- E-Driver’s Licenses as Ukraine Goes Digital
- Centrenergo Privatization to Go Ahead
- DTEK to Invest $355 Million in Kyiv Electric Grid
- Number of Foreigners Visiting Ukraine Doubles
Digitizing government services, the new Diya (Action) mobile allows Ukrainians to access their driver’s licenses and car registration documents from their smartphones. Launched Thursday, this e-driver’s license can also be used to board trains and check in for domestic flights. At the app launch, President Zelenskiy said Ukraine is only the third country in Europe to offer e-driver’s licenses. He said that the 9 million Ukrainians with valid driver’s licenses can easily obtain digital versions. “[The app] is available on Apple Store and Google Play,” said Zelenskiy whose election platform included ‘the state in the smartphone.’
In another digital advance, e-Maliatko, or e-Baby started working last month in four cities. Later this year, it is to spread across the nation. Part of Diya, this service offers 10 government registrations for newborns. “Without submitting 37 different documents and going to 11 institutions, as it was before,” said Zelenskiy, the father of two children. Prime Minister Honcharuk said: “Next will be the opportunity to digitize your ID-card and a foreign biometric passport.”
Internet advertising now accounts for almost half of all advertising in Ukraine today, reports a study by the Internet Association of Ukraine. Of this online advertising, 95% is on social media – Facebook, Instagram, Twitter, YouTube, Skype, Viber, etc. Of the methods, banner advertising and in-stream video remain the most popular.
Democratizing basic banking, Ukrposhta has equipped 3,000 village branches with terminals for cash withdrawals. Located in towns with more than 2,000 people, these post offices now have point of sale terminals where people can use bank cards to pay utility bills, make money transfers, and now withdraw hryvnia cash in amounts from $2 to $400. A bill before the Rada would allow that state post office to become a full-fledged, European-style postal bank. Existing banks oppose this, saying they would have to compete with the state. Ukrposhta retorts that 15% of Ukraine’s population is ‘un-banked’ and existing banks have no plans to open branches or place ATMs in villages. The list of small town post offices offering this no commission service is here.
Court challenges will not block the privatization of Centrenergo, one of the five ‘big’ privatizations, this year, predicts Dmytro Sennichenko, head of the State Property Fund. “We will win and in courts as well – there is political will, and court systems are feeling this pressure,” he said, looking beyond the central Ukraine electricity producer. ‘Big’ privatizations – of companies with assets over $10 million – were frozen in Dec. 2018 by a Kyiv judge. After Zelenskiy swept the presidential and parliamentary elections, judges started to remove roadblocks to privatization.
Under the ‘small’ privatization program, the State Property Fund may sell this year three Kyiv landmark hotels – the Dnipro, the President and the Ukraina – and three seaports – Bilhorod-Dnistrovskyi, Skadovsk and Ust-Dunaisk. Sennichenko says he plans to sell this year on ProZorro 500 of these ‘small’ companies, or companies assessed at less than $10 million.
To spur sales, the Property Fund unveiled last week a bilingual online register of all properties being prepared for sale. The Fund also signed agreement last week with the World Bank to set up an international standard valuation system for state properties.
DTEK Kiev Electric Grids plans to invest $355 million over the next five years to modernize the capital’s electricity system. This investment is almost five times the investment of the previous five years. With electricity consumption expected to grow by 9% by 2024, Kyiv city is now home to 3.7 million people, or 10% of Ukraine’s population. The development plan includes building four new large substations, 51 km of 110-35 kV power lines, the reconstruction of 231 energy facilities and 1,753 km of network lines. In addition, the portion of households with ‘smart meters’ is to triple, to 37% by 2024. This kind of meter allows a homeowner to monitor energy consumption on line.
ArcelorMittal reduced EBITDA in the fourth quarter by 13%, compared with the third quarter, to $925 million, the steel company reports. Last year’s operating loss was $1.5 billion. Arcelor, the owner of Ukraine’s largest integrated steel mill, says its worldwide steel production fell in the last quarter to 19.8 million tons, down 11% from the third quarter. Looking ahead, Lakshmi Mittal, Arcelor CEO, says: “Although market conditions continue to be difficult, we see early signs of recovery, especially in our key markets in the USA, Europe and Brazil.”
Due to the current unusually mild winter, Ukraine should finish the heating season two months from now with 3 million tons of coal in storage – almost double the amount of last April, predicts Oleksiy Orzhel, Minister of Energy and Environmental Protection. In addition to tying up money to buy coal will stay in storage through next October, the big coal piles are fire hazards.
A pop electronic quiz of members of the American Chamber of Commerce found that 85% intend to expand their business in Ukraine in 2020. Asked if they plan to increase salaries this year, 77% voted ‘yes.’ Asked if “Ukraine’s economic reform agenda [is] on the right track, the house was split: yes – 53%; no 47%.
At the meeting, Lenna Koszarny, the Chamber’s Board Chair, endorsed President Zelenskiy’s plan to introduce later this year voluntary international arbitration to enforce business contracts. Recognizing this as a “stopgap measure” until Ukraine’s courts can be rebuilt, Koszarny said: “We stand ready to support international arbitration. This is a very important start and a necessity for foreign investment, privatization and concessions to succeed.”
At a European Business Association meeting, Tomas Fiala, EBA president, made these predictions for 2020: GDP growth: 4%; inflation: 5.2%; and year end exchange rate: 24 hryvnia to the dollar. Most GDP growth forecasts are slightly lower for 2020: IMF + 3%; National Bank of Ukraine +3.5%; World Bank and Ukrainian Government + 3.7%.
Ukrainian labor migrants to Poland increasingly are younger, picky about the work they do, and in command of rudimentary Polish. Of the migrants, 29% are under 36 years of age, and most of these come right after graduation, according to a joint study by the Warsaw University’s Center for East European Studies and the Center for Migrant Support in the Labor Market EWL. Men account for 60% and the portion of non-Polish speakers has fallen to 21%. As summarized by Ukrainska Pravda, the portion willing to work for Poland’s minimum wage has plummeted, from 40% in 2018 to 6% last year.
The number of foreigners visiting Ukraine hit 27.3 million in 2019, more than double the 13 million who visited in 2014. The State Border Guard Service reports that 20% of last year’s visitors came to Ukraine by airplane. Last year, increases were registered for visitors from: Austria, the Baltics, Britain, Germany, and Sweden. Visitors from Russia dropped by 7%.
UIA, Ukraine’s flagship carrier, carried nearly 8 million passengers last year, 0.6% less than in 2018. The number of UIA flights was down 4.6%, which means that planes flew, on average, with 82% of seats filled. Half of all passengers were in transit. The airline’s best growth areas were: charter flights +15%, and long haul international flights +10%.
- Deutsche Bahn Starts a Decade Long Alliance with Ukrzaliznytsia
- Minister Pay Capped at $30,000/year
- Residential Sales Highest Since 2007
- Kyiv Apt. Prices Up 33%
- EIB May Loan Boryspil €300 million
Germany’s Deutsche Bahn is to work over the next decade with Ukrzaliznytsia, helping the state railroad to make “the transition to a European model of the railway transportation market,” Prime Minister Honcharuk said Wednesday in Kyiv at the signing of a memorandum of cooperation between the two rail companies. By May 1, the two railroads are to write a road map for UZ’s modernization. On Jan. 1, Deutsche Bahn and its subsidiary, DB Engineering & Consulting GmbH, are to move into a mixed consulting and management role.
“Deutsche Bahn will provide support in managing freight, passenger, infrastructure, provision of services and maintenance,” Honcharuk wrote on Telegram. Ronald Pofalla, Deutsche Bahn’s CEO for Infrastructure, said at the signing: “We are confident that our cooperation will be successful.”
China’s coronavirus epidemic will not impact Ukraine’s grain sale to China, Ukrainian traders tell Reuters. “I see no reason to worry,” says Mykola Gorbachev, president of the Ukrainian Grain Association traders’ union. “There are difficulties inside China with logistics, with delivery to the regions, to consumers, but in general, the demand has not gone away.” China imports 6% of Ukraine’s grain exports and 7.5% of its sunoil exports, reports APK-Inform agriculture consultancy. In the last week of January, Ukraine exported 208,000 tons of corn to China.
Ukraine’s foreign reserves hit $26.3 billion on Feb. 1, enough to cover four months of imports and the latest 7-year high, reports the National Bank of Ukraine. Last week, reserves were boosted by the foreign purchases of government hryvnia bonds and by the government’s successful placement of a €1.25 billion Eurobond.
Weak demand stopped falling yields for hryvnia treasuries, with cut off rates stopping around 10%. With only $93 million in equivalent sold at Tuesday’s weekly auction, cutoffs were: 6-month bonds: 10%; 16-month bonds: 10.10%; and 3-year bonds: 10.15%.
Concorde Capital’s Evgeniya Akhtyrko wrote: “Auction receipts plunged from the impressive results of the other three auctions in January… We should wait for the results of two more auctions in order to conclude whether the interest of non-resident investors in Ukraine’s local bond market is truly fading.”
The pay of a Ukrainian cabinet minister is to be capped at five average salaries, or $30,000 a year, Prime Minister Goncharuk reports after a Cabinet of Ministers meeting. In addition, the government will ask Naftogaz’ Supervisory Board to stop payouts on the multimillion dollar commissions promised for winning the big settlement against Gazprom.
Timothy Ash writes from London: “By so doing, he will ensure the government of Ukraine will fail to hire the best people, and government will remain wracked by corruption. If you don’t pay government officials half decent salaries, the tendency will be to supplement their wages by creating lots of different side money making schemes. Zelensky either wants a ‘professional’ government – or he does not.”
Some of the $2.9 billion windfall payment from Gazprom will pay for highway construction and energy efficiency, President Zelenskiy said in a review of the first five months of the government. He said: “We are planning to allocate additional funds for road construction – this is our infrastructure priority, for other infrastructure projects, for the medical sector and energy efficiency.”
Sales of apartments and houses across Ukraine hit 301,029 in 2019, the highest level since 2007, reports Novoye Vremya, drawing on figures from Ukrainian Trade Guild, the real estate consulting company. According to UTG, buyers held off during the first half of 2019, awaiting the outcome of the elections. By contrast, sales in Kyiv were down by one third, affected by the Ukrbud financial crisis and foreign currency holders waiting for the hryvnia to devalue, reports Novoye Vremya.
The average starting price for a new apartment in Kyiv increased by one third in 2019, to $1,245/square meter, compared to $931/square meter in 2018. City One Development reports that the average price of apartment sold was even higher – $1,468/square meter. Pulling up prices, about one quarter of all new apartment projects were launched in Kyiv’s elite Pecherskyi district, where prices average $1,823/square meter.
The European Investment Bank may loan €300 million to Boryspil Airport to cover almost half of major renewal program: rebuilding one runway, modernizing baggage handling, and expanding Terminal D, the airport’s busiest terminal. Handling 63% of all air passengers in Ukraine last year, Boryspil saw its passenger count grow by 21% to 15.3 million. Hobbled by public administration, Boryspil is chronically late on projects: 10 years to build a parking garage; two years to build a cargo terminal; and one year to build a duty free zone for Terminal F, the new discount carrier terminal. The Infrastructure Ministry is mulling putting the airport up for concession.
Ukrainians increasingly fly to EU countries, reports Ukraine’s State Border Service. Last year, the number of passengers were up y-o-y as follows: Greece +46%; Czech Republic +38%; Germany +31%; Italy +26%; France +13%. For land crossings, almost as many Ukrainians visited tiny Hungary – 3.4 million – as visited big Russia – 3.9 million. With the hryvnia strong, tourism to sunny destinations was strong: Egypt +36%; Georgia +23%; Turkey +21%; to UAE +20%; and to Cyprus +15%.
Ukrainians now account for the largest nationality of foreigners caught staying illegally in the Czech Republic – about 20% of the 7,067 people deported last year. Last year, 1,456 Ukrainian were caught over staying the 90-visa free period – more than the total of next three countries – Moldova, Vietnam and Russia, reports Schengen Visa Info site. Ukrainians often work in construction and manufacturing, two Czech sectors suffering from severe labor shortages.
Starting next January, visa free visits to the EU will come with a €7 surcharge and one new permit, issued by ETIAS, or European Travel Information and Authorization System. Application is online and is to take 10 minutes. An ETIAS will be needed by all adults traveling to the Schengen Zone from 62 countries, including Ukraine, US, Israel, Japan and possibly Britain.
Japan’s Rakuten owner of messaging app Viber, will open its second office in Ukraine – an R&D center in Kyiv. Viber currently has an office in Odesa, where 120 people work. Created a decade ago, Viber now is installed on 96% of Ukrainian smartphones, the company reports, citing a study by Kantar. In Ukraine, one third of users are aged 25-35. Overall, women account for 55% of users, men for 45%.
- GDP Up 3.3% in 2019
- China to Invest $50 Million to Increase Mykolaiv Grain Exports
- Ukravtodor: Eurobonds to Build Highways
- IMF Deal in March?
- Food Accounts for 44% of Exports
- ProZorro Wins More Work, More Awards
Ukraine’s economy grew by 3.3% last year, down slightly from 3.4% in 2018, reports the Economic Development, Trade and Agriculture ministry. After Q2 growth of 4.7% and Q3 growth of 4.1%, Q4 growth fell to 2.1%, largely dragged down by poor industrial performance.
For 2020, forecasts include: IMF + 3%; National Bank of Ukraine +3.5%; World Bank and Ukrainian Government + 3.7%.
COFCO, China’s largest food processor and trader, plans to invest $50 million to expand grain and oilseeds handling at Mykolaiv, Ukraine’s second largest port. By rebuilding two berths and building a unified transshipment complex, COFCO will increase the port’s cargo traffic by 7%, or 2.3 million tons. Danube Shipping-Stevedoring Company, now fully owned by COFCO, outlined the investment plan last week to Mykolaiv port, rail and Seaport Administration officials, according to the Center for Transportation Strategies.
China-Ukraine trade grew by one third during the first 11 months of 2019, to $11.7 billion, Dmytro Kuleba, deputy prime minister for European and Euro-Atlantic Integration, told Ukrainian officials preparing for a major China-Ukraine meeting this year. Last year, China displaced Russia as Ukraine’s largest single nation trading partner. Calling China “our strategic partner,” Kuleba told ministry representatives to remove barriers to trade and to open up new opportunities for Chinese investment here. He said that 34 Ukrainian-Chinese research projects are being carried out and Ukrainian scientists are working on China’s Lunar Exploration Program.
Ukravtodor, the state highway agency, will be able to borrow up to $800 million with state guarantees to build roads, under two bills signed into law Tuesday by President Zelenskiy. The Zelenskiy administration is embarking a major road building program designed to connect all 24 regional capitals with EU standard highways, including four highways radiating out of Kyiv with 130 kph speed limits. Ukravtodor may launch a Eurobond as early as the first half of this year.
French construction giant Vinci is invited to bid on Ukrainian toll roads and airport concessions, Infrastructure Minister Vladyslav Krykliy said Monday at a meeting with company representatives in Kyiv. Vinci works on airports in Brazil, Japan and Portugal. Last year, it bought the controlling share of London’s Gatwick Airport.
The Infrastructure Ministry is appealing a ruling of a Kyiv Appeals Court suspending the results of the concession tender that awarded Kherson port to Risoil-Kherson, a Swiss Georgian consortium. A challenge was brought by an all-Ukrainian consortium, Kherson Seaport Special Company, that was disqualified for apparently not meeting the liquid asset minimum. Separately, Kyiv’s Commercial Court froze last week the upcoming privatization of Centrenergo, upholding a challenge by Ukrdoninvest, a company disqualified from the tender.
A bill to block returns of insolvent banks to former owners “is the right law,” President Zelenskiy told reporters Tuesday. “I’m sure we will accept it,” he said, referring to the law designed to prevent the reversal of nationalizations of such banks as PrivatBank. Apparently to give the Rada more time to debate and vote on the law, Ukraine’s Supreme Court delayed a hearing last Friday in a key PrivatBank case. Such a law is a key demand by the IMF for Board approval of a 3-year, $5.5 billion Extended Fund Facility.
“Ukraine May Not Get IMF Cash Until Late Spring,” Bloomberg reports, citing a note by Raiffeisen Bank analysts Andreas Schwabe and Gintaras Shlizhyus. From London, Timothy Ash writes: “Seems most likely scenario…Ukraine can easily fund itself in the market, so little pressure for them to meet the prior actions required to kick start the new program.”
Ukraine is making “good progress” in meeting the IMF’s preconditions for the Extended Financing Facility, IMF Managing Director Kristalina Georgieva told Ukrinform on Friday in Washington. Georgieva, a Bulgarian, cited her Jan. 22 meeting in Davos with Zelenskiy, and said: “We all understand which platform the President ran for – and the Ukrainian people chose him for this. So, we want to do everything possible to provide institutional support to the country.”
With one bank transfer, Gazprom’s payment of its $2.4 billion debt to Naftogaz in late December pushed Ukraine’s current account deficit from 3.3% of GDP down to less to 0.7%, according to the National Bank of Ukraine. Oleksiy Blinov, chief economist for Alfa-Bank Ukraine, writes: “This is a rather low level of deficit that leaves Ukraine much less vulnerable to possible external shocks like it was the case in 2008 or 2014.”
Pushed by a 49% jump in corn exports, Ukraine increased its overall food exports last year by 18% y-o-y, to a record $22.2 billion, reports the Ukrainian Club of Agricultural Business. Last year, food accounted by 44% of all of Ukraine’s exports, up from 39% in 2018. Of total food exports, processed foods increased by 7%, to $3.1 billion.
Exports of vegetables, fruits, berries and nuts, grew by 9.4% last year, hitting a record $339 million, reports EastFruit, the analytical website. Walnuts, berries and apples grew to account for 70% of Ukraine’s exports last year. Although Ukraine has recovered from Russia’s trade embargos in this sector, Ukraine is not among the world’s top 50 exporters of fruits and vegetables. Poland, for example, exports $2.6 billion – almost eight times Ukraine’s volume.
Mining licenses will be exclusively allotted through auctions on ProZorro.Sale, the online e-auction platform, Prime Minister Honcharuk says on Telegram. “The enrichment of corrupt officials at the expense of natural resources is an unacceptable story,” he writes. “The bowels of Ukraine will work exclusively in the interests of the Ukrainian people.”
ProZorro won first prize for “Doing More with Less,” an annual award by Apolitical, a London-based good government NGO. “[ProZorro] has been globally recognized as one of the most innovative public procurement systems delivering government services in a transparent, effective, fair and low-cost way,” writes Apolitical. “ProZorro.Sale was developed by a small team on a budget of only US$100,000, but has generated more than US$500 million in revenue.”
Lviv won “Emerging City of the Year” award for Central and Eastern Europe, elected by Business Service Center executives from the region. After last week’s ceremony in Warsaw, Olha Syvak, chief investment officer at Lviv City Council, writes: “Lviv already has [business service] success stories: Nestle, Austrian Airlines, KPMG, PwC, Smart Support, Runway.”
A 65 km eastern extension of EU gauge train tracks, from the Polish border to a rail junction near Lviv airport, will generate almost 650,000 passenger rides a year, according to the Cabinet of Ministers’ ‘Investment Atlas.’ With construction to start this year, the $21 million project will extend EU width tracks from Ukraine’s border town of Mostyka to Skynliv. From Skynliv, a western suburb of Lviv, trains are to go Lviv Airport and to Lviv-Holovnyi, the city’s main rail station.
- Presidents Energize Turkey-Ukraine FTA
- Vodaphone Bond Deal 6 Times Oversubscribed
- SMEs Jump for Cheap Money
- Rivers of Grain Flow Through Black Sea Ports
- Discount Air Revolution: Ukrainians Flying to Poland Triple
Aiming to double Turkey-Ukraine trade to $10 billion by 2023, the presidents of both countries placed a priority on completing a bilateral free trade agreement. “I hope we will be able to report good news very soon,” Turkish President Recep Tayyip Erdogan told a bilateral business forum in Kyiv. President Zelenskiy expressed similar urgency to wrap up the 10-year-old negotiations, saying: “We have agreed to give impetus to our representatives working on the text of the free trade agreement…This will give an impetus in many areas: agriculture and food industry, housing, energy and energy efficiency, transport and tourism.”
Addressing dozens of Turkish business leaders, Zelenskiy appealed for Turkish investment in privatization and infrastructure concessions. “One of our priorities is the large-scale modernization of infrastructure – roads, airports and seaports, the launch of river transport,” he said. “Now we are preparing new competitions at airports and seaports, as well as concession road projects.” Determined to turn around Ukraine, Zelenskiy said: “Ukraine should be covered by an avalanche of investments, both foreign and domestic.”
Urging Turks to look across the Black Sea, Zelenskiy called for investment in tourism projects in Kherson and Odessa. Erdogan said Turkish companies have $3 billion invested in Ukraine. Last year, 217,000 Turks visited Ukraine. In return, 1.5 million Ukrainian tourists visited Turkey, 12% more than in 2018. This is equivalent of 4% of Ukraine’s population. Building on the existing no-passport travel regime between the two countries, officials signed Monday a bilateral deal allowing for mutual recognition of driver’s licenses.
Vodaphone Ukraine placed $500 million worth of 5-year Eurobonds at 6.2% per annum, reports Interfax-Ukraine. Reflecting strong foreign investor demand for Ukrainian bonds, the placement was six times oversubscribed, with $3 billion in demand. In addition, the yield was 300 basis points below a €90 million Eurobond placed nine months ago by Vodaphone. Last week’s roadshow was led by J.P. Morgan and Raiffeisen Bank International. In December, these two banks helped finance a $464 million bridge loan, allowing Azerbaijan’s Bakcell to buy the Vodaphone unit, Ukraine’s second largest mobile operator, after Kyiv Star.
Ukraine’s entrepreneurs respond to cheap credit. Almost 17,000 small and medium businesses signed up for the government new “Credits 5-7-9%” – before the program was launched last Monday. Prime Minister Honcharuk writes on Facebook: “No exaggeration: Ukrainian small businesses were waiting for this program. Already before the official launch we received almost 17 thousand preliminary applications.”
Through 2024, the program is to funnel $1.2 billion to SMEs. This year, 50,000 loans are expected to be given out, largely by three big state banks: Ukrgasbank, Oschadbank and PrivatBank. Terms are: up to 5 years and up to $60,000. The interest rate varies according to the number of jobs to be created. For the first year, interest rates are subsidized by $80 million from the Finance Ministry and €10 million from the German-Ukrainian Fund, or NUF.
The program could become redundant if the National Bank of Ukraine meets its target of cutting Ukraine’s prime rate to 7% by year end. Honcharuk said: “In the coming years, it may not be necessary for such a program, because the cost of credit in the markets will be 7-9%. With 4% inflation, this is a completely real story.” Until then, PrivatBank and Oschadbank officials say they are processing 200 loan applications a day.
Nova Poshta starts construction of its latest automated sorting center – a 4,000 square meter depot in Bila Tserkva, 75 km south of Kyiv’s Ring Road. At the same, Nova Poshta is building in Kharkiv, a heavily automated sorting and cargo center. Equipped with Dutch sorting machinery and robots, this center should be ready in September. Last September, Nova Poshta opened a similar center in Lviv.
Ukraine’s farmer harvested a record 75 million tons of grain last year, up 7.2% from 2018, reports the Economic Development, Trade and Agriculture Ministry. While corn was flat at 35.8 million tons, wheat was up 15%, to 28.3 million tons, and barley was up 21%, to 8.9 million tons. In the first seven months of the grain marketing year, Ukraine exported 36.3 million tons, up 30% from the prior July-January period.
Remittances from Ukrainians working outside the country grew 12% y-o-y last year, to $12.9 billion, reports the National Bank of Ukraine. This volume of money offset Ukraine’s $12.1 billion 2019 trade deficit. In the last week, the central bank registered two new money transfer systems: Pay Place Ukraine and NovaPay, a unit of Nova Poshta. There are now 31 registered payment systems in Ukraine.
As discount airlines change Ukrainian travel habits, the number of Ukrainians flying to Poland has more than tripled in three years, reports Europe Without Barriers, a Kyiv-based NGO. Last year, 700,000 Ukrainians flew to Poland, up from 204,000 in 2017. With four airlines flying between Kyiv’s two airports and Poland, it is now possible to fly from Kyiv to eight Polish cities.
Szczecin, Poland is lobbying to win direct flights to Ukraine. The fear is that Germany, 15 km to the west, will lure away Szczecin’s Ukrainian workers, reports Rynek Lotniczy, Poland’s aviation market magazine. Germany is adopting laws to ease immigration of skilled non-EU workers, moves that worry Western Pomeranian employers. Ukrainians account for about 20,000 workers in this Baltic seaport of 400,000 people. Known as Stettin in German, Szczecin is a 15-hour bus ride from Kyiv.
- Concessions to Inject Private Money and Management into Ports, Airports and Train Stations
- After Qatar Takes Over Olvia Port, UAE to Take over Kyiv Rail Station?
- Foreigners Now Own $5 billion in Hryvnia Bonds
- In Dollars, Wages up 25% in 2019
Qatar’s QTerminals plans to turn Mykolaiv’s Olvia port into a major grain hub, investing $25 million a year for five years in a new grain terminal, two new berths, six cranes, silos and belt loaders from rail and truck transfer stations. “We want to turn Olbia into a grain hub,” Neville Bisset, QTerminals CEO, said Friday in Kyiv. “It has a good geographical location. This makes it possible to create a good product.”
Fresh from winning the 35-year Olvia concession, Qatar’s Minister of Transport Jassim bin Sayf Ahmed Al-Sulayti met Friday with Ihor Zhovkva, Ukraine’s deputy presidential chief of staff. He assured: “Our company will take these investments seriously.” QTerminals is the largest operator in Hamada, Qatar’s main seaport which opened four years ago at a price of $7.4 billion.
A Swiss-Georgian consortium plans to build a major river cargo hub in Kherson, the last Dnipro port before the Black Sea. Risoil-Kherson, winner of the Kherson concession, plans to invest $15 million to upgrade cargo storage, to purchase new cranes, and to build seed and soybean processing plants. “We want to make Kherson a river hub for the whole Dnipro River,” Shota Hadzhishvili, company founder, said Friday at an Infrastructure Ministry ceremony for the port concession winners. Aiming to double cargo traffic in five years, he said: “We plan to use all the navigation options on the Dnipro River, including the acquisition and construction of modern ships.”
Infrastructure Minister Vladyslav Krykliy said at the winners ceremony: “Kherson and Olvia ports will become growth points for concessionaires and the Ukrainian economy.” He said the next port facilities to go up for concession will be the container terminal and ferry terminal at Chornomorsk, Ukraine’s third busiest port.
Turning to airports and rail stations, Krykliy said: “By the end of February we plan to decide on concession projects at the airports of Lviv, Zaporizhia, Kherson, and Chernivtsi. We are preparing concessions for railway stations of Chop, Dnipro, Kharkiv, Khmelnytskyi, and Mykolaiv. This should give a new quality to our rail passengers.”
Kyiv’s Central Passenger Station also is being prepared for a 20-year concession, according to the Cabinet of Ministers’ ‘Investment Atlas of Ukraine.’ Serving almost 100,000 people every weekday, the station has a total leasable area of 236,000 square meters. According to Minister Krikliy, one company interested in the concession is Emaar Properties, the United Arab Emirates developer of Burj Khalifa, the world’s tallest building.
Big US companies are welcome to bid on highway construction contracts and national gas and oil extraction in Ukrainian waters in the Black Sea, President Zelenskiy told visiting US Secretary of State Michael Pompeo in Kyiv Friday. He asked Pompeo to abolish the 25% customs duties on steel imports from Ukraine.
Alluding to the Ukraine-Impeachment nexus, Andy Hunder, President of the American Chamber of Commerce in Ukraine, told Pompeo: “There is a need to shift the narrative on U.S.-Ukraine relations to focus on business and investment. Ukraine is going through a massive overhaul.”
Turkey’s President Recep Tayyip Erdogan visits Ukraine. Erdogan and Zelenskiy will open the Ukrainian- Turkish business forum at the Ukrainian Chamber of Commerce and Industry.
Turkey’s President Recep Tayyip Erdogan visits Ukraine today. Erdogan and Zelenskiy will open the Ukrainian- Turkish business forum at the Ukrainian Chamber of Commerce and Industry.
Backed by €366 million in committed loans, an international tender for the electrification of 270 km of rail lines feeding Mykolaiv port has been posted on the EBRD‘s electronic procurement site. The Rada has approved taking the loans from the EBRD and the European Investment Bank. Converging in Mykolaiv port in a V-formation, the lines start in Dolynska and Kolosivka. Electrifying tracks can increase freight train speeds by 25%.
ArcelorMittal Kryvyi Rih, Ukraine’s biggest iron mining and steel manufacturer, invested $415 million to develop production last year. This was slightly less than the 2018 level of $433 million, the company reports. “2019 was a difficult year for all plants of the mining and steel complex of Ukraine, while the second half of the year was more difficult than the first one,” reads the company press release. “It was increasingly difficult for Ukrainian exporters to sell their steel products due to a significant drop in prices and general decrease in steel consumption on the world markets.”
“Despite the reduction of the investment program budget, in 2020 the company intends to complete the implementation of key investment projects and continue the implementation of new ones,” Arcelor said. Through 2022, the company plans to invest $1.8 billion to develop production.
MHP, Ukraine’s largest poultry producer, is cutting by 15% its earlier guidance that 2019 earnings before interest, taxes, depreciation, and amortization would be $450 million. In a company filing on the London Stock Exchange, MHP blames the strengthening of the hryvnia last year, weak export prices and a four-month ban on exports to Saudi Arabia.
To reverse a more recent setback, Ukrainian trade officials are negotiating with the EU to end a temporary ban on Ukrainian poultry exports to the EU. The ban stemmed from the discovery on Jan. 18 of chicken killed by avian influenza. The dead bird was not on an MHP farm. It is believed to have been infected by a wild bird.
The sunflower harvest in Ukraine, the world’s biggest sunflower oil exporter, rose by almost 8% y-o-y, to 15.3 million tons in 2019, reports the State Statistics Service. Ukraine has increased its sunflower oil exports by about 60% so far in the marketing year that started in September, to almost 2 million tons. Last year, it exported 6 million tons. The national crop of canola, another source of cooking oil, increased by 20% y-o-y in 2019, to 3.3 million tons.
Foreign investor holdings of Ukraine government hryvnia bonds hit $5 billion last week, the Finance Ministry reports. In January, foreigners bought UAH 7.2 billion, or $287.5 million, of the bonds. Foreigners now hold 15% of the bonds, a level not seen as risky. Last year, Ukraine‘s Finance Ministry auctioned government domestic loan bonds worth the dollar equivalent of $11.5 billion – 3.5 times more than the amount sold in 2018.
The hryvnia officially trades 25 to the dollar, down 5.7% from the start of January. Central bank deputy governor Dmitry Sologub attributed the January drop to cyclical reasons: companies paying dividends and imports prevailing over exports. Sensing the hryvnia would fall, citizens sold a net $100 million in January, Sologub told reporters Thursday. Last year, the hryvnia appreciated against the U.S. dollar by 14.5%.
“In USD terms, wages jumped almost 25% in 2019,” writes Oleksiy Blinov, chief economist for Alfa-Ukraine. He cites hryvnia appreciation and low inflation for bringing average wages to $520. Assuming exchange and inflation rate remain relatively stable, he predicts real wage growth this year will be 9%.
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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