia and MotorSich starting flights to Kyiv Sikorsky next month.

By the time Odesa’s new runway is completed this fall, Ryanair will become the city’s largest airline, with scheduled year round flights to five EU cities. One flight will go to Berlin, and four to Poland – Gdansk, Katowice, Krakow, and Wroclaw. The Krakow flight starts June 16. The other flights start Oct. 29.

With as many as 2 million Ukrainians working and studying in Poland, Ukraine has opened in Katowice its 11th honorary consulate in Poland. In addition, there are four consulates: Gdansk, Krakow, Lublin and Warsaw.

The news that Lufthansa recently inspected Zaporizhia airport, drew attention to southeast Ukraine’s fastest growing airport and its 12,000 square meter new terminal that opens this fall. Built to handle 400 passengers an hour, the terminal will soon handle flights by nine airlines to 12 destinations, including Barcelona, Istanbul and Warsaw. By contrast, Dnipro a city of 1 million people — one third more than Zaporizhia – has four airlines flying to four cities. To steal passengers from its rival, Zaporizhia recently started a direct bus route from downtown Dnipro to Zaporizhia airport, a 100 km, 90-minute ride.

Scheduled domestic flights should return to Mariupol by next year, Infrastructure Minister Volodymyr Omelyan tells Delo.ua. His ministry and the military are assessing safe landing approaches to this Donetsk region airport, which is only 35 km, west of the front line. Currently used for supply flights by the military, the Mariupol landing strip is considered in better shape than its rivals for civilian flights: Kramatorsk, also in Donetsk region, and Berdyansk, 80 km to the west of Mariupol.

Investing in Ukraine’s two Sea of Azov ports, the government has awarded tenders this month for the first major dredging in a decade of Mariupol and Berdyansk to Azimut Specialized Technical Bureau LLC, a Ukrainian company. With the winner determined by ProZorro online auctions, the two contracts total $27 million.

France is supplying a €64 million soft loan to supply drinking water to Mariupol, an Azov city of 500,000 people, a population swollen with refugees from occupied areas of Donetsk region. Under an agreement approved Thursday by the Rada, the 30-year loan with a 10-year grace period and an annual interest below 1% will help build modern water filter stations and to upgrade city water pipes to cut leaks of drinking water and sewage. A leader in the field, France exports water system technologies around the world.

 

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, April 30

 

 

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

As approved by the Rada Thursday, the bill requires:

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

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

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

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

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

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

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

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

 Vote Indicates Ukraine’s Population is 41 Million

Chinese Trains Charge Across Eurasia

Venture IT Investments up 30%

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

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

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

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

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

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

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

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

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

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

EU Refiners Fill Gap

Landmark Properties in Central Kyiv Sold

Post-Election Bond Demand High

Retail Sales Strong

Canada’s Bombardier Wants to Sell Electric Locomotives

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

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

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

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

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

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

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

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

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

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

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

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

Poroshenko Allies Called for Questioning in Economic Cases

Transparency for Defense, Modernization for Health

A Sin City for Ukraine?

Markets Calm

Online Delivery Services Spread Across Ukraine

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

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

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

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

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

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

Chinese Technology for Europe’s 2nd Largest Solar Plant

With UIA Cutting Flights, Kolomoisky Could Clip Wings of Competitors

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

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

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

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

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

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

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

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

 

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