• Kyiv Court Rules Nationalization of PrivatBank Illegal
  • Spanish-American JV Builds Ukraine’s Largest Corn Processor
  • China Extends More Export Credit Insurance
  • Consumer, Executive Sentiment Calm
  • Grain Exports up 21%
  • More Tools to Combat Overweight Trucks
  • Chickens Rule
  • Kyiv Vaults Into Elite List of Europe’s IT Startup Cities
  • S&P, Fitch Leave Bond Rating Unchanged, Outlook ‘Stable’
  • Canola Crop to Jump by Almost One Quarter
  • Rivers Revive

Ukraine’s central bank will appeal a surprise court decision ruling that the 2016 nationalization of Ukraine’s largest bank, PrivateBank, was illegal. Last September, the same Kyiv District Administrative Court recognized that the National Bank of Ukraine’s decision to declare PrivatBank insolvent was legitimate, reports the Kyiv Post. As part of the nationalization, the government injected $6 billion in PrivatBank, averting a banking crisis. In 2018, Kroll Inc., the New York–based corporate investigations firm, completed a forensic audit that concluded that a “large-scale and coordinated fraud” scheme had stolen $5.5 billion.

Markets and international observers reacted negatively to the court ruling. Ukraine’s dollar-denominated bonds fell Thursday, according to Refinitiv. The US Embassy in Kyiv immediately posted a statement: “In 2016 Ukraine’s international partners supported the decision of the government and the National Bank of Ukraine (NBU) to nationalize PrivatBank…It is important that the authorities continue their efforts to recover losses from former owners and related parties of failed banks. Ukraine’s international partners will be closely monitoring developments in this area.”

American Bunge Ltd and Spain’s Dacsa are investing $14 million to build Ukraine’s largest corn processing complex in Vinnytsia region. When completed next year, the plant is to export 80% of production, Dmitry Gorshunov, director of Bunge Ukraine tells Inventure news site. Last summer, Bunge inaugurated a $180 million farm products exporting terminal at Mykolaiv port. The new plant, located in Demkivtske village, is to use Italian equipment to process corn, breaking it down into oil, starch, protein and fiber.

Sinosure, China’s official export credit agency, will provide up to $500 million worth of insurance cover for credits for Chinese projects in Ukraine. Under a deal signed Thursday with Ukreximbank, the insurance cover is to go to projects in construction, agriculture, energy, transportation, oil and gas. Two weeks ago, Sinosure announced that it will extend $1 billion of insurance cover to Naftogaz to allow state energy company to get low-cost credit to buy high tech Chinese equipment.

The index of business expectations by Ukrainian enterprises’ top executives grew to 119.7% in the first quarter, from 117.3% in the fourth quarter, reports UNIAN. About half of business executives polled predicted that the hryvnia would not fall below 29 to the dollar, a 7% devaluation from today’s rate. Separately, the average value of the consumer sentiment index in Q1 exceeded the average value for all of 2018, according to a study by Info Sapiens. In general, the index of economic expectations in March rose by 1.4 points – to 68.1 – according to the results of a poll of 1,000 people.

Grain exports are up 21% compared to this time last year, reports the State Service for Food Safety and Consumer Protection. Since the start of the marketing year, in July, Ukraine has exported 40 million tons. Of last fall’s 70 million ton harvest, Ukraine may export as much as 50 million tons.

The outcome of trade disputes between China and the US and Canada will determine Ukrainian export flows in coming years, Argus Media reports from Kyiv’s Black Sea Grain conference. US-China trade talks are expected to end this month. No deal would big opportunities for Ukraine’s exports of corn, barley and canola. “There is a big opportunity for Ukraine to export to China,” Renault Quach, director of Chinese trading firm Donlink Grain and Oil.

The name of Ukraine’s busiest port has been officially switched from ‘Yuzhny’ (Russian) to ‘Pivdennyi’ (Ukrainian). Both words mean ‘Southern.’ Founded 40 years ago on a shore of the Ajalyk estuary, 40 km north of Odesa, Pivdennyi handled 43 million tons of cargo last year. It is also Ukraine’s deepest port, with average depths of 15 meters.

Two Canadian companies – International Road Dynamics Inc. and Quarterhill Inc. – have won a $6.4 million contract to supply 12 electronic complexes capable of weighing trucks as they travel down highways. In an effort to get overloaded trucks off the roads, the World Bank is largely paying for the Weight in Motion systems. The systems weigh and ticket drivers, minimizing the human interface. Reflecting the amount of money traditionally made by extorting drivers, a group of police officers attacked a rival police group early Wednesday morning at an Odesa highway weigh station. Five cars were damaged and three men went to the hospital.

UIA has switched to three new fare categories: Economy Light, Economy Standard and Economy Premium. Fares differ according to baggage amounts and the ability to switch travel dates. Designed to maximize revenue per seat, the rules follow similar rate structures adopted since 2015 by other legacy flag carriers – Lufthansa, Air France, KLM, Alitalia, British Airway, and LOT. Last year, UIA lost $100 million.

The ratio of unemployed people to vacancies, has fallen from 5 people per job opening in January, to 3 people per vacancy in March, reports the State Statistics Service. Overall, the official unemployment rate fell to 8.8% at the end of 2018, from 9.9% one year earlier. Faced with labor migration, Oleg Bakhmatyuk, owner of Ukrlandfarming, a major agro holding, tells UNIAN that in the last two years, he has nearly doubled the average farmworker salary, to $407 a month. Skilled mechanics earn over $1,000 a month.

A Dutch-Ukrainian poultry farm on the border with Poland is investing €38 million to double its production, says Alina Sych, general director of the company, Volodymyr-Volyn Poultry Factory. A new plant will be capable of processing 13,500 broilers an hour, she tells Interfax-Ukraine. The farm accounts for 6% of national production.

Ukraine’s poultry exports were up 39%, to 103,600 tons, in the first quarter of this year, compared to the same period last year, reports the State Fiscal Service. In dollar terms, exports were up 31%, to $147 million. As of April 1, there were 205 million chickens in Ukraine, reports the State Statistics Service. While cows, sheep and goats were down slightly year-over-year, chickens bucked the trend, increasing by 3.7%. Poultry in industrial farms were up 6%. Reflecting the industry’s dominance, in March poultry accounted for 69% of total meat production in Ukraine.

Racing the grain harvest, Nibulon is tripling its construction workforce to 1,500 to complete a new $19 million Dnipro river transshipment terminal by July. With the 300,000 ton a year terminal in Ternivka, Nibulon will have three Dnipro river ports in Zaporizhia region. “The need for farmers to use heavy trucks will disappear,” Nibulon CEO Oleksiy Vadaturskyy predicted on a visit to Ternivka, saying river ports cut out the expense of long drives to Black Sea ports. “This certainly will save each farm from $3 to $5 a ton…it is a colossal amount of money that farmers will be able to invest in development of their farms.”

Ukraine, the world’s largest exporter of sunflower oil, is exporting 7% more oil than during the last marketing season. Two thirds of the way through the September to August marketing season, Ukraine has exported 3.3 million tons of the cooking oil, according to APK-Inform. The largest buyers are India, the EU and China.

With food exports leading the way, Ukraine’s largest trade exports last year were: India $1.6 billion; Egypt $1.4 billion; Netherlands $827 million; Spain $741 million; and Moldova $671 million. Source: State Statistics Service.

In ranking of 1,028 big city ‘startup ecosystems’ around the world, Kyiv jumped 29 places last year, to come in 34th. Among European cities, Kyiv came in 6th. For the other cities of Ukraine’s big five, the rankings by StartupBlink are: Odesa –235; Lviv – 299; Kharkiv –435; and Dnipro – 561. The report says: “Kiev, Ukraine Startup Map has 321 startups, and the most popular startups…are Grammarly, Hotelscan and Template Monster.”

As part of the new foreign exchange liberalization, PrivatBank terminals now allow users to deposit hryvnia or use their bank card to replenish their dollar or euro foreign currency account. Under the Feb. 7 foreign exchange law, individuals can buy online every day up to 150,000 hyrvnia, currently $5,555.

No change at the coffee shop? The volume of hryvnia banknotes and coins in circulation is almost $1 billion less than at the start of the year, reports the National Bank of Ukraine. Currently, UAH 375.4 billion — $13.9 billion — in cash circulates in Ukraine, or 6.2% less than on Jan 1. The government encourages the use of credit cards and bank cards to collect more sales taxes.

Meal delivery is the fastest growing sector for Kyiv restaurants, says Michael Don, a 23-year veteran of the capital’s restaurant scene. “Delivery is growing by 30% a year, traffic is heavy, and people don’t want to drive,” says Don who maintains 90 small cars to make deliveries for his 74 restaurants. In addition to handling orders by Internet, Don’s USG Holding is investing in brick and mortar this year, opening two new Sushi-Yas and two more Il Molino. Currently, USG has 42 Sushiyas and and 18 Il Molinos. He also mulls opening a small chain of Lebanese restaurants, “depending on how quiet the election is.”

Shrugging off the election season fireworks, S & P Global Ratings confirmed Ukraine’s sovereign credit rating at the level of “B-/ B”, with outlook of “stable.” The international ratings agency says the stable outlook reflects expectations that Ukraine will comply with the IMF agreement, maintaining macroeconomic stability during the presidential and parliamentary elections. S & P expects Ukraine to retain access to domestic and international capital markets, allowing it to repay debts in 2019. Last month, Fitch confirmed its rating of Ukraine foreign currency bonds at “B-” with a stable outlook. Dragon Capital writes: “Uncertainty stemming from the presidential and parliamentary elections, compounded by high public sector external debt repayments, is likely to keep Ukraine’s credit ratings from being upgraded this year.”

Ukraine hopes to raise new sovereign debt backed by a World Bank guarantee again this year though the size has not been decided, Finance Minister Oksana Markarova tells Reuters on Monday. Last month, Ukraine borrowed €529 million under World Bank guarantees. “We are working on the maximum possible amount, but it is too early to say specific figures,” Markarova said. Next month and in November, Ukraine also expects to receive two IMF loan tranches worth a combined $2.5 billion.

Separately, Valeria Gontareva, who nationalized the bank as Governor of the National Bank of Ukraine, dismissed Kolomoisky’s demand for $2 billion “as complete nonsense.” “The bank did not have that capital — there was a hole of 5.5 billion dollars, which the state closed,” she told Novoe Vremya Biznes. In a warning to the court, she added: “This is the biggest fraud in the history of the financial world, so the whole world is watching this case.”

At the meeting with business leaders, Poroshenko drew applause when he said he signed the Bankruptcy Code. As adopted by the Rada last fall, the new Code makes it easier for individuals to go into bankruptcy and for bankrupt properties to be sold at electronic auctions by ProZorro.Sale.

At the urging of Houston’s Frontera Resources, Ukraine is offering an oil and gas tender for its first offshore block: a 9,772 square kilometer section of the continental Black Sea, near Romania. Called the Dolphin section, the block is to developed under a 50-year production sharing agreement that requires a minimum investment during the first five year to drill at least five exploratory wells. Frontera already produces oil and gas in the Black Sea, off the coast of Georgia. Romania, drilling in the Danube delta region of the Black Sea, is on track for a gas boom in the 2020s.

Ukraine increased electricity export revenue by 22% in January-March q-o-q, to $98.4 million, the State Fiscal Service reports. Hungary purchased 60%, or $58 million. Poland bought $22 million and Moldova about $14 million. Last year, Ukraine increased electricity exports by 19% to almost 1 gigawatt. In monetary terms, exports jumped by 41%, to $332 million.

Ukraine’s harvest of rapeseed, used for canola cooking oil, is to jump by 23% this year, predicts AgroConsult. This increase would put Ukraine in fifth place world wide – after Canada, the EU, China, and India. Exports of seed would increase by 17%, to 2.9 million tons. With new investment in crushing plants, processing into cooking oil is to jump by 50% this year, to 500,000 tons, predicts Yulia Garkavenko, the consulting group’s oil market expert.

Led by grain exports, cargo handling at Ukraine’s ports rose 12.4% q-o-q, to 37 million tons, reports the Sea Ports Administration. Grain exports were up by 33%, ore shipments were up by 30%, and container cargo was up by 14%. Fewer ships carry more cargo. The number of ship calls was down by 15.

Yuzhne confirmed its leadership as Ukraine’s busiest port, handling 11.6 million tons, up by 19%. Mykolaiv came in second, with 8.2 million, up 26%. Chornomorsk dethroned Odesa for third place, handling 6.4 million tons, up 23%. The Pearl of the Black Sea came in fourth, with 6.2 million tons, up 5%. Kherson enjoyed a 40% jump, handling almost 1 million tons. The two Azov ports saw declines: Mariupol down 5%, to 1.3 million tons, and Berdyansk, down 27%, to 261,000 tons.

With milder weather in March, shippers jumped at the chance to abandon trucks and trains for river barges. River cargo on the Dnipro jumped 8-fold q-o-q, to 724,000 tons. Of the cargo, 54% was grain, reports the Sea Ports Administration. With freight cargo rates going up this month, more cargo is expected to move to the river.

Ship passenger traffic was up by one third during the first quarter, with 11,373 people traveling by boat to and from Odesa and Chornomorsk. The lion’s share – 76% — traveled on UkrFerry’s Black Sea routes from Chornomorsk – to Poti and Batumi in Georgia and to Haydarpasa and Samsun in Turkey.

The Ukrainian Danube Shipping Company launches its shipping season this week. While some routes will go the full “Alps to the Black Sea” route, most cruises will be of a 1,000 km section of the Danube, between Passau, Bavaria’s ‘City of Three Rivers,’ and Budapest, ‘the Queen of the Danube.’ Based in Izmail, the company has four river cruisers: Dnipro, Moldova, Ukraine and Volga.

The European Investment Bank is to help pay for a feasibility study to build a 270 km highway from Lviv to Mukachevo and Uzhgorod, says Ukravtodor, the state highway agency. The goal is to cut the drive time to Mukachevo in half — to 90 minutes. The rebuilt highway would connect Lviv, Western Ukraine’s road hub, with the new highways approaching Ukraine from Slovakia and Hungary.

Through March, Wizz Air carried 450,000 passengers, 80% more than during the first quarter of 2018, reports the Budapest-based discount airline. With a new hub in Kyiv Sikorsky, Wizz Air starts service in May to Athens and Thessaloniki, in June to Lublin, Poland, and in July to Leipzig. With this expansion, Wizz Air will fly from Kyiv to 30 EU cities.

Passenger traffic at Ukraine’s airports grew by 22% q-o-q, to 4.4 million people, reports the State Aviation Administration. Of this flow, 91% flew internationally. Lviv and Kyiv Sikorsky airports grew the fastest. Ukraine’s top six airports are: Kyiv Boryspil – 2.7 million passengers +15%; Kyiv Sikorsky – 638,000 passengers +44%; Lviv – 370,000 passengers +53.5%; Kharkiv – 221,000 passengers +29%; Zaporizhia – 97,000 passengers +17%; and Dnipro – 62,000 passengers +12%.


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