- For Big Foreign Investors: English Law and International Arbitration
- €1.3 Billion Bond Impresses Analysts
- Census Indicates Population Dropped by One Quarter in Two Decades
- Nova Poshta Plans to Invest $100 Million This Year
- Avian Flu Prompts EU Bans on Ukrainian Poultry
English law contracts and international arbitration will be available to foreign investors, President Zelenskiy promised Thursday in a video address delivered to the annual Davos Ukrainian Breakfast sponsored by the Pinchuk Foundation. “For those who invest more than $100 million, we will conclude a direct investment agreement with the state, based on the English law,“ said Zelenskiy who left Davos Wednesday night for a 2-day trip to Israel. “And in order to provide a guaranteed protection of property rights, we will create an international arbitration system for investors in Ukraine.”
Fallout from Ukraine’s surprise €1.25 billion bond placement at 4.375%:
“Ukraine sells €1.25bn of new debt at record-low borrowing costs,” writes The Financial Times. “Country capitalizes on optimism over president Volodymyr Zelenskiy’s reform program.” Viktor Szabo, an emerging market debt portfolio manager at Aberdeen Standard Investments who bought bonds in Wednesday’s sale, tells the FT: “It’s a rare country where serious reforms are happening and the economy is in good shape.”
Timothy Ash writes: “Extraordinary…A year or so ago, it would not have been able to come at much less than 10%…But what worries me now a bit is complacency and, with cheap market funding, much reduced leverage for the IMF. This could well translate into less of a willingness of the Zelenskiy team to deliver on IMF-related reform conditionality.” Writing from London, Ash also worries about the delay in Rada approval of legislation to lock in the privatization of PrivatBank: “With bondholder money in the bank, and little need now for IMF financing, my fear is that all this will drift.”
Ukraine needs more than money in order to thrive in the 2020s, two Americans said Thursday at the Pinchuk breakfast in Davos.
Robert J. Shiller, Yale University Professor of Economics, said: “Ukraine’s government has to work to promote “sustainable optimism”. It has to be something that people really believe in. I think that the educational system in Ukraine has to present something that is contagious.”
David M. Rubenstein, co-executive chairman of The Carlyle Group, said Ukraine’s poor image scares off investors. “Ukraine has to work on its image as well as the reality,” he said. Alluding to the impeachment ere broad brush painting of rampant corruption in Ukraine, this visitor from New York said: “Many investors who are eager to invest in emerging markets because they are seeking higher rate of investment return are afraid of being criticized – even though they did nothing wrong – because of that perception of the corruption.”
An electronic census estimates that 37.3 million people live in Ukraine, a 24% drop since the last official census counted 48.9 million people in 2001. Cabinet Minister Dmytro Dubilet announced the estimate Thursday, saying it used information from mobile phone operators and the Pension Fund. The drop is attributed to loss of Crimea and the most populated parts of the Donbas; a birth rate below the death rate, and emigration. Kyiv is Ukraine’s most populous metropolitan area with 3.7 million people. The government plans to conduct a new census at the end of this year.
Nova Poshta, the private package delivery service, plans to invest $100 million this year, largely to upgrade sorting facilities, to develop mobile apps and to buy scooters, pickups, minibuses and intercity containers. Kyiv’s new sorting center will be upgraded to handle 50,000 packages an hour, Volodymyr Popereshnyuk, co-founder of the Nova Poshta, writes on his Facebook page. Last year, the number of active users of the company’s mobile app grew by 30% to 2.8 million people. In 2019, the company delivered a record 212 million parcels. In mid-December, it set a record, delivering 1.3 million parcels in one day.
Ukraine’s poultry exports to the EU may remain suspended for one month, an industry analyst tells Interfax-Ukraine. Last Saturday, tests on a dead chicken at a poultry farm on Vinnytsia revealed the cause of death to be avian influenza type A – the first case detected in Ukraine in three years. In response, poultry farms in the area are under quarantine and 21,000 chickens have been destroyed. On Wednesday, the EU banned imports of poultry from Ukraine. The ban does not affect exports of eggs.
Talks are underway to lift the EU restrictions, says Taras Kachka, Deputy Economy Minister and Ukraine’s Trade Representative. “The EU decision to restrict the import of poultry meat due to the case of bird flu in the Vinnitsa region is much stricter than it should be,” he wrote on Facebook. “Nevertheless, we are actively and jointly working to quickly adjust this decision.” Earlier, the Ministry said: “The EU’s decision is stunningly unexpected for the Ukrainian side.” This month, avian flu was reported in Hungary, Poland, Romania, Slovakia, and the Czech Republic.
Poultry is one of Ukraine’s fastest growing major exports, increasing last year by 26% y-o-y, to 414,490 tons, reports the State Customs Service. In dollar terms, exports were up by 14.2%, to $579 million. Imports of poultry to Ukraine were less than 10% of exports.
Deutsche Bahn is to play a major role in reshaping Ukrzaliznytsia in the 2020s.“Yes, we want to give the Germans 10 years to manage the railway,” Prime Minister Honcharuk said Thursday in Davos at the annual Davos Ukrainian Breakfast sponsored by the Victor Pinchuk Foundation. This partnership “should show that Ukraine is unprecedentedly open for investment, for the world, for new standards,” he said. “A political decision has already been made regarding this, and this is already a huge step.”
Details of strategic partnership are being negotiated and are to be signed in February by Ronald Pofalla, a member of the DB Infrastructure Board, Deutsch Bahn said later. The railroad’s consulting company, DB Engineering & Consulting, “will advise and support Ukrzaliznytsia in business and technical matters.”
Concorde Capital’s Alexander Paraschiy writes: “Whatever form this partnership will take, it looks positive for Ukrainian Railways. The involvement of foreign advisers raises the chances that many legal initiatives to benefit the company will be implemented…Additionally, this partnership improves possibilities to finance further development at lower costs.”
- Zelenskiy in Davos: Income Tax Breaks and ‘Investor Nannies” To Make Ukraine Eastern Europe’s ‘Investment Mecca’
- IMF: ‘Constructive’ Meeting with Zelenskiy
- Finance Ministry Places €1.25 Billion Eurobond At Yield 237 bps Below Last June
- Strong Demand at Hryvnia Bond Auction Also Depress Yields to 10%
To jump start foreign investment in privatization, President Zelenskiy announced Wednesday a five-year income tax break for investors who invest $10 million or more for a state company and a personal “investment nanny” to help large investors navigate Ukraine’s bureaucracy. “It is the state that will protect you, you will have a manager who speaks five languages and will work with you 24/7,” Zelenskiy told the World Economic Forum in Davos.
“We offer an ‘investment nanny’ for those investing $100 million-plus – this will include a separate contract with the state,” Zelenskiy said, answering a question from Klaus Schwab, executive chairman of the Forum. “A manager speaking five languages and available 24/7 will answer any question. You will be in direct touch with the manager and have no problem whatsoever.”
Addressing an audience heavily populated with investors and company CEOs, Zelenskiy said: “500 companies are ready for privatization.” Asserting that privatization starts in earnest this spring, he said: “We propose all of you to be the shareholders of the success of new Ukraine.”
The setbacks of the last five years “mobilize us Ukrainians and make us move faster, inspire us to do the incredible and impossible,” he said. Aiming high, Zelenskiy told the investor audience: “My goal is to have Ukraine in the textbooks alongside the cases of Japan, South Korea, Singapore. So join us! Ukraine should become the investment mecca of Eastern and Central Europe.”
IMF Managing Director Kristalina Georgieva met with Zelenskiy, Prime Minister Honcharuk and Finance Minister Oksana Markarova. Afterwards Georgieva released this statement: “We had a very constructive conversation with President Zelenskiy about the progress made in reforming the judiciary, increasing respect for the law, promoting economic growth and the importance of completing actions that still remain unsolvable so that we can put the IMF program on board decision Directors.”
Earlier in the day, Markarova wrote on Facebook that the 3-year program could be Ukraine’s last for the Zelenkiy presidency. “The IMF program, which we have agreed at the management level, is definitely needed for three years. But there is a chance to withdraw from the IMF, having completed [the program] in full.” If approved by the IMF Board, the Extended Fund Facility is expected to be for $5.5 billion.
Favorable financial developments bolster the Finance Minister’s confidence.
A €500 million tranche of EU financing may be transferred to Ukraine next month, Radio Liberty correspondent Ricard Jozvyak, tweets from Brussels. Release has been loosely tied to a EU agreement.
Last night, the Finance Ministry announced placement of €1.25 billion in 10-year euro-denominated Eurobonds at a rate of 4.375% per annum. The issuance was almost six times oversubscribed. The joint lead managers were BNP Paribas, JP Morgan and Raiffeisen Bank International. For comparison, last June, Ukraine placed €1 billion worth of seven-year Eurobonds with a yield of 6.75% per annum.
Markarova posted on the Ministry website: “We are pleased to announce that today Ukraine conducted a price-list of euro-denominated Eurobonds with a maturity of 10 years at the lowest coupon in the history of the country, at a rate of 4.375%, having collected applications from more than 350 investors from all over the world.”
This low interest bond deal will save Ukraine $2 million a day, Prime Minister Honcharuk posted on Telegram. “Our government has inherited a heap of insane debt,” he wrote. Referring to a $20 billion a year load, he wrote: “Servicing the national debt is the largest item of expenditures from the State Budget. It will average UAH 484 billion a year by 2022. That is why we have placed Eurobonds at the cheapest interest rates in the history of Ukraine. In simple words, we replace debts – we give away expensive ones, and we take much cheaper ones.”
On Tuesday, heavy bidding at the weekly auction for hryvnia bonds depressed yields across the board to the 10% range. Demand was double supply, the Finance Ministry reports. The sale netted the dollar equivalent of $263 million, 5% more than the auction the week before. Average weighted yields were: 3-year hryvnia bonds down 237 basis points to 10.01%; 1-year bonds down 14 basis points to 10.04%; and 6-month bonds down 172 basis points to 10.03%.
Concorde Capital’s Evgeniya Akhtyrko writes: “The interest rates for short-term bonds declined significantly amid the growing demand. The interest rates converged at around 10%, no matter the bonds’ term of maturity…Next week, the government will lengthen the maturity of the Ukrainian state bonds spectrum by offering 7-year bonds.”
With the National Bank of Ukraine expected to cut Ukraine’s prime next week by 200 basis points or more, ICU writes: “Generally, current conditions seems to have put rates very close to the bottom, and a further decline in the NBU key policy rate will not have significant impact, especially at the long end of yield curve, where demand is mostly seen from foreign investors.”
At Davos, Zelenskiy also held meetings:
With Suma Chakrabarti, president of the EBRD. Zelenskiy thanked him for extending €1.1 billion in new loans to Ukraine last year.
With David McLennan, CEO of Cargill. Zelenskiy outlined Ukrzaliznytsia plan for private freight trains this year and encouraged the American company to increase its investments in food processing.
With Rovnag Abdullayev, CEO of Azerbaijan’s SOCAR energy company. Zelenskiy discussed new investments in gas transportation. Separately, Azerbaijan’s Ambassador to Ukraine Azer Khudiyev said in Kharkiv on Tuesday that Azerbaijan plans to expand its new investments in Ukraine this year to $1.5 billion.
Also at Davos, German rail giant Deutsche Bahn signed a memorandum of understanding with Ukraine’s Infrastructure Ministry. “The experience of the most successful European railway company will increase the efficiency and quality of rail transport in Ukraine,” said Prime Minister Honcharuk. Stressing that the alliance does not mean privatization of the state railroad, he added: “German operational efficiency and zero tolerance for corruption will be the basis for changing the situation at Ukrzaliznytsia.”
At Ukraine House Davos, Honcharuk chaired on Wednesday evening his first meeting of the National Investment Council, the CEOs of 20 top foreign investors in Ukraine. Noting that next year’s economic growth rate is expected to match the inflation rate – 4% – he urged: “Now is the best time to invest in Ukraine.” After listing the main free market reforms enacted in the first four months of his government, he said: “Fair competition and equal rules for all are our religion. We believe in it and will fight for it.”
- Ukraine Lacks Administrators: €4 Billion Stays in Euro Bank
- Davos: Investment to Flow Into Infrastructure
- A Green Tariff Switch Could Turn off Investors
- Feeding Western China: Ukrainian Corn, Wheat To Fill Empty EU-China Trains
- Ukrposhta May Win Banking Services
Lack of a “well-functioning public administration” holds up disbursement in €4 billion in approved European Investment Bank loans to Ukraine, Jean-Christophe Laloux, the bank’s head of lending, told the Ukraine House Davos. Noting that only €2 billion of €6 billion in approved loans have been disbursed, he said Ukraine needs to invest in public administration. “People need to be paid enough to make it a career – not to exit after a couple of years.”
Infrastructure will become a prime target for investors during the five-year Zelenskiy administration, predicted several Davos speakers.
Citing Monday’s award of a concession tender for Kherson port, Olga Magaletska, office head of the National Investment Council, said: “We have been talking about concessions for 20 years – and finally it has happened.” On Tuesday, Prime Minister Honcharuk formally announced that a Swiss-Georgian consortium, Risoil-Kherson, won the tender. Magaletska said ports, regional airports and private freight trains will be priority areas for foreign investment this year. Toll roads require new legislation.
Ukraine no longer can afford the luxury of debating public private infrastructure partnerships, said Michael Yurkovich, CEO of TIU Canada. “90% of Ukraine’s infrastructure will fail in 10 years,” he said, citing a recent study by the Ukrainian Institute for the Future. “Ukraine needs $80 billion to keep the country where it was in 2005.”
Switching gears on green tariffs without a consensual agreement could be a barrier to new foreign investment, warned Alain Pilloux, EBRD’s vice president for banking. “The investment climate of Ukraine is at stake, the ripple effect could hit concession tenders and privatization.”
In the audience, a major green investor, Joar Viken, group CEO of Norway’s NBT, warned that retroactive changes to the tariff would cause investors to “lost trust.” NBT has a €1.1 billion pipeline of wind-power projects for southern Ukraine. This fall, the company plans to inaugurate Syvash Wind Farm, a €376 million, 250 MW project in Kherson. In addition, NBT is trying to line up funding for Zophia, a €700 million wind-farm in Zaporizhia, on the north shore of the sea of Azov.
Ukraine’s strong macroeconomic position – 4% inflation and 4% forecast GDP growth – are catching the eye of foreign investors, several speakers said.
“Every week, I am getting calls from EU, US, Asia and Middle East investors, looking for bolt on acquisitions in Ukraine,” Lenna Koszarny, Horizon Capital CEO, said of the mood shift. “In the next 3-5 years, I see in Horizon Capital’s pipeline $1 billion of new deals that will be financed by Horizon together with our co-investors and debt partners.” Noting that the government has set a goal attracting $50 billion in foreign direct investment over five years, she said: “That amount will only be reached through infrastructure.”
Andrey Gorokhov, UMG Investments CEO, said Ukraine had to work faster to win more foreign direct investment. He predicted that his Kyiv group would invest $150-200 million in Ukraine projects in the next 3-5 years.
On the infrastructure side, Volodymyr Osadchuk, CEO of COFCO Agri Resources Ukraine, said his company is negotiating to win permission to fill China-bound container trains with wheat, corn and soybeans. Currently, trains return to China from Europe largely empty. COFCO, a Chinese company, predicts that 35 container trains a week could cross Ukraine, loaded with food for Western China, a food importing region. Urumqi, the largest city, is roughly equidistant from Shanghai and Kyiv.
Rail passenger traffic between the EU and Ukraine, grew by 15% y-o-y last year, to 947,000 passengers. About half of the passengers, 482,000, took the train that runs between Kyiv and Przemysl, Poland.
In IT, a $100 million Ukrainian startup fund is being created by the government, said Oleksandr Bornyakov, Deputy Minister of Digital Transformation of Ukraine. The Finance Ministry reports this Saturday, nine finalists from 300 applicants will present their projects to the competition committee of the Ukrainian Startup Fund.
Last Tuesday, the government unveiled ‘Dilo Svita’ a national project to teach 6 million people digital skills, Bornyakov said. This program meshes with a larger goal of closing internet ‘white spots’ – or extending internet use to the last 10 million Ukrainians. In addition, as part of increasing the nation’s IT professionals from 200,000 today to 500,000 in 2024, the government wants to train people for key support roles, notably IT marketing managers.
Welcoming Ukrainians to Davos, analysts at Credit Suisse forecast the nation’s GDP will grow at 4% and higher this year and next. “Our main expectation from the Ukrainian economy is that in the coming years it will grow at or above 4%,” the report said. With the higher growth would come a higher payout ratio for the nation’s 2015 GDP-linked warrants. The analysts also predicted that Ukraine’s central bank would intervene more actively this year to prevent a strengthening of the hryvnia.
Radical cleanup of the nation’s three big state-owned banks during the Zelenskiy government is envisioned in a strategy document posted on the National Bank of Ukraine website. Nonperforming loans are to drop from 53% today to 10% in 2024. The state banks’ share of banking assets is to drop from 60% today to 25%. The level of public confidence in the financial system is to increase from 10% today to 60% in 2024.
To extend banking services to all population centers of Ukraine, the Rada has registered a bill to allow Ukrposhta to offer the kinds of financial services seen at European postal banks – open postal accounts and pay salaries, pensions and social benefits. “Opening of postal accounts is an opportunity for the 37% of the population who do not have access to bank services to receive modern financial services, through Ukrposhta,” Igor Smilyanskiy, Ukrposhta CEO, told the post office’s press service.
Ukraine’s off the books, shadow economy amounts to $83 billion, according to a study by Yury Kharazishvili, chief researcher at the Institute of Industrial Economics of the National Academy of Sciences of Ukraine. If accurate, Ukraine’s $150 billion GDP is really $233 billion. With this accounting, GDP per capita rises to $5,833.
- China Forges Ties With UZ
- Private Czech Railroads Coming to Lviv
- Swiss-Georgian Consortium Wins Kherson Port Concession
- 300 State Properties to be Sold in 2020
- Eggs Up, Milk Down
- UIA Only Airline to Cut Flights
China’s CRCC, the railroad construction giant, and Ukrzaliznytsia signed a memorandum of cooperation last Monday. Goals are to modernize Ukraine’s rail system and to promote Ukraine as a rail transit country for China’s trade with the EU. Ukrzaliznytsia is currently evaluating Chinese electric locomotives for what could be a $1 billion deal. At the signing ceremony, Wang Hongwei, deputy general director of CRCC, said his company will open an office in Kyiv this year.
Ukrzaliznytsia wants to work with CRCC to increase the transit of Chinese container trains to the EU. Last year, Belarusian Railways handled 338,500 containers on trains traveling between China and the EU, about double the 2018 volume. CRCC is a major player in Beijing’s Belt and Road Initiative which seeks to diverse trade routes between China and its trading partners.
“We expect that the cooperation between Ukrzaliznytsia and CRCC will significantly improve the state of transport infrastructure,” Infrastructure Minister Vladyslav Krikliy, said at the ceremony. “We aim to attract direct structural investments in the creation of a high-speed rail network, not only between ‘millionaire’ cities in Ukraine but also…bring Ukraine to Europe…It will be possible to go to Warsaw, Budapest, and Bucharest in no more than three hours, and from Kyiv to Odesa, the train will take 1.5 hours instead of the current 7-8.”
Two private Czech region railway companies plan to launch trains between Prague and Lviv Region within the next six months. Initially, the trains would go to Mostyska 2, a Ukrainian border station with a European gauge track. If Ukrzaliznytsia fulfills plans to build 70 km of European gauge track to Lviv, the trains would run Prague-Lviv.
In mid-March, Leo Express plans to start trains between Prague and Mostyska 2. On June 14, Regio Jet, the largest Czech private railway operator, wants to start night trains from Prague to Mostyska 2, reports Rynek Kolejowy, the Polish rail news site.
A Swiss-Georgian consortium, Risoil-Kherson, has won the Infrastructure Ministry’s tender for a 30-year concession to run Kherson seaport, according to press reports. Considered a small port, Kherson handles a mix of Dnipro River and Black Sea cargo.
Starting with 87 state properties this month, the State Property Fund is to privatize more than 300 state properties this year, almost one a day. Prime Minister Honcharuk writes on Telegram that he has instructed Dmitry Sennichenko, head of the State Property Fund, “to carry out transparent privatization of over 300 objects planned for this year.”
The government is transferring 35 plants of Ukrspirt to the State Property Fund for privatization, reports the Ministry of Economic Development, Trade, and Agriculture. Of the 35 plants, eight are producing, seven can restart production within a month, 16 require significant modernization, and four need to be closed.
Ukrposhta, the state postal company, switched to $25 million profit last year, from $30 million loss in 2018, the company reports. Employing 76,000 people, Ukrposhta increased its net income by 21%, to $342 million. Competing for head to head with Nova Poshta, the private delivery service, Ukrposhta acquire 547 new cars, 8,300 new computers and 5,000 point of sale terminals for contactless transactions.
Ukraine has the world’s second cheapest internet, according to Worldwide Price Comparison, a study by the British company BDRC Continental and provider Cable.co.uk. The average cost of connecting in Ukraine is $ 6.64 per month, only four cents more than in Syria. Ukraine is part of Eastern Europe’s cheap internet pool of countries. After Ukraine, the ranking is Russia – $7.35 per month; Romania – $8.15 per month; and Belarus – $9.87 per month.
Ukraine’s egg production increased by 3.4% y-o-y to 16.7 billion eggs, reports the State Statistics Service of Ukraine. This follows a 4.1% rise in 2018.
Ukraine’s milk production decreased by 3.7% y-o-y, to 9.7 million tons, reports the Statistics Service. Dairies were down 1.4%. Households were down 4.6%. This follows a 2.1% fall in 2018.
The numbers of most farm animals decreased by 4.7-5.7% last year, reports the Statistics Service. Cows were down 5.7%, to 3.1 million. Pigs were down, 4.9%, to 5.7 million. Sheep and goats were down 4.7%, to 1.2 million.
By contrast, poultry were up by 3.6%, to 219.4 million on Jan. 1. In 2018, poultry was also up, by 3.3%
Due to Ukraine’s ban on overflights of Iraq and Iran, SkyUp Airlines will suspend on Feb. 1. Its flights to Sharjah (UAE) from Zaporizhia, Lviv, and Kharkiv. After the shootdown of the UIA plane in Iran, SkyUp was forced to route planes over Egypt and refuel in Turkey, a change that added three hours to Sharjah-Ukraine flights.
UIA was the only airline of the top 10 serving Ukraine to cut its flights last year. UIA cut its flights by 5%, to 58,773, according to UkSATSE, the air traffic control agency. All others enjoyed double-digit growth. Discount airlines showed the fastest growth: Ryanair was up 438%, to 9,295 flights; Wizz Air was up 37%, to 20,944; and SkyUp was up 341% to 10,061.
- Shipping News: Sea Cargo up 18% to Post-Independence Record
- At Black Sea Ports, TIS, EBT, and Kernel Start Big Investments
- Qataris, Turks, and Swiss Vie For Ukraine Port Concessions
- River Cargo up 19%
- Ze Aims to Triple River Cargo, But Shippers Complain River Closes Too Early
- Nibulon and Asket Build More River Ports
- Viking Expands Its $4,000 Luxury Cruises up Dnipro
Cargo handled by Ukraine’s 13 seaports jumped by 18.4%, topping 160 million tons for the first time in the history of independent Ukraine. The top four ports, all on the Black Sea, were: Pivdennii (Yuzhne) – 54 million tons (+26%); Mykolaiv – 33.4 million tons (+14.5%); Chornomorsk – 26 million tons (+21.4%); and Odesa – 25.3 million tons (+16.8%).
Pivdenni, Mykolaiv, and Olbia hit maximum cargo levels since opening, in Soviet days. For the first time in a decade, Black Sea container cargo topped 1 million. Helping shippers, 7 million cubic meters of sediment were dredged, for the second year in a row, reports Raivis Vetskagans, outgoing CEO of the Ukrainian Sea Ports Authority.
After handling a record 33 million tons at Pivdennii – 61% of the port’s total – TIS terminals have ambitious plans for the 2020s. “90% of the world’s cargo is still transported by sea, and we have huge plans in this regard,” Andriy Stavnitser, a co-owner of the company, told the Center for Transportation Strategies. “We are going to develop the TIS industrial park, actively increase container transit and transshipment. There will be more container trains, many new records, and impressive news.”
Mykolaiv’s Nika-Tera marine terminal handled 48% more cargo last year than in 2018, reports Alim Agakishiev, director of this terminal, which is part of the Group DF. Of the 8.6 million tons, grain, legumes, and oilseeds accounted for 69% of the total volume.
Mykolaiv’s ЕВТ starts construction in May of a 180m long berth capable of loading two Panamax size vessels at the same time, says Sergey Gunko, director of the port formerly known as Evroneshtorg. Due for completion in October, the new berth will expand the company’s usable berth line by 65%.
At Chornomorsk, Kernel, the world’s largest producer and exporter of sunflower oil, has signed a deal with the Sea Ports Authority to invest $125 million in port infrastructure. In return, the Authority will dredge in front of Kernel’s berths. In November, Kernel made its first grain shipment to China exclusively by water. From Svitlovodsk port on the Dnipro, two barges carried 4,000 tons of corn to Chornomorsk where they were loaded on a mother ship and shipped to China.
Qatari port operator Qterminals and two Ukrainian companies are finalists in a tender for a concession to operate Stevedoring Company Olbia. The Infrastructure Ministry is to announce the winner this week. In the queue for a concession operation are Kherson, Mariupol, Mykolaiv, Odesa, and the Chornomorsk ferry complex.
Despite Russian harassment of Ukrainian shipping in the Sea of Azov, the cargo was up 10% last year at Mariupol, Ukraine’s largest port on the Azov. Cargo at this Donetsk Region port hit 6.5 million tons, reports the Sea Ports Authority. In 2018, cargo fell almost 10% from 2017 levels.
Due to expanded dredging and larger barges on the river, the number of boat trips was down 27%. Over the last two years, dredging has allowed barges to nearly double their average cargos, to 960 tons, says Vetskagans, of the Sea Ports Authority.
Nibulon, the nation’s largest river shipper, increased its river cargo by 38% to 3.8 million tons. This was split between 3 million on the Dnipro, and 800,000 on the Southern Bug, Ukraine’s second-longest navigable river.
With some grain moved to ports by train and truck, Nibulon exported a total of 5.3 million tons of food in 2019, up 8% over the year before. Already exporting to 70 countries, Nibulon is working to develop Bangladesh, Ethiopia, Kenya and India, Indonesia, Saudi Arabia, and South Korea.
Dnipro cargo should grow this year by 25%, to 15 million tons, says Infrastructure Minister Vladyslav Krikliy. By 2024, river cargo should triple to 35 million tons, he told a recent transportation forum, outlining his Ministry’s 5-year plan. He said: “The development of river transport will unload the roads and protect them from destruction, and will also help to create new jobs by increasing orders for Ukrainian shipbuilding companies.”
In a first step, Krikliy says repairs will be made this year on four of the six locks on the Dnipro ‘cascade’ of dams. Descending the river, the six shipping locks are Kyiv, Kanevskyi, Kremenchuk, Kamianskyi (Dneprodzerzhinsky), Zaporizhia, and Kakhovskyi. Viktor Dovhan, a Ministry adviser estimated that dredging and basic lock repair will cost $36 million. To pay this bill, the Ministry advocates doubling lock fees this year.
Nibulon argues all major repair work should be done January to March when ice closes the river for shipping. This season, the Infrastructure Ministry closed the Kamianskyi (Dneprodzerzhinsky) lock on Dec. 1 for repairs. “We lost half of the river,” Mykhail Rizak, a Nibulon government affairs officer, told the UBN.
Nibulon, which owns 12 river ports, plans to build two more, both on the Southern Bug: one in the Matveevka district of Mykolaiv City, and the other, about 100 km upriver at Pribuzhye, Mykolaiv Region. Nibulon has 75 river boats, most made at the company shipyard in Mykolaiv.
Also betting on river transport, Asket Shipping plans to commission in March a grain storage warehouse at its new river terminal in Dnipro City. In 2018, Asket opened a river terminal in Zaporizhia. About 90 km apart, the terminals handle barley, corn, soybeans, and soybean and sunflower meal.
Boat passenger traffic ticked up 4% last year, to 538,000. Although largely for domestic cruises, 10,000 passengers traveled on international Black Sea routes, largely to Odesa. This summer, Viking River Cruises expand its 10 Odesa-Kyiv cruises to include Bucharest. The 12-day cruises run from May 17 to Aug. 15 and prices start at $4,000 per person.
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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