- New Ministers for Economy, Health and Infrastructure
- Zelenskiy Promises to Keep Infrastructure Spending
- Steel Production up 7%
- DTEK Pioneers Electricity Storage for Solar, Wind
The Rada has approved three new ministers: Oleksandr Kubrakov, for Infrastructure; Oleksiy Lyubchenko for Economy; and Viktor Lyashko, for Health. Here are highlights of their speeches to the Rada.
Renting out parts or all of Ukraine’s 13 state-owned seaports to private concessions will be a priority, Kubrakov said in his speech. To move the state railroad, Ukrzaliznytsia, toward profitability, he promised to raise freight tariffs. To rebuild domestic aviation, he announced investment in regional airports and to create a national airline, a pet project of President Zelenskiy’s. Kubrakov, whose previous role includes management of Ukravtodor, the state highway agency, for the last 18 months, asked the Rada to approve legislation that would allow the state Highway Safety Agency, Uktransbezpeka, to pay for itself through fines on overweight trucks. ‘Big Construction’ – rebuilding and repairing 40% of the nation’s major roads in 2020-2021 – will continue, he promised.
Lyubchenko said he wants banks to move from buying government debt to lending to manufacturers. He said he favors an innovation economy and stress on producing at home rather than importing. “The law enforcement function should leave the economy,” said Lyubchenko, who served for the last year as head of the State Tax Service. “The law enforcement function should be focused on the use of budget funds, not on the sphere of production.”
Lyashko promised that every Ukrainian who wants to be vaccinated against coronavirus will get the two vaccinations by the end of this year, the Health Ministry reports on Telegram. Until this week, Ukraine’s Chief State Sanitary Doctor, Lyashko, has been involved in the fight against coronavirus since its start in Ukraine 14 months ago. Previously, during the tenure of former Health Minister Ulana Suprun, he worked at the Center for Public Health.
Concorde Capital’s James Hydzik writes: “In general, we see the replacements are good, at least from the reputational standpoint…Lyashko is very familiar with the government’s pandemic response from his time as chief sanitary officer…Lyashko still needs to prove himself as decisive if and when the highly probable fourth wave of the pandemic emerges. Also, Lyashko will have to better organize the COVID-19 vaccination process…Lyubchenko looks like a good technocrat who is familiar with the way government works (unlike his predecessor who came from business), so he definitely will be a more efficient economy minister.”
The ousted minsters of Economy and Infrastructure will continue to hold roles in the Zelenskiy Administration, the President said at his press conference reviewing his two years in power. Ihor Petrashko, the former Economy Minister, will help coordinate the launch this summer of a farmland market. Before entering government, Petrashko worked for seven years as deputy director general of Oleh Bakhmatyuk’s UkrLandFarming. Zelenskiy did not specifiy the new post for Vladyslav Krykliy, the former Infrastructure Minister.
President Zelenskiy vowed to continue his ‘Big Construction’ program until bad roads in Ukraine end. “Roads should be the showcase of our country,” he said in the nationally televised press conference. “Everything we have in Ukraine must be repaired.” This year’s goal for the program is to rebuild: 29 swimming pools, 70 kindergartens, 95 schools, 80 stadiums, and 6,500 km of roads.
Ukrzaliznytsia is “bankrupt,” Zelenskiy said, because of a burden of debt taken out at high interest rates. “Ukrzaliznytsia has a loan debt of hundreds of millions of dollars,” he told reporters. “They took loans of 100, 200, 300 million dollars at 10-12%.” By contrast, Naftogaz bonds currently have 7-8% yields.
With world iron ore prices double the level of one year ago, President Zelenskiy defended a draft law passed last week to increase taxes on iron ore. “The price is very high today,” he said at his press conference. “You can slightly increase budget revenues. I think it’s fair.” Moving from a tax of 11-12% of iron ore as it come out of the ground, the new tax scale would range from 0.1% to 16% on iron concentrate and pellets ready for export. Using as a marker China’s price for one ton with 62% iron content, the tax would be 16% for shipments selling at over $180 a ton. With a price at $210 a ton, iron has traded over $180 for the last month.
Responding to strong world steel prices, Ukraine’s steel makers increased steel production by 7.2% to 7 million tons in January-April, compared to the same period last year. Ukrmetalurgprom, the industry association, said that pig iron production was up by 9.1%, also to 7 million tons. Last year, half of Ukraine’s metal exports went to China, which invested a record $542 billion in infrastructure.
DTEK officially launched Ukraine’s first industrial lithium-ion energy storage system, a pioneering entry into what is to be a billion dollar business in Ukraine during this decade. Maksym Tymchenko, DTEK’s CEO, said of the 1 MW battery in Zaporizhia: “This is first step toward building a new reliable, flexible energy system in Ukraine. We open door to other actors who will invest more in energy storage systems.” Storage helps power distribution companies balance the peaks and lows of electricity generated from solar and wind plants.
Worldwide during the 2020s, about $225 billion could be spent to build almost 500 gigawatts of storage capacity, said Eren Ergin, General Manager of Honeywell Process Solutions, the unit that helped build the storage system. Addressing the event by video link, he said: “You are the true trailblazers.” Bloomberg forecasts that by 2040, world storage capacity will hit 1 terawatt (1,000 gigawatts).
To get there, Ukraine has to develop regulations and laws to accommodate energy storage systems, Maksym Nemchynov, a deputy energy minister, said. Referring to this legal black hole, he praised DTEK for going ahead, calling it “a brave and risky project.” He and Roman Abramovskiy, minister of Ecology and Natural Resources promised to help create the legal framework for more investments in industrial scale energy storage.
Ukraine will meet the 18-month deadline to synchronize its power system with the EU one, Volodymyr Kudrytskyi, Ukrenergo board chairman, told the battery storage event. The head of Ukraine’s state-owned electricity distribution company, promised: “Synchronization of the Ukrainian energy system with the European one in 2023 will take place. Period.” He said that if Ukraine has more ‘flexibility’ – including industrial energy storage systems – it will allow Ukraine to export more power to the EU.
Car carrier trains to the Carpathian Mountains and to the Black Sea have proved increasingly popular since their debut in March, reported Ukrzaliznytsia. With the addition of auto wagons to Train No. 53/54 between Dnipro and Odesa, there are now seven trains that carry automobiles. The state railroad beckons: “Using this service and choosing the railway instead of traveling by car, you can save a lot on fuel, reduce emissions, as well as spend time on the road with benefits or relax in comfort.”
The Rada approved a banking reform bill seen as a key step to restarting Ukraine’s stalled $5 billion IMF program, Reuters reports. Passed on first reading, the bill strengthens the independence of the central bank and expands its regulatory powers to push out corrupt or incompetent managers or board members of private and state banks. In 2015-2017, the central bank closed two thirds of Ukraine’s privately owned banks and nationalized the largest one, PrivatBank.
UIA is considering reopening flights to and from Tel Aviv, the airline reports. Flights stopped May 13 due to the Palestinian-Israeli missile exchanges. UIA asks travelers to check the airline site for updates.
- Nafto Board Stays on for One More Year
- Hungry China Wants More Ukrainian Food
- Vaccination Passports Will Open EU Doors – for the Vaccinated Elite
In a reversal, the 5-member Naftogaz Supervisory Board agreed to stay on for a one-year term – on the condition that the current Executive Board remains and the roadmap submitted by the Supervisory Board is respected. Clare Spottiswoode, the British energy executive who chairs the Supervisory Board, said in a video address to the Cabinet of Ministers: “We will carefully consider any good ideas and changes in the implementation of our roadmap proposed to us by the Chairman of the Board [Yuriy Vitrenko].” The Supervisory Board had quit en masse, effective last Friday, in protest over the government’s ‘legal manipulation’ on April 28 to oust Andriy Kobolyev, Naftogaz CEO for seven years.
The Black Sea seismic program is to start this summer and the 4-member Executive Board is to remain in place through the end of this year, according to a copy of the ‘Joint Roadmap’ obtained by the UBN. At Cabinet meeting Prime Minister Shmygal wrote on Telegram that the government would start an independent search process for a new CEO and Supervisory Board for Naftogaz. It is not known if the search will include Vitrenko, a former Naftogaz executive director.
Adrian Karatnycky, wrote in an Atlantic Council Ukraine blog: “Amid all the rhetorical sturm und drang, it is important for everyone to understand that in appointing Yuri Vitrenko, Ukraine’s government has chosen a strong manager, a reformer with a record of integrity and independence, a negotiator of proven skill, and an executive with a track record of effectively countering Russia’s economic and energy wars against Ukraine.” Karatnycky, a senior fellow at the Council, titled the essay: “Naftogaz drama highlights Ukraine’s politics of personal destruction.”
China’s Ambassador to Ukraine Fan Xianrong said that Chinese companies should invest in farming and processing food in Ukraine, Xinhua reports from an online forum: “Ukraine-China: The Future of Trade, Pulses, Grains, Oilseeds.” Fan notes that Ukraine’s food exports to China jumped 84% yoy, accounting for 45% of Ukraine’s total exports to China. Due to exports of food and metals, China is Ukraine’s largest trading partner.
Ukrainian food exporters should take advantage of a projected 24% jump in Chinese food consumption by 2024, Oleh Sytnytk, the President of the Ukrainian-Chinese Friendship Society, said at another China-Ukraine food conference. Due to urbanization and growing incomes, “more and more Chinese families can afford quality European products,” he said, Ukrinform reports from the forum which was organized by the Chamber of Commerce and Industry of Ukraine.
Fighting for the business of Ukraine’s 12 million pensioners, Igor Smelyansky, CEO of Ukrposhta, disconnected last night all third party ATM machines in Ukraine’s 11,000 post offices. He wrote on Facebook that he is protesting a decision by the Pension Fund to force pensioners to open bank accounts. Smelyansky said this will cause needless hardships “especially in 96% of settlements in Ukraine where there are no banks.” Banks in Ukraine are closing branches because digital banking has a lower overhead and is more profitable.
The EU 27 countries agreed to allow fully vaccinated tourists this summer from non-EU countries, Reuters has reported. Largely aimed at bringing back tourists from the US and Britain, the new rules would apply to Ukrainians fully vaccinated against Covid. To date, 1 million Ukrainians have received their first vaccination. Yet only 8,350 have received their second vaccination. On week, the Rada fired Maksym Stepanov from the post of Health Minister, largely for the slow progress on vaccinations.
A domestic ‘vaccination passport’ – for entrance to schools, shopping centers, restaurants, theaters and gyms – would be supported by 27% of Ukrainians and opposed by 34%, according to a survey by Research & Branding Group conducted during the last week of April. Support grows with the age of respondents. For foreign travel, 44% of the 1,804 respondents see it as justified.
To further upgrade rail freight and passenger traffic between Poland and Ukraine, a consortium of German, Italian and Ukrainian engineers will study electrifying and restoring 63 km of pre-war European gauge tracks between Kovel and Yahodyn, on the Polish border. Funded partly by the European Investment Bank, the feasibility study could lead to a €40 million construction project. Separately, PKP PLK, which manages Poland’s rail infrastructure, plans to modernize Poland’s rail approach to Yahodyn. Kovel, northwest Ukraine’s rail hub, has six lines radiating outward. This month, work starts on electrifying a second line from Kovel to Poland, the 94 km stretch to Izov, Volyn.
Ukraine’s State Aviation Service recommended that Ukrainian airlines suspend all flights to Tel Aviv until the Israeli-Palestinian missile exchanges stop. A check of Ben Gurion Airport’s arrivals and departure board shows cancellations for about half of flights from around the world to Israel’s main airport.
- Ferrexpo to Invest $2 billion to Double Iron Production
- Metinvest Produces Enough Steel for 20,000 Eiffel Towers
- Iron and Steel Boom
- Privatization ‘Irreversible’
- Big Bond Sale
Betting on strong Chinese demand for iron, Ferrexpo plans to spend $2 billion in capital investments to double its production of iron pellets by 2030, reports Interfax-Ukraine. This year, the LSE-listed company is increasing production by 14%, to 12 million tons. A combination of strong Chinese demand and the Biden Administration’s planned infrastructure renewal plan have contributed to a doubling of world iron ore prices over the last year, to $208 a ton.
Ferrexpo has started using the first unmanned mining dump trucks in Europe. A US company, Autonomous Solutions Inc., installed remote controls on several large capacity Caterpillar trucks now in use at the Eristovsky open pit mine in Poltava region.
Marking Metinvest’s 15th anniversary, company engineers calculate that the company, Ukraine’s largest steel maker, has produced 142 million tons of steel since 2006 – enough steel to build 20,000 Eiffel Towers. “We are also affectionately called ‘Ukrainian steel giant’ because we are engaged in the extraction of raw materials, steel smelting and the sale of metal products all over the world,” wrote the publicists for Metinvest, 71% of which is owned by Rinat Akhmetov. “And we are the only company with Ukrainian roots that is included in the list of the world’s leading steel producers and iron ore miners.”
Prices for the iron and steel products exported by Metinvest have skyrocketed over the last year, according to Metal Expert, an industry consultancy. Compared to one year ago, the price jumps are: pig iron +71%; billet +77%; steel slab +104%; hot rolled coil steel +118%.
Concorde Capital’s Dmytro Khoroshun has predicted: Steel price “levels should remain exceptionally elevated in the short term, even though we expect a correction later in 2021. Metinvest’s monthly EBITDA will likely to reach the $400-500 million range in 1H21 because of strong steel and iron ore prices.”
Dniprospetsstal, Ukraine’s main producer of specialty stainless steels, has increased output of finished products by 19% January-April, compared to the first four months of last year. Based in Zaporizhia, the electrometallurgical plant produced 56,000 tons through the end of last month.
Interpipe, the steel pipe and Wheel Company, successfully returned to international capital markets last week, completing the placement of $300 million worth of Eurobonds, maturing in 2026. The coupon rate is 8.375% per annum. Fadi Hraibi, director general of the company, said that the bonds, now listed on the Luxembourg Stock Exchange: “Over the past years, we have undergone an impressive business transformation and achieved financial stability.” The breakdown of the investor base is: US – 43%; UK – 26%; and EU – 26%. Fitch gives the bonds a ‘B’ rating.
Largely shut out of the Russia’s railroad wheel market, Interpipe started exporting wheels last year to Germany for use on the highspeed trains of Deutsche Bahn. Last month, Interpipe’s exports of railroad products increased 23% over March, to 14,000 tons.
Ukzaliznytsia should move faster to open its tracks to private freight trains, said outgoing Infrastructure Minister Vladyslav Krykliy at a farewell speech presented to the Rada. Alluding to the doubling of world iron ore prices over the last year, he said: “It is impossible to observe how the cost of resources in international markets is growing, and at the same while the rates remain the same.” Krikliy also stressed the UZ should not be allowed to default and that “international partners should be involved in order to receive normal ‘transparent’ financing at a low interest rate and to restructure debts that drag the company down,” reported the Center for Transportation Strategies.
The Rada voted to approve the resignations of Krykliy and Economy Minister Ihor Petrashko. Ukraine’s Parliament also voted 292-1 to dismiss the Health Minister, Maksym Stepanov, over his handling of the coronavirus pandemic.
The privatization drive is “irreversible,” Kyrylo Tymoshenko, Deputy Presidential Chief of Staff, wrote on Facebook after President Zelenskiy chaired an inter-agency Zoom call on the campaign. Over the next six weeks, there are to be 100 auctions of large-scale and small-scale state properties. He said: “It will, firstly, give new life to unprofitable property and, secondly, attract billions of investments.” Arguing that investors are taking notice, he said the average number of auction bidders has risen, from 3.67 in April 2020, to 4.57 last month.
Auctions of state or communal farmland will now take place openly through electronic auctions conducted on the Internet, under a bill adopted by the Rada. “Anyone with a computer and Internet access will be able to take part in the auction,” (Interfax-Ukraine). “According to the ministry, the winners of the bidding will be those who offer the highest price per lot.” Plot sizes are limited to 20 hectares and buyers are limited to Ukrainians.
The Finance Ministry raised $513 million – in dollars, euros and hryvnia – in its weekly government bond auction last week. The Ministry reported on Facebook that hryvnia bonds, annual yields were virtually unchanged: 3-month at 8.5%; 1-year at 11.2%; 18-month at 11.3%; and 2-year at 12.05%. Investors bought $63 million worth of 2-year dollar bonds at 3.9%. The majority of sales were 1-year euro bonds. Investors bought €238 million – two times more than in the total sold in the two previous euro auctions this year.
On May 31, Ukraine will make its first payment on GDP warrants issued under the 2015 public debt restructuring. The payment will be $40.1 million, according to the Irish Stock Exchange. With a total face value of $3.2 billion, the bonds are to be repaid through 2040, depending on GDP growth. Analysts warn that, if Ukraine’s economy grows steadily, the warrants could become a time bomb for the nation’s finances. Last Tuesday the warrants were trading at 108.5% of face value. The first payment will be $1.26 of their notional amount.
Timothy Ash, of BlueBay Asset Management, writes: “Payouts increase markedly with higher real GDP growth. If real GDP growth accelerates to 5% in 2021, the payout might increase to around $900 million for that year. And, obviously, growth at 3% or lower and there are zero payouts.”
- DTEK Completes Marathon Debt Restructuring
- Today’s Likely Cabinet Picks
- Ukrposhta Plans to Buy a Bank
- IMF Deal Next Month?
- Kyiv Sikorsky to Build A Longer Runway For Long Haul Jets
DTEK Energy completed a 14-month restructuring of its loan portfolio, converting current Eurobonds and major bank debt, totaling more than $2 billion, into new Eurobonds; the company said. In an announcement posted on the London Stock Exchange, DTEK said parts of the current debt on DTEK Energy Eurobonds were converted into $425 million worth of DTEK Oil and Gas Eurobonds, at a rate of 6.75% per annum and maturity until Dec. 31, 2026. Other debt was converted into new DTEK Energo Eurobonds at a rate of 7%, maturing Dec. 31, 2027.
“Thus, DTEK Energy’s loans have been transferred to a public financial instrument,” the press release reads. DTEK CEO Maksym Timchenko said: “Despite the loss of assets in Donbas, the systemic crisis in the Ukrainian electricity market and the economic downturn caused by the COVID-19 pandemic, DTEK Energy has successfully completed the process of restructuring its Eurobonds and its main bank debt in the amount of more than US$2 billion.”
In advance of the expected cabinet reshuffle, the Cabinet of Ministers let go three deputy ministers. Two Deputy Energy ministers were fired: Yuriy Boyko, responsible for electricity, and Oleksandr Zorin, responsible for coal. The Cabinet accepted the resignation of Svitlana Panaiotidi, a deputy minister who had submitted her resignation before the May holidays.
The Rada is to meet in special session to decide on three ministries; Economy, Health, and Infrastructure. Concorde Capital predicts: “The most likely substitutes in the Cabinet are: Oleksiy Lyubchenko (Head of the Tax Administration) for Economy Minister; Oleksandr Kubrakov (Head of the state road administration Ukravtodor) for Infrastructure Minister; and Viktor Lyashko (Chief Sanitary Doctor and Deputy Minister) for Health the Ministry.“
Ukrposhta plans to acquire a bank, Igor Smelyanskiy, CEO of the state postal operator, wrote on Facebook. He said that “The acquired bank will be small, without branches or with a small number of them (we have 11,000 of our own) and, of course, without a portfolio of problem assets.” Smelyianskiy’s goal is to conclude talks with one of three target banks by the end of this year.
The National Bank of Ukraine opposes the transformation of Ukrposhta into a postal bank, arguing that Ukraine’s four large state-owned banks already dominate banking in the country. Smelyanskiy counters that he will focus on Ukraine’s ‘under-banked 20%’ – the thousands of villages that have no bank branches. He has said that by reaching Ukraine’s rural 6 million, Ukrposhta would soon be second only to PrivatBank in the number of payment cards.
Ukraine and IMF may reach a staff level agreement in the next few weeks, close to the one year anniversary of the $5 billion Stand-By Agreement, Yuriy Geletiy, Deputy Governor of the National Bank of Ukraine, announced in an interview with FinClub. Referring to reforms that must pass the Rada, he said: “Work with our Banking Committee is quite constructive. I hope it will be the same with other committees, which will consider the legislative changes needed to continue cooperation with the IMF.” After the IMF approved an 18-month stand-by program last June 9, only a first tranche of $2.1 billion was disbursed. Several reviews and most tranches were planned, but the program stalled due to lack of progress on the Rada adopting free market economic changes.
Further IMF aid should be strictly tied to concrete progress by Ukraine in adopting EU-standard changes, Henrik Larsen, who served as an EU political adviser in Ukraine from 2014 to 2019, wrote in an Atlantic Council blog. Headlined ‘US Support for Ukraine Should be Ties to Reform Progress,’ the article notes that the IMF ‘pause’ holds up $2.9 billion from the IMF and €600 million in EU aid. “The IMF should publicly state its unwillingness to disburse this money unless Ukraine demonstrates a convincing track record of convictions in high-level corruption cases,” wrote Larsen, now a Senior Researcher at the Swiss Federal Institute of Technology Zurich. “As long as Ukraine refuses to deliver on these long-standing commitments, the government will be forced to go to the financial markets for loans with much higher interest rates.”
Kyiv’s Sikorsky airport is embarking on a 3-year, $100 million investment program to allow long haul jets to land by the end of 2023. The asphalt concrete runway is to be rebuilt with concrete and extended by 20%, to 2,770 meters. Often restricted by fog, the airport will receive a Category II ILS instrumental landing system. This will cut in half – to 350 meters – the visibility needed for pilots to land. With only one landing strip, Kyiv’s right bank airport will be closed for eight months in 2023 for runway reconstruction, Denis Kostrzhevsky, head of Master-Avia, the airport management company, told reporters last week.
By promoting charter flights to Egypt and Turkey, Kharkiv airport handled 53,500 international passengers in April, 71% of its pre-pandemic level, the airport’s press service has reported. With Covid controls restricting travel to the EU, Egypt and Turkey now account for 70% of the total foreign travel by Ukrainians, according to Pavlo Hryhorash, Chief Executive of the Ukrainian Travel Agencies Association.
Odesa’s new concrete runway is to be inaugurated mid-summer, Avianews has announced. The long-delay in opening the runway has allowed for the arrival this month from Germany of four telescopic passenger tunnels. These will allow passengers to go directly from planes to the terminal. In April, the airport handled 63,387 passengers, 85% for international flights.
Munich-based FlixBus inaugurates its first domestic bus route in Ukraine, a marathon, 21-hour voyage that start in Zatoka, the Odesa region Black Sea resort, then circles through Kyiv, Zhytomir, Rivne, Lviv, Ivano-Frankivsk, and finally ends at the Carpathian mountain resort of Dragobrat. Michal Leman, the bus company’s regional director, said in an online press conference: “This is our first branded line on the domestic route in Ukraine, and it provides the most popular destinations for travel in Ukraine, both in summer and in winter.”
- GDP Down
- Cabinet Shuffle
- IKEA Draws Digital Crowds
- Coal Phase out Planned
- Bitcoin Uses As Much Electricity as Ukraine
- Ukrposhta More and More Looks Like a Bank
Ukraine’s GDP contracted by 2% in Q1 2021, compared to the first quarter of 2020. By contrast, the economy contracted by 0.8% in the last quarter of 2020. The disappointing first quarter results casts doubt on 2021 growth predictions, which are in the 4-5% range.
A cabinet shuffle is in the works. The Rada is to vote on the Ministers of Economy, Health, and Infrastructure. Ihor Petrashko, Minister of Economic Development, Trade, and Agriculture, and Vladyslav Krykliy, Minister of Infrastructure have submitted their resignations, the press secretary of Verkhovna Rada Speaker Dmytro Razumkov, posted on Facebook. The Rada must vote to approve or deny.
Prime Minister Denys Shmygal asked parliament to fire Health Minister Maksym Stepanov. Appointed at the start of the Covid pandemic, 13 months ago, Stepanov was criticized for first trying to bypass Ukraine’s Western-designed procurement system, then for failing to procure enough vaccines. In April, 500,000 vaccines were administered, a fraction of the 2.6 million promised for that month. To date, almost 1 million vaccines have been administered, giving a first jab to about 3% of the adult population.
By the end of May, Ukraine is to have received a total of 3 million vaccines. Officially, 48,075 people have died of coronavirus in Ukraine and more than 1.8 million people have recovered from the infection. In a UNICEF survey last month of 2,027 Ukrainian adults, 22% said they had fallen sick with coronavirus. If this percentage is applied to Ukraine’s adult population of 30 million, it would indicate that around 6 million Ukrainians have had coronavirus.
Mexico’s Grupo Bimbo plans to invest $30 million to build a bakery in the Kyiv region, said Ihor Mariash, General Manager of Bimbo QSR Ukraine, at an investment conference. In 2017, the company bought the East Bolt Ukraine bakery in Dnipro which produces buns for McDonald’s. Mariash also announced that Burger King will soon be entering the Ukrainian fast food market (Interfax Ukraine).
In its first year of operation in Ukraine, IKEA’s online store has received 2.5 million visitors and 148,000 online orders, said Florian Melle, the head of IKEA in Ukraine (Interfax Ukraine). After the first physical store opened in Kyiv’s Blockbuster Mall on February 1st, the store received almost 400,000 visitors in one month. To deliver goods ordered online, IKEA opened three delivery points last year: Auchan Rive Gauche, Metro Cash & Carry, and Lavina Mall.
London-based Environmental Resources Management has been chosen by the Energy Ministry to draft a pilot project for finding a new future for a coal-based region. The pilot project is funded by Britain, a country which has struggled with this challenge since the 1980s. Germany and Poland also are advising Ukraine on the transition. With the number of coal miners dropping, Ukraine’s transition largely has meant miners leaving mining regions for other jobs.
Of Ukraine’s 33 state-owned coal mines, six money losing mines will be transferred to Centrenergo. Others will be privatized individually, said Yaroslav Demchenkov, the Deputy Energy Minister on Dom TV. “These are the ones that have promising coal beds, and enough coal that can be mined there for several more decades,” he said. “We will try to find an investor for them.”
“A socially sustainable coal-phase-out in Ukraine” and “Decarbonization of Ukraine’s steel sector” are among 10 policy proposals to be presented at an online event sponsored in part by the German government. This Zoom conference, “Reaching Ukraine’s energy and climate targets,” will be in Ukrainian and English.
Ukraine’s central bank welcomed a decision by the Bank of England that it approved the “bail-in” of $595 million of loans that a British-based financial company made to PrivatBank before it was nationalized in 2016, Reuters reports. In a statement, the National Bank of Ukraine said the decision by Britain’s central bank bolstered Kyiv’s argument the nationalization had been carried out within the framework of a reliable legal procedure and complied with international standards.
The IMF’s decision to distribute $650 billion in Special Drawing Rights this summer is undermining arguments for free market changes in countries like Ukraine, Timothy Ash argues in an essay. He writes from London: “The hope was the looming debt service hump for Ukraine in Q3, when $3bn in external debt falls due, would concentrate minds in the Zelenskiy administration. But likely with $2.8bn in SDR allocations due in September now, I think there will be zero incentive on the part of the administration to do anything to meet the conditionality in the SBA [Stand-by Arrangement]. This SBA is dead now in my mind, as it expires at year end.”
Bitcoin mining consumes as much electricity as Ukraine. Bitcoin consumes almost 150 TeraWatt hours, according to the Bitcoin Electricity Consumption Index run Cambridge University’s Centre for Alternative Finance. By contrast, Ukraine generated 150 TeraWatt hours last year. Bitcoin dropped in value by 10%, after Tesla CEO Elon Musk announced that his car manufacturer will stop vehicle purchases using Bitcoin because of environmental concerns.
Less than one year after receiving banking rights, Ukrposhta increasingly looks like a European-style postal savings bank. Now the Ukraine’s seventh largest purchaser of point of sale terminals, Ukrposhta has brought electronic banking to 3,200 branches, largely concentrated in villages of around 2,000 people. In the first quarter of this year, Ukrposhta customers used the cash withdrawal service 207,000 times, withdrawing an average of $50. Two weeks ago, the post office raised its limit on withdrawals to $535.
Ukrposhta has posted on ProZorro a tender for a partner in construction of a $50 million modern sorting center in Kyiv. This will be the first such construction by the state postal operator in 42 years, Ukrposhta director Igor Smelyansky wrote on Facebook. Ukrposhta is undertaking a decade long logistic renovation program that will involve constructing six major sorting centers and 62 depots. To jumpstart the program, the EBRD is the lead finance partner, lending €63 million and the European Investment Bank is also lending €30 million to Ukrposhta.
Ukrposhta’s iconic Stalin-era headquarters on Kyiv’s Independence Square could find a second life as a casino, Smelyansky told the Kyiv Post. He said: “We are converting old infrastructure to a new, modern use. You cannot constantly live in the past.“
Jumping at the chance to reserve international road cargo permits without paying bribes, trucking companies have made almost 1 million electronic bookings since the e-service started early last year. At the time, Infrastructure Minister Krikliy said: “Thanks to the digitalization of the process, equal conditions have been created for all carriers to access the order of the service, without any corruption component.”
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