- Oil, Gas Auctions to Unleash $250 million Investments
- Dutch Buy Lviv Animal Feed Maker
- Inflation Slows
- Boryspil’s Terminal F Reopens March 31
- Next for Ryanair: Kharkiv
- New Office Space to Double in Kyiv This Year
- Dragon Buys Another Shopping Center
- US Ambassador Calls Out Government on Corruption
- Foreigners Skip Auctions of Oil, Gas Blocks
- Ukraine Has World’s 4th Cheapest Internet
- UkrGazvyDobuvannia nearly doubled its ‘fracking’ operations
- Ukrainians Spend $1 billion on Smartphones
- Mariupol Mega Plant Will Export Steel Instead of Pig Iron
- River Cargo Grows
- Regional Airports Revive
- France’s Alstom Eyes 500 Locomotive Deal with Ukraine
- SCM Invests $1.3 billion in Ukraine Cos
- EU to Spend €50 Million on Azov Roads and Rails
The three oil and gas blocks sold at electronic auction should trigger almost $250 million in exploration and production investment, says Stepan Kubiv, Economic Development Minister. Sold Wednesday by online auctions on ProZorro, the blocks went for a total of $5 million, about triple the opening price. Kubiv said: “Simple and competitive access to special permits for subsoil use is a boost to increase our own production.” Concorde Capital’s Alexander Paraschiy writes: “This was the first transparent tender for the sale of oil and gas licenses in Ukraine. If such tenders become a regular occurrence, they will benefit the nation’s investment climate and energy independence.”
Holland’s Royal De Heus, one of the world’s top 10 animal feed suppliers, is buying majority control of D-Mix, a Lviv region manufacturer of food for chickens and pigs. With a capacity to make 80,000 tons of soy and sunflower-based feed, D-Mix is about to start building a multi-million dollar pre-mix plant at their Zolochiv site. Betting on beef and dairy herds expanding in the 2020s, Koen de Heus, CEO of the family owned multinational, says: “We believe that our extensive experience in international livestock farming and the animal feed sector will also be of value in further professionalizing livestock farming in Ukraine.”
The government will spend $130 million this year to turn around the gradual decline of the national livestock herd, Olga Trofimtseva, Minister of Agrarian Policy and Food, told the International Dairy Congress in Kyiv. Of this amount, about half will be for rebuilding milking barns and fences and purchases of modern equipment. For households, the subsidy for keeping a milk cow is raised to $33, paid twice a year.
Kormotech, a Lviv region producer of cat and dog food, is building a wet food plant in Lithuania and is expanding its dry food production in Ukraine by 50%, to 46,000 tons. To reach a target of exporting 50% of production by 2023, the company is entering new markets — in South America, Hungary, Lebanon, Libya and the Czech Republic. The company sells its pet food under the brands Optimeal, Club 4 Paws, Meow!, and Woof!
Inflation slowed in February to 8.8% year over year, reports the State Statistics Service. This was down from 9.8% for 2018. The National Bank of Ukraine predicts inflation will end this year at 6.3%. The IMF and World Bank predict 7.3%.
Work is to start this spring on doubling to four lanes the 200 km Lviv-Rivne section of the M-06, cutting drive times in half, to 90 minutes. This is a key section of the main truck route west from Kyiv and Zhytomyr to the Polish border. Construction will include building bypasses around towns on the way, reports the Center for Transportation Technologies, citing Ukravtodor, the state highways agency.
Hungary plans to build next year a new highway bridge over the Tisa River near Chop, the Zakarpattia border town. In addition, both countries are working to cut travel times on the new Mukachevo-Budapest train to six hours, from seven. Work also is underway to put to use Hungarian loans for Zakarpattia road rebuilding, first offered two years ago, reports Ukraine’s embassy in Budapest, citing a meeting Friday between Hungarian diplomats and Ukraine Infrastructure ministry officials.
Taking trucks off roads, Ukrzaliznytsia expands its increasingly popular container freight service, launching a new train running the north-south length of the nation, from Belarus to Romania. On Wednesday, the first train rolled — from Udritsk on the Belarus border to the Chernivtsi rail crossing with Romania, a 1.5-day trip. Started in earnest two years ago, Ukrzaliznytsia’s container service has expanded to 10 domestic trains and eight international transit trains. Yevhen Kravtsov, chairman of the state railroad, said: “This guarantees shippers the reliability, safety and speed of delivery of products on the principle of door to door.”
Boryspil’s Terminal F reopens March 31, relieving congestion at Terminal D, which handled 1 million passengers a month last year. Airlines moving to Terminal F are: Aigle Azur, Laudamotion, Ryanair, and SkyUp. Terminal F will also handle some flights by: Air Serbia, Bravo Airways, Bukovyna, FANair, Iraqi Airways, Wind Rose and YanAir. “Charter and low-cost carriers operating point-to-point direct flights will operate in Terminal F,” Yevhen Dykhne, first deputy director of Boryspil, writes on Liga.net. Airlines handling transfer passengers and codeshares will stay in Terminal D.
By refurbishing and reopening regional airports, Ukraine could triple its air passenger market to over 60 million people a year, Infrastructure Minister Volodymyr Omelyan tells Channel 5 TV. “We will be able to reach it quickly enough if we invest in airports,” the minister said. He noted that Ukraine’s air traffic increased last year by 25%, hitting 20.5 million passengers.
Ryanair is to start flights from Kharkiv this fall, making Kharkiv Ukraine’s second city to be served by Europe’s largest airline. The main destinations under negotiation are cities in Poland, Germany and the Baltics, Vladislav Ilyin, the airport’s marketing director tells ‘On Vacation’ (U Vidpustku) website. He says: “We plan that this year Ryanair will fly from Kharkiv.” Serving Ukraine’s second largest city, Kharkiv airport registered a 19% jump in traffic last year, to almost 1 million. Airport officials also are negotiating with Wizz Air about adding more German routes, beyond the sole Kharkiv-Dortmund flight.
New flights and new frequencies were approved by Ukraine’s Aviation Service Commission. Jonika airline won the right to fly Kyiv-Gothenburg, Sweden and Kherson-Erbil, Iraq. UIA won the right to increase the frequencies of its flight from Kyiv Boryspil to Toronto to five times a week and to Paris to 18 times a week. SkyUp won the right to increase the frequencies of its flights from Boryspil to Alicante, Spain to four times a week and to Tbilisi to daily. In June, UIA plans to start flights from Kherson to Burgas, Bulgaria.
Betting on foreign travel growth, Azur Air Ukraine is doubling its long-haul fleet by leasing two more Boeing 767-300s, reports Karen Antonov, charter airline’s company’s general director. The additional planes will allow Azur to offer business class on its flights to Barcelona, Egypt, Tunisia and Turkey.
New office space is to double this year in Kyiv – to 117,000 square meters, according to a new study by CBRE Ukraine. In 2020, new space is to increase by another 20%, fully returning to pre-2014 levels. Of new construction, 58% is in the central business district, an area with good metro access. As vacancies dropped last year from 17% to 10%, monthly prime office rents rose by 9% y-o-y to $25/square meter. Last year, about $130 million of known investments were made in Kyiv offices, the highest level since 2008.
Driving demand, IT companies accounted for 38% of office take up and co-working hubs accounted for 24%. The biggest expansion was by Regus, which rented three new office spaces for a total of 8,300 square meters. Of this take up, upgrading accounted for 51% and company expansions for 34%. CBRE writes: “Demand for high quality, well-located offices came from IT, high tech and telecommunications and business services companies willing to open most competitive offices in the fight for the best talent in the market.”
Dragon Capital has bought Aladdin Kyiv, its fourth shopping center in less than three years Ukraine. Located at a left bank highway interchange, near Poznyaki metro station on the Green metro line, Aladdin is 500 meters from Pyramida, a slightly larger mall that Dragon bought in 2016. Between those two purchases, Dragon bought Sky Park in Vinnytsia and Victoria Gardens in Lviv. Vladimir Tymochko, Dragon’s managing director for equity, says the purchase of Aladdin, with 10,571 square meters of leasable area, brings the total area of Dragon’s shopping center portfolio in Ukraine to 160,000 square meters. The Aladdin purchase price was not disclosed. In 2016, Interfax-Ukraine estimated the purchase price of Pyramida was $25 million.
Almost 40% of Ukrainians would like to open their own business, but two thirds believe the state hinders small and medium businesses, according to a late February poll of 2,500 people conduced by the Sociological Group Rating, a nonprofit entity. But only 27% see the government’s role as promoting economic freedoms. A majority, 64% see the state’s role as ensuring income equality and social justice, a jump from 48% last June.
An overwhelming majority – 77% – support cutting bank interest rates, currently the highest in Europe. Of respondents, 63% trust small entrepreneurs and 60% trust medium-sized entrepreneurs. Confidence in big business owners fell to 20%, and in ‘oligarchs’ to 6%.
It is now easier for foreigners to get work permits, the government says. Under regulations adopted Wednesday, foreigners are allowed to submit documents to the Foreign Ministry’s Consular Services Department, without leaving Ukraine. The change was announced at the latest deregulation meeting of the Cabinet. At the meeting Prime Minister Groysman said the government has abolished or changed 1,200 regulatory documents, including the removal Wednesday of 149 obsolete acts from the mid-1990s. The government abolished the obligation for companies to keep complaint books.
Ukraine’s goal this year is to climb 10 notches in the World Bank’s Ease of Doing Business ranking. Last year, Ukraine rose five points to rank 71st out of 190 countries. Charged with this deregulation mission, the current Cabinet is to remain in place until next November, when results of the Oct. 27 parliamentary election are known.
Of 10 oil and gas blocks up for electronic auction Wednesday, there were no bidders on seven and only Ukrainian bidders for three. In the three successful auctions, prices were bid up — from 43% to five times the asking prices. Nikolay Zlochevsky’s Burisma group agreed to pay $925,000 for a lot in Poltava. A unit of Rinat Akhmetov’s DTEK agreed to pay $3.1 million for a Kharkiv block, almost five times the lowest bid. State-owned UkrGazVydobuvannya agreed to pay $1.1 million for another Kharkiv block, three times the starting price. Foreign investors had complained about the lack of insufficient seismic data. They also expressed concerns that Ukraine’s next president could change the rules of the game.
In a survey of 230 countries, Ukraine has the fourth cheapest mobile internet in the world. With an average prices of US 51 cents per gigabyte, Ukraine was only bested by India, Kyrgyzstan and Kazakhstan in the Worldwide Mobile, Data Pricing list compiled by Cable, a Britain-based broadband advisory service. At the other end of the scale are: Zimbabwe $75 per gigabyte; Greece –$33; Chad — $23; Switzerland — $20; Turkmenistan — $20; Greenland — $17; Mozambique — $16; Portugal — $14; and Norway — $13. Cheap internet boosts Ukraine’s IT industry.
Naftogaz’ gas production company, UkrGazvyDobuvannia, nearly doubled its ‘fracking’ operations this winter. The state company reports that it plans to conduct over 100 hydraulic fracturing operations this year, extracting an extra 500 million cubic meters of gas.
Ukrainians spent nearly twice as much last year to buy mobile phones as to buy laptops and TVs combined. Ukrainians spent $1.1 billion to buy 6.9 million mobile phones, 78% of them smartphones. The average smartphone cost $200. The average push button phone cost $23. Point of Sales Tracking GfK Ukraine reports, Ukrainian spent $320 million to buy 610,000 laptops and $333 million to buy 810,000 televisions.
Billed as “the largest industrial construction project in history of independent Ukraine,” a new $150 million steel casting plant in Mariupol is to pump out $1 billion worth of new steel slab exports a year. Metinvest says the new plant will increase Mariupol’s Iron & Steel Works steel smelting capacity by almost 40%. It will allow the plant to replace exports of low value pig iron with higher value steel slab. Inaugurated Friday after 2.5 years of construction, the new plant has created 347 new jobs.
Capable of casting 2.5 million tons of steel slab a year, the plant largely uses Austrian equipment from Primetals Technologies. Raiffeisen Bank International provided a €43 million loan, covered by Austria’s export credit bank, Oesterreichische Kontrollbank AG. Gas cleaning and dust removal equipment comply with EU environmental requirements. Yuriy Ryzhenkov, Metinvest CEO, said: “This large-scale project will ensure a clean production and new jobs, additional foreign currency revenues amounting to approximately $1 billion for the country, and guaranteed prospects to the industry, the region and the city.”
Nibulon has launched its 10th and final tug boat from its Mykolaiv ship yard. Completing a five-year construction project, the tug fleet is to haul grain barges down the Dnipro to Nibulon’s Black Sea terminals in Kherson and Mykolaiv. The latest tug uses key imported foreign components: Mitsubishi — main engines; Volvo-Penta — diesel generators; Rolls-Royce — screw-steering columns; and Viessmann — hot-water boiler.
With an early end to the ice season and completion of repairs on two locks — Kakhovsky and Zaporizhia – commercial shipping on the Dnipro is to resume this week. Last year, 10 million tons of cargo were moved on the Dnipro, up 22% from 2017.
Using the Dnipro River to move construction materials, Kyiv’s river port plans to build a 10,000 square meter, multi-modal logistics center, capable of handling containers for trucks or trucks, reports the Center for Transportation Technologies. Sand, gravel, metal, and cement are target cargos. Over the last five years, the Kyivport company has invested $1.5 million in building warehouses and a customs complex and buying an icebreaking tugboat and a floating crane. Two barges and a hydraulic lift were bought from Belarus. The port aims to attract cargo from Belarus, 1-2 days upriver from Kyiv.
Wizz Air is basing a fourth Airbus A320 jet at Kyiv Sikorsky this month, responding to near doubling of its Ukraine passenger traffic. In January-February, the airline carried 300,000 passengers on its 44 Ukraine routes, up 94% from the same period last year. Last weekend, the discount airline opened four new Ukraine routes: from Lviv to Copenhagen, and from Kyiv Sikorsky to Riga, Bremen, and Billund, Denmark. The company now employs 140 people in Ukraine and says its investments here total $400 million.
Mykolaiv airport aims to 200,000 passengers a year in the early 2020s, surpassing a level not seen 1990. Closed for a decade, the airport reopened 10 weeks ago with SkyUp flights to Sharm el Sheikh, Egypt. On May 1, SkyUp starts flying to Antalya, Turkey. On a visit to the airport Monday, President Poroshenko was told flights are planned to Kyiv and to Istanbul.
Cherkasy airport, closed since 2002, is negotiating with SkyUp Airlines to host international charter flights later this year. Odesa’s Rostdorstroy is under contract to complete repaving the airport’s 2.5 km landing strip by the end of this year.
France’s Alstom is prepared to supply 500 train locomotives to Ukraine, Henri Poupart-Lafarge, the company CEO tells the Center for Transportation Strategies. Alstom is proposing to Ukrzalinystia a package that would include French technology, French financing and a degree of Ukrainian production. Asked about the degree of localization, he responded: “We need to balance our desire to localize production in Ukraine, which will benefit the Ukrainian economy, with the demand of the French side for localization in France.”
Prime Minister Groysman told the Alstom CEO about a locomotive deal: “The issue of localization is very important to us. We are interested not only in maintenance but also in full scale production.” The French CEO responded: “You have every opportunity to become a production base of European scale. We are, of course, aware of the amount of work that we have ahead, but we came to strive for a strong and lasting partnership.” According to the Center for Transportation Technologies, Alstom has interview 50 potential parts supplier and five potential locomotive manufacturers.
Ukrzaliznytsia plans to spend $1.85 billion through 2025 to buy 310 new locomotives, Alexander Bogdanov, deputy director of the state railroad’s locomotive department, said at a recent railway conference in Kyiv. The average Ukrzaliznytsia locomotive has used up 84% of its expected working life. By the end of this month, all 30 GE locomotives imported from the US since last fall are to be released for service on the tracks.
China’s Xian Electric Engineering Co. has signed a €19.4 million contract to rebuild a Ukrenergo substation serving the Boryspil, Brovary and Baryshivka regions of Kyiv’s region’s left bank. Ukraine’s state electricity distribution company says that 11 companies from eight countries participated in a tender under rules set by the European Investment Bank, the primary source of project finance. The Chinese bid cut the expected price by 25%. Xian is to complete upgrading the 330 kV Brovarska substation by the end of 2021.
The SCM group, owner of Metinvest, invested $1.3 billion in its Ukraine companies in 2018, Natalia Yemchenko, SCM spokeswoman, writes on Facebook. SCM is owned by Rinat Akhmetov.
The EU plans to spend €50 million to improve road and rail access to Mariupol and Ukraine’s Sea of Azov, President Poroshenko told the Odesa Regional Development Council on Saturday. By electrifying rail lines, he said, EU aid could extend Intercity rail service from Zaporizhia to Mariupol. “We will bring Mariupol closer through Intercity. For me, this is a fundamental thing and a challenge: we must reduce the distances.”
An IMF team arrives in Kyiv for a week long review visit. In December, Ukraine received a first $1.4 billion tranche of a 14-month $3.9 billion program. Progress toward implementing anti-corruption conditions is needed for release of a second tranche, expected to be $1.3 billion in May.
Ukraine has received a second loan, for €529 million, under a World Bank guarantee, reports the Finance Ministry. Funds were provided in two tranches – €240 million with a maturity of four years, and €289 million with a maturity of 10 years. The loan was arranged and provided by Deutsche Bank. Since December, a World Bank guarantee of $750 million has allowed Ukraine to attract about $1 billion from international markets.
Ukrainians and Georgians can visit each other’s countries using only their national ID cards, or internal passports, under an agreement that went into effect on Friday. Ukraine and Turkey have a similar passport-free, 90-day visit agreement. Last year, 177,000 Ukrainians visited Georgia. Four airlines fly from Kyiv to Tbilisi: Georgian Airways, SkyUp, UIA and Yanair. In May, SkyUp starts flights to Batumi. This summer, Yanair will fly to Batumi from Kyiv Sikorsky, Lviv and Odesa.
Kharkiv, Ukraine’s second largest city, gets more international flights this spring. On Saturday, SkyUp started flights to Sharjah, UAE. On March 25, Ernest Airlines starts flight to Rome and Milan-Malpensa. On May 3, Buta Airways launches flights to Baku.
Lviv airport’s passenger traffic increased by 50% y-o-y in January and February, maintaining the strong 48% growth of last year. Of the 108,400 passengers in February, 89% flew international. On Sunday, Wizz Air started flights to Copenhagen. Confirmed new flights this season are: Motor Sich to Uzhgorod on March 15, airBaltic to Riga on April 1 and SkyUp to Odesa on June 2. This year, Lviv is expected to win a flight to Doha on Qatar Airways.
The original English version is from our partner UBN – Ukraine Business News. For more information and news archive, go to: www.ubn.news.