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  • Government Jawbones IMF on Gas Price Controls
  • Gazprom Keeps its Word and Pays Ukraine $2 billion
  • Kolomoisky Pulls Plug on Canadian Solar Plant
  • Sun Sets on Coal

The government’s plan to cut gas prices by one third is sparking a flurry of meetings between the IMF representative and government ministers. “We had a constructive meeting with the IMF on gas prices,” Prime Minister Shmygal wrote on Telegram. “Our Government’s position: the gas market in Ukraine must work. Unfortunately, some market players continue to abuse the position that Ukrainians suffer from.”

Aware of the IMF’s core attachment to market prices for gas, acting Energy Minister Yuriy Vitrenko and Finance Minister Serhiy Marchenko also explained the government’s position to IMF representatives. “They are concerned that we are revising some of our earlier commitments,” Marchenko told NV Radio, referring to the IMF. There are no grounds, he added, “to say that we have already done something very bad.”

From London, Timothy Ash stressed the importance of market prices for a major source of Ukraine’s heat and electricity: The move to market-based gas pricing in Ukraine has produced huge wins in recent years – it’s helped slash gas consumption from plus 70 bcm to less than 30 bcm, cutting the energy import bill from $12bn per annum, to perhaps $2-3bn, and also cut the quasi-fiscal deficit by 4-5% of GDP, given the huge subsidies previously given to Naftogaz. That has also cut a huge amount of graft from the system. Estimates had suggested that Ukrainian elites were perhaps creaming off $3bn annually from the gas business.”


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Spawning street protests in at least eight regional capitals, the spike in Ukraine’s gas prices stems from: cold weather, high prices in Europe, and a poorly implemented market opening that allows price gouging by suppliers. Ash again: “The Zelenskiy team will argue that this is not aimed as a major reversal in market-based energy pricing, but is a reaction to oligopoly pricing by a few bad actors in the industry. Essentially Naftogaz seems to be selling gas to consumers at UAH7 per kWh, whereas other operators are selling at prices nearer to UAH11-12 per kWh. Naftogaz can do this as it bought gas into storage cheaply and is trying to take market share.”

At stake is $2.9 billion of low interest loans remaining to be disbursed from the IMF’s $5 billion Stand-By Arrangement of last summer. The agreement is widely seen as a seal of approval for Ukraine’s economic policies, an approval that lowers Eurobond rates for Ukrainian borrowers and, ideally, gives a green light to foreign brick and mortar investors. While discussions behind closed doors in Kyiv have been heated, in Washington, IMF Spokesman Jerry Rice merely told reporters: “The first review of the Stand-By agreement continues.”

One year after the last-minute renegotiation of Ukraine’s gas transit deal with Gazprom, Naftogaz reports that the Russian state company paid its 2020 bill in full – $2.1 billion. Gazprom paid for shipping the total booked amount – 65 billion cubic meters. By year’s end, Gazprom had shipped only 86% of that amount – 55.8 bcm.  This year through 2024, Gazprom is contracted to ship 40 bcm a year through Ukraine’s pipelines.

TIU Canada of Calgary is suing Nikopol Ferroalloy Plant for disconnecting the Canadians’ 10.5 MW solar plant last March, ostensibly because the Ferroalloy Plant did not want to pay green power rates. The trial started Wednesday in Kyiv Commercial Court with TIU charging that the shutdown has cost them €1.5 million over the last 10 months. The solar plant connects to a substation on the grounds of the Ferroalloy Plant, which is owned by Igor Kolomoisky, Gennadiy Bogolyubov, and Viktor Pinchuk. TIU maintains that under Ukrainian law, only electricity producers can disconnect a plant from the national power grid.

Ukraine’s coal production fell by 7% last year, hitting 29 million tons, near the level of 1916, reports the Energy Ministry. Employment in coal mines is about 30,000 today – 6% the level of the end of the Soviet period. In the last 15 years, government subsidies to coal mines have been cut from $8 billion a year to less than $500 million a year today.

Western Ukraine Coal Construction, Ukraine’s last state company devoted to building coal mines, goes up for auction in 6 days, reports the State Property Fund. The company has 15,700 square meters at its headquarters in Chervonograd, Lviv region and nine hectares at a miners’ resort in Volyn’s lake region. Bids start at $400,000.

The State Property Fund plans to sell 500 state properties this year to private owners, Dmytro Sennychenko, the head of the Fund, wrote on Facebook. “Privatization grows jobs, improves the socio-economic state of the regions, and the state ceases to spend taxpayers’ funds on damages,” he wrote. Obstacles include: the need to follow 70 procedures for each property sale, “sabotage by enterprise management or its ′shadow ′ executives,” and the lack of final Rada approval to lift last year’s suspension of big sales.

Regional airports are primed for a post pandemic takeoff. UkSATSE traffic numbers for 2020 confirmed the dominance of Kyiv’s two big airports – Boryspil (47,524 flights) and Sikorsky (12,805). The air traffic control agency’s graphic on Facebook shows a second layer that is catching up with Sikorsky: Lviv (9,850), Odesa (9,282), and Kharkiv (7,576). A third layer shows potential: Dnipro (4,174), Poltava (4,119) and Zaporizhia (4,087). This winter, Dnipro starts a 3-year, $100 million rebuild of its runway and terminal. Last spring, Zaporizhia inaugurated its new terminal. And Poltava’s air traffic is entirely charter aircraft. Scheduled flights are expected to follow – once EU travel restrictions lift.

The EBRD is working with the Infrastructure Ministry to create dedicated funds to develop Ukraine’s airports and railway infrastructure, Minister Vladyslav Krykliy said on the ministry website. In an attempt to emulate the Road Fund, “the EBRD has already allocated funding and selected consultants to analyze international experience, develop a concept and write relevant legislation,” Krikliy said. The EBRD also gave the Minister a report assessing the ministry’s capacity to execute public partnerships with private companies.

 

  • Defying IMF, Price Controls Return to Gas
  • 16 Foreign Companies Show Interest in Buying State Titanium Complex
  • Big Mac Index: Hryvnia 61% Undervalued
  • Dnipro River Shipping Down Slightly
  • Kyiv in the Big Leagues – for Traffic Jams

With European natural gas prices rising to the highest level in two years, Ukraine will cut and cap gas prices from Feb. 1 until the end of the heating season, usually early April. With prices expected to be cut by about 30%, President Zelenskiy said on his website: “Market prices are too high today, especially given the pandemic.”

The price freeze reverses a gas market liberalization process long advocated by the IMF. Coming as the IMF is conducting a remote review of Ukraine, this measure is expected to delay any agreement on a new tranche. Timothy Ash writes from London: “[I] cannot see the IMF buying this…I think Ukraine’s old corrupt elites are once again using the gas price card to scupper the IMF program.”

In another cloud over the IMF deal, Dmytro Sologub, a 5-year veteran member of the board of the National Bank of Ukraine, tells Bloomberg that summer’s shakeup of the central bank leadership may delay the next tranche from last June’s $5 billion IMF loan to Ukraine. In an interview headlined, „Ukrainian Central Banker Warns Revamp Risks “Substantial” Damage,” Sologub says: “Cracks in the bank’s collegial decision-making system and, honestly, a lack of professionalism in some positions, may lead to substantial problems a few years down the road.”

The Finance Ministry kept interest rates unchanged at Tuesday’s weekly auction, selling $319 million worth of bonds, almost the same amount as the prior week. Of the total $48 million of 1-year dollar bonds carried a yield of 3.8%, the Ministry reported on Facebook. Of the 7.5 billion worth of hryvnia debt, 93% were for securities with maturities one year or less.

Dragon writes: State-owned banks likely remained the major buyers of domestic bonds…With the 2021 budget deficit target set at 5.5% of GDP, the government’s borrowing needs will remain high this year, keeping it reliant on cooperation with the IMF.”

Sixteen foreign companies have registered interest in Ukraine’s first big privatization of this year – the sale of a state company that mines and enriches titanium ore in Zhytomyr and Dnipropetrovsk regions. Scheduled to take place by the end of March, the online auction of United Mining and Chemical Company is expected to draw bids of at least $150 million, State Property Fund officials told reporters. The company produces ilmenite, the main source of titanium dioxide, which is used in paints, printing inks, fabrics, plastics, paper, sunscreen, food, and cosmetics.

Increasing the company’s attractiveness, new management increased profits six-fold last year to $21 million and announced last month a doubling of reserves of titanium-bearing ore sands at the Vilnohirsk Plant, in Dnipropetrovsk. Decreasing attractiveness, men opposed to privatization have burned a company manager’s car, conducted ‘searches’ of company offices, and opened 10 hopper cars filled with ilmenite concentrate, destined for the US company Chemours, a DuPont spinoff.

Whittling away at Ukraine’s state property mountain, 1,899 privatization auctions were held in 2020, yielding $107 million for the budget, Dmitro Sennychenko, executive chairman of the State Property Fund, reported. With this month’s end of the suspension of ‘big’ privatizations, the Fund expect to present to investors for sale this year the Odesa Port Plant and six regional power companies. Through the end of 2023, investors have the right to contracts drawn up under English law.

Foreigners who invest over $100,000 in companies they set up in Ukraine will be able to apply for an immigration permit, according to a resolution approved at the Cabinet of Ministers. Investments will have to be documented by bank transfers.

The dollar remains king in Ukraine, with the hryvnia 61% undervalued against the US currency, The Economist reports in its annual Big Mac index. In Ukraine, a Big Mac costs UAH 62, or $2.21. In the US the same hamburger goes for $5.66. Using this index, Ukraine has the world’s fifth most undervalued currency. The cheaper currencies are: South African rand – 61.9%; Turkish lira – 64.5%; Russian ruble – 68%; and Lebanese pound – 68.7%.

The ‘Karta Polaka’ or ‘Polish Card’ was granted to 7,094 Ukrainians last year, Poland’s Foreign Ministry told Ukrinform. Started in 2008 for people of Polish heritage who are not allowed to have two passports, the card facilitates residency and work in Poland. To date, about 130,000 Ukrainians have received the card.

Bills on ‘virtual assets,’ on cloud storage and on creating Diya.City, a virtual free economic zone for IT companies, are legislative priorities this year for the Ministry of Digital Transformation. Minister Mikhail Fedorov wrote on Telegram that another bill will allow people to change their place of registration with “a few clicks.” Referring to this hangover from Soviet days, he called for “unlinking registration from many situations in life (where it is really not needed).”

Turkish Airlines displaced Ukraine International Airlines as the top carrier in Ukraine last year, UkSATSE, the air traffic control agency, writes on Facebook. Turkish carried out 14,623 Ukraine flights. UIA carried out 14,406. The other leaders were: Belavia (Belarus) -10,644 flights; Wizz Air – 9,151; Windrose (Ukraine) – 8,511; SkyUp (Ukraine) – 8,434; LOT Polish– 6,260; and Ryanair – 5,965.

Just in time for the snow, Kyiv ranks 7th in a ranking of 416 world cities for traffic congestion, reports TomTom, the Netherlands-based provide to satellite navigation devices. Sandwiching Kyiv between Bangalore and New Delhi, TomTom gives Ukraine’s capital a traffic congestion level last year of 51%.

Drivers spent an unnecessary 207 hours in rush hour traffic last year, TomTom reports, detailing Kyiv’s traffic patterns. Congestion adds an extra 25 minutes to morning commutes and an extra 29 minutes to evening commutes. Last year, December was the most congested month and Friday, Dec. 18 was the worst day of the year to be behind the wheel. Of no surprise to drivers, the satellites report the worst times to drive in Kyiv are at 8 am and 6 pm. The easiest time during the day is between 10 am and 4 pm.

Odesa region plans to build 400 km of bicycle paths in coming years, Ukravtodor writes on Telegram. Two priority sections are along the Black Sea: from Chernomorsk to Sanzhiika and from Shabo to Kurortne. The state highway agency writes: “In the Odessa region, bike paths can be an additional incentive for tourism development.”

 

  • China Outstrips Russia as Ukraine’s Top Trading Partner
  • Betting on Chinese Trains Crossing Ukraine, a Big Container Hub Goes up Near Hungary-Ukraine Border
  • Chinese Covid Vaccines Rise to 5 million
  • Metro and Air Traffic Down Drastically in 2020

China far outstripped Russia last year as Ukraine’s largest single nation trading partner, racking up $15.4 billion in two-way trade, more than double’s Russia’s $7.3 billion. Globally, Ukraine’s exports of goods were down only 1.7% yoy, reports the State Customs Service. Ukraine’s imports of good were down 10.3%, to $54.2 billion. Two-way trade in good totaled $103.4 billion, a drop of 6%. Trade in services is not included.

In a bold bid for China’s container trade, private investors have started building a €61 million road and rail terminal in Fényeslitke, Hungary, 25 km south of Ukraine’s border crossing in Chop, Zakarpattia. Scheduled to open this time next year, the 125-hectare intermodal terminal will have its own 5G network and will be capable of handling 1 million TEU containers a year. Called East-West Gate, the terminal will use massive, computerized cranes to shift containers to trucks or EU gauge trains from the broad-gauge trains that carry Chinese cargo across the former Soviet Union. The site is 50 km north of Hungary’s new M3 motorway to Budapest and 14 km south of a junction of two dual gauge rail lines, from Mukachevo and Uzhgorod.

Promoted as “the Western gateway of the New Silk Road,” the terminal will depend on Chinese cargo rolling across Ukraine and will compete directly with the booming northern route – through Belarus to Poland. Last year, the number of Chinese containers crossing from Belarus to Poland jumped by 60%, to 555,000, reports Belarusian Railway. With freight trains delayed at Brest by the need to shift wheels from broad gauge to EU gauge, the Belarus Railway is investing in two new border crossings with Poland, at Bruzgi and Svislač. Ukrzaliznytsia is promoting Ukraine as alternate corridor for Chinese goods to the EU.

Kharkiv drug manufacturer Lekhim will supply Ukraine with 5 million doses of the Chinese COVID-19 vaccine, more than double the 1.9 million announced earlier, the company said in a press release. This would be enough to vaccinated 2.5 million people. Covax has promised to give 8 million doses to Ukraine, enough to vaccinated 4 million people. Health Minister Maksym Stepanov says Ukraine must vaccinate at least 10 million people – or one quarter of the population – to develop herd immunity.

Patients of Ukraine, a clean government organization, accuses Minister Stepanov of handpicking Lekhim to distribute the Chinese vaccine, bypassing competitive procedures established by the state procurement agency, Medical Purchases of Ukraine. Other producers are “being blocked personally by Minister Stepanov,” Patients of Ukraine tells life.pravda.com.ua news site. Valeriy Pechayev, head of the Lekhim’s supervisory board, is a “close ally” of Raisa Bohatyriova, a former health minister, under former president Viktor Yanukovych, reports babel.ua news site.

Concord Capital’s Zenon Zawada writes:It was inevitable under the Zelenskiy administration that well-connected people would earn business from the COVID-19 disease, particular those with ties to the Yanukovych administration.”

President Zelenskiy asked the EU for more help in procuring coronavirus vaccines after his government rejected Russian offers of help, reported Reuters. “For all countries of the Eastern Partnership initiative, in particular Ukraine and Moldova, the issue of obtaining vaccines is important,” Zelenskiy said while hosting Moldovan President Maia Sandu in Kyiv. The Eastern Partnership is an EU initiative to work with six post-Soviet states: Ukraine, Armenia, Azerbaijan, Belarus, Georgia and Moldova. “The countries of the Eastern Partnership should be given increased attention by the EU states in matters of joint procurement procedures and accelerating the supply of vaccines.”

To ease Moldova-Ukraine interchanges, the drive time between Kyiv and Chisinau is to be cut to five hours, from six hours today, according to a memorandum signed in Kyiv by Moldova’s new President Maia Sandu and President Zelenskiy. About two thirds of this road improvements will be provided by the internationally funded rebuilding of the Kyiv-Odesa highway, the M-05. Chisinau is only 150 km west of this highway. The two leaders also agreed to advance a longstanding plan to build the second road bridge over the Dnestr, linking Yampil, Vinnytsia region and Cosăuți, northern Moldova. Currently, the two cities are linked by a ferry.

The first weekend of the ‘enhanced lockdown,’ restaurant revenues were down 58%, compared to the same Jan. 8-10 period in 2020. By contrast, coffee shops suffered only a 12% drop in revenue, Poster reports on Telegram. Businesses focused only on takeout and delivery one year ago, reported that their sales last weekend were up 5% yoy. Poster surveyed about 2,000 establishments.

Ukraine’s car production fell by one third in 2020, to 4,202 cars, reported Ukrautoprom. This is 1% of Ukraine’s peak production, of 424,000 cars in 2008, and 1% of the 438,900 cars imported last year. In the Soviet era, Ukraine was the second largest car producing republic, after Russia. Two years ago, efforts to attract a major German car manufacturer failed after the sudden shift to electric car production turned the industry upside down.

Ridership on the Kyiv metro fell last year by 44%, to 279.5 million passengers, Viktor Braginsky, head of the subway system reported. The loss of 215.8 million passengers means a loss of $61 million in fares. As usual, the busiest line was the east-west Red line, which carried almost 114 million people. The Blue line came in second with 98 million riders. The Green line came in third with 68 million riders.

Rail passengers can now use multilingual chat bots in Viber and Telegram to buy tickets and meals on the high speed Intercity+ trains. The bots, which speak English, Ukrainian and Russian, also allow passenger to check timetables, fare, availability, and, in the case of Kyiv, platform number. The system was announced by Ukrzaliznytsia in partnership with Visa payment system and Middleware Inc, an American IT company. In 2019, Ukrainians bought 57% of their rail tickets – 30 million – online.

Kyiv Boryspil ended 2020 with passenger traffic down by two thirds, compared to 2019. Last year Ukraine’s largest airport, handled 5.1 million passengers, down from 15.3 million in 2019. And traffic did not improve in December, normally a busy travel month. Passengers on charter flights were down 53%, passengers on scheduled flights were down 74%, and transit passengers were down by 91%.

UkSATSE, the air traffic control agency, handled last year only 42% of the 2019 volume of planes flying through Ukrainian air space. The drop was brutal. In February flights were up 10%. In April and May, flights were down 90%. The agency is funded largely through overflight fees.

 

  • Steel Grew in 2020
  • GDP Growth Pushed Off To Spring
  • Chinese Vaccines for 2.5% of Ukraine’s Population by June 1
  • Ukraine Will Spend $20 billion to Service Debt This Year
  • Ukroboronprom Puts Up For Lease 5 Parus
  • US Treasury Sanctions 7 Ukrainians
  • Nearly Half a Million ‘New’ Cars Flood Urkaine

Despite the global recession, Ukraine’s steel companies increased rolled steel production by almost 1% yoy, to 18.3 million tons. Steel smelting decreased by 1.4% to 20.5 million tons. But pig iron production increased by 1.5% to 20.4 million tons, according to Ukrmetalurgprom, the industry association. Metals are one of Ukraine’s top four exports, a group that includes food, IT, and migrant labor.

Consumer prices grew 5% last year, inside the government’s inflation target range and slightly higher than in 2019, the State Statistics Service reported. Previous annual inflation rates were: 2019 – 4.1%; 2018 – 9.8%; 2017 – 13.7%; 2016 – 12.4%; 2015 – 43.3%. Oleksiy Blinov, Alfa-Bank Ukraine’s head of research, predicts on Facebook that Ukraine’s annual inflation rate will rise to 6% this month and 7% in February.

Ukraine’s economic recovery will be slower than expected, coming in the spring, the Economy Ministry predicted. Reversing an earlier prediction of economic growth in the first quarter of 2021, the Ministry now forecasts GDP shrinkage by as much as 3% yoy in the January-March period. The Ministry blamed “declining strength of most foreign trade (especially services) [and] constant fluctuations and changes in working conditions in 2020, continued restrictions associated in the fight to control the coronavirus pandemic.” According to the Ministry, Ukraine’s GDP contracted by 4.8% last year.

The first 700,000 coronavirus vaccines could arrive in Ukraine by the end of February, Valeriy Pechayev, CEO of the importing company, Lekhim, told reporters. Contracted to import 1.9 million doses from China’s Sinovac Biotech, Pechayev predicted that the second batch, 1.2 million will arrive in May. Given that the vaccine has to be administered twice, this contract would cover vaccinating 2.5% of Ukraine’s population. “We have invested €10 million in organizing the production of the vaccine at our plant in Kharkiv,” he said. “In 2022, we plan to start the production of the finished form of this vaccine.”

During the first weekend of the ‘enhanced quarantine’ the National Police issued fines to 1,658 violators – 1,314 shops, 264 restaurants, 40 shopping centers and 22 fitness centers. In addition, 3,658 people were fined for violating rules mandating masks in enclosed public spaces. This level of quarantine runs through Sunday night Jan. 24.

After a 3-week break for the holidays, the IMF’s Europe Office resumed video talks with Ukraine’s government to revive the Stand-By Arrangement signed last June. The program revision was to take place last July, but was put on hold after President Zelenskiy purged the central bank. Ukrainian officials say talks now are on track, and they hope to get a second $700 million tranche by March. Prime Minister Shmygal wrote on Facebook that the talks “will open opportunities for Ukraine to receive the next tranche.”

Ukraine will spend $20 billion this year to repay principal and pay interest on its public debt, according to Finance Ministry figures. About 72% will go to repay domestic debt and 28% to repay foreign debt. Peak payment months are: March – $2.5 billion; June – $2.7 billion; and September – $3.6 billion. About 25% will go for interest payments, and 75% for repaying principal, the Ministry posted two weeks ago on Facebook.

Ukroboronprom, the state arms production conglomerate, and ProZorro.Sale, the online auction platform, signed an agreement to put up for auction leases on 250 properties around the nation with a total floor space of 380,000 square meters, Mustafa Nayem, assets director of the conglomerate, wrote on Facebook. For comparison, this unused, non-manufacturing space is five times larger than the total office space of Kyiv’s Parus office building. Looking ahead, Nayem told reporters at press briefing: “Currently, it is almost 2 million square meters that can theoretically be leased.”

Details of the properties are posted on the Ukroboronprom site under Assets-Investment Property for Rent. These details, plus the mechanics of the auctions, also will be posted on the site of Prozorro.Sale. Yuriy Gusev, Ukroboronprom’s new CEO, said State Watch, an NGO, found that the holding company loses $130,000 a month due to under market rents set 15 years ago by three Kyiv companies – Artem, Mayak, and Radar.

Looking at Ukroboronprom’s 137 enterprises, Gusev writes: “Some will go for privatization, because they produce non-military products, and some will cease to exist.” Of the 137, only 28 –or 20% – make money, he writes on his Ekonomichna Pravda blog. In a major mismatch, Ukroboronprom meets only 36% of the armaments needs of Ukraine’s military and 70% of the conglomerate’s revenue comes from exports. One candidate company for closing – or a major turnaround – produces components for Soviet submarines. Ukraine’s only submarine, the Foxtrot class Zaporizhia, was seized by the Russian Navy in Sebastopol in 2014.

In the first six months of a government-mandated program of online leasing of state and city properties, more than 5,000 auctions have been held, Svitlana Panaiotidi, deputy economy minister, told reporters. So far, 400 government entities, included the State Property Fund, have joined the system. Although some auctions have failed, one easily understandable success stands out: an auction for 10 square meters of retail space at Boryspil Airport. Bidding for monthly rent started at $183. It ended at $2,917.

The US has added seven Ukrainians and four media sites to the Specially Designated Nationals and Blocked Persons List for attempting to interfere in the 2020 presidential election, the US Treasury Department announced. The list includes Oleksandr Dubinsky, Rada member from President Zelenskiy’s Servant of the People party, who previously worked as a host on 1+1 TV, owned by Ihor Kolomoisky. Others include former chief prosecutor Konstantin Kulyk, former diplomat Andriy Telizhenko. They “were part of a Russia-linked foreign intelligence network associated with Andriy Derkach,” Secretary of State Michael Pompeo said. He said Derkach, a Rada member, “has been an active Russian agent for more than a decade.” People on the sanctioned list cannot do business with Americans or American businesses and their properties in the US are blocked.

Imported used cars accounted for 80% of the 438,900 first time car registrations in Ukraine last year, reports Ukrautoprom, the vehicle industry association. Last month, about 40,000 used cars were registered, the highest monthly number in almost two years and 31% more than in Dec. 2019. In 2020, 353,400 used cars were registered for the first time, down 13% from the 2019 level. In 2019, a tax amnesty for illegally imported cars provoked a one-time surge of registrations.

Traffic congestion increased in Kyiv last year by about 5%, reports the Center for Transportation Strategies, citing the City’s Traffic Center. Traffic on Kreshchatyk increased by 5-10%. Traffic Brovarskyi Avenue, a major east-west artery connecting east bank residential high rises with the city center increased by 17 to 24%. Slowing driving speeds are attributed to: more cars, reluctance to use buses and the Metro during the coronavirus pandemic, and poor traffic management by the City.

 

  • Ukraine Zero Foreign Investment in 2020
  • DTEK Opens London ‘Investment Hub’
  • Turkey-Ukraine: 30 Military Production Projects
  • Ryanair Cuts 70% of Flights out of Kyiv Until April

With Russian gas transit across Ukraine only guaranteed through 2024, Ukraine’s pipeline operator is negotiating alternatives: storage of gas from new LNG terminals in the Baltic and Adriatic, and transmission of ‘non-carbonized’ gases, such hydrogen and bio-methane. Olga Bielkova, international affairs director for Ukraine’s gas transportation system, writes in an Atlantic Council Ukraine Alert blog that Ukraine and Romania are increasing their cross-border pipelines from one to four, Ukraine is negotiating with Hungary access to gas from Croatia’s new LNG terminal, and is offering Polish gas traders storage capacity in western Ukraine, near the border.

Alfa-Bank Ukraine forecasts the 2020 year-end foreign direct investment figure will be $0.00 billion. By contrast, net FDI inflow was $5.2 billion in 2019 and $4.5 billion in 2018.

Lack of rule of law, unpaid debts to solar and wind investors, and last year’s purge of internationally-known reformers from government make for bleak prospects for inbound investment this year, Anders Aslund predicts in an Atlantic Council Ukraine blog: „What is Ukraine’s Economic Outlook for 2021?“. “Looking ahead, Ukraine’s worst economic problem remains the absence of property rights, which continues to hinder investment of any kind,” the Swedish-American economist writes from Washington. “Without judicial reform or an increase in investment, there is little reason to expect any economic growth beyond the gains arising from the anticipated post-coronavirus rebound.”

By the end of next year, Ukrhydroenergo plans to put into operation at its hydro plants energy storage systems with capacity of 212 MW and solar power plants with a capacity of 65 MW, says Ihor Syrota, CEO of the state hydroelectric power generating company. Without citing numbers, he said the World Bank and the European Investment Bank are ready to lend to the project, reports Expo Consulting.

DTEK is opening “an investment hub” in London to attract investments for renewable energy projects in the Ukraine and in the EU, the company reports. “We created a hub to attract investment in new energy projects in Ukraine,” says company CEO Maxim Timchenko. “This primarily concerns renewable energy sources, energy storage systems and hydrogen energy projects.”

Turkey and Ukraine are working on “more than 30 joint projects” for production of military equipment, Ukraine’s Ambassador to Turkey Andrii Sybiha says in a lengthy written said interview with Defensehere.com, a Turkish defense industry news site. Rather than trading military goods across the Black Sea, the countries are focusing on “joint research, joint-ventures and establishing joint production,” he says. This decades, he predicts, will see Ukrainian Antonov planes built in Turkey and Turkish drones produced in Ukraine. Turning to space, he said both countries are working for joint development of “satellite technologies, space launch systems and infrastructure.”

A Turkey-Ukraine-Poland container route is in the pipeline for 2021 as Ukrferry and Ferrplus have signed an agreement with Ukrzaliznytsia’s Lisky terminal in Kyiv. In a multimodal route, containers will cross the Black Sea by ferry, largely to Odesa, then continue by rail to Kyiv and then to Gdansk, Poland’s port on the Baltic, reports Railfreight.com. Separately, Edvīns Bērziņš, the new Latvian director of UZ’s freight terminal at Lisky, is negotiating with PKP Cargo Connect to transport goods between Ukraine and Poland; with BTLC Germany to expand container trains between Europe and China; and with DHL will allow to organize container transportation around Ukraine.

Ryanair is suspending about 70% of its flights out of Kyiv Borsypil until April, according to an analysis of the discount airline’s booking system by aviannews.com. Until spring, only three out of the 30 routes from Kyiv will operate unchanged. Flights from Kharkiv and Kherson are suspended and traffic from Lviv is limited to a lone flight to London. The EU and UK have largely banned non-essential visits by Ukrainians. Flights are largely limited to people with work permits, study visas, in transit, or nationals of the destination country. Most countries require a certificate attesting to the negative result of a coronavirus test conducted within the previous 48 hours.

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

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