- Foreign Investment in Ukraine Treasuries up 4X
- Trade with EU Up, Trade with Russia Down
- River Shipping Season Opens
- A Hilton Planned for Lviv
- Ukraine Is the Region’s Top Country for Wage Remittances
- To Compete, Employers Hiked Salaries 15-20% Last Year
- Second Big Kyiv Office Buy
- China-Eu Trains Roll Through Ukraine
- More Flights to Switzerland, France
- Metinvest to Invest $1 billion this year
- Ukraine Steel Production up 4.5%
- EU to Finance Road, Rail Out of Mariupol
- Poland Invests to Become US LNG Hub
- Ukraine Startups Win Attention in New York, Nigeria
- Air Travel to Boom in the 2020s
- Foreign Companies Can Now Open Bank Accounts
- Wind Projects Under Construction Total $1.3 billion
- Norway’s ABT Plans Europe’s Largest Wind Farm – in Zaporizhia
Foreign investment in Ukraine’s UAH treasury bonds has quadrupled since the start of this year, hitting almost $1 billion, according to the National Bank of Ukraine. The increase to 25.8 billion hryvnia is attributed to: high-interest rates, lack of concern about the presidential election, and the expectation that the opening in the coming weeks of the Clearstream clearinghouse link will increase demand and lower spreads for Ukraine bonds.
Setting an example for Ukraine, Moldova’s Aragvi Holding International Ltd., has successfully launched Moldova’s first ever international bonds – a $300 million, five year Eurobond issue. Fully subscribed last week the bond, with a 12% coupon, had this buyer profile: EU 33%; Switzerland 29%; Britain 19% and US 18%. Aragvi’s Trans-Oil Group specializes in growing and crushing sunflower seeds and exporting oil through Moldova’s Danube river port of Giurgiulesti and Ukraine’s adjacent port of Reni. The bonds are listed on the Irish Stock Exchange.
Trade with the EU is up, and trade with Russia and the CIS is down, according to first quarter statistics released by the State Fiscal Service. Ukraine’s trade with the EU grew 6% q-o-q, to $11.2 billion. Exports were up 3%. to $5.2 billion. Imports were up 9%, to $5.9 billion. During the same January-March period, trade between Ukraine and the CIS, including Russia, was down by 5%, to $4.3 billion. Exports fell by 6%, to $1.5 billion. Imports fell by 4%, to $2.8 billion.
Ukrtelecom JSC, the nation’s landline telephone company, starts in May $10 million, two-year project to lay 3,500 km of fiber optic lines to bring high-speed internet to 300 small towns and villages, the company reported Tuesday. Ukrtelecom, owned Rinat Akhmetov, will work with Slovenian telecommunications company Iskratel. Half of the budget is funded by SID Banka, Slovenia’s development bank.
After a three-month winter closure, the Dnipro is open for shipping with the locks open all the to Kyiv. At the start of the river shipping season, Yuriy Lavrenuk, deputy infrastructure minister, believes Dnipro cargo will grow, building on last year’s 22% rebound, to 10 million tons. “River transport is becoming more and more relevant,” he told a recent transportation meeting in Kyiv. “We see new carriers emerging on the river transportation market. Our goal is to reduce the load on Ukrainian roads by redirecting part of the cargo to the river.” Cargo by Ukraine’s ports on the Danube was 6 million tons, and on the Southern Bug River, 600,000 tons.
Increasing rail freight cargo rates and a highway crackdown on overweight trucks will push more cargo to river barges, predicts Dmytro Kozachenko, executive director of the Ukraine Rivers Association. He tells Interfax-Ukraine: “We are still far away from the figures before the 1990s when 60 million tons of cargo were transported on Ukrainian rivers. However, we can talk about some recovery of the market.” According to the State Statistics Service, the river cargo breakdown last year was: construction materials – 39.5%; or – 14%; and grain – 11%.
Two weeks after authorizing an ‘open skies’ aviation agreement with Qatar, Ukraine’s government proposes to Qatar Airways to start a local carrier. “We are ready to support the creation of Qatar Airways Ukraine,” Infrastructure Minister Volodymyr Omelyan tells U Vidpustku travel site. “This is a serious offer. We see that we are chronically short of airplanes on the domestic market of Ukraine.” Separately, Qatar Airways seeks to fly to Amsterdam via Lviv. Omelyan said that Wizz Air has applied to reopen Wizz Air Ukraine, closed in 2015.
Starting Sunday, Ukrainians can visit Thailand for 30 days without visas. UIA flies from Kyiv Boryspil to Bangkok Suvarnabhumi five days a week.
A Hilton hotel is to be built in Lviv, Mayor Andriy Sadoviy said at a City Council meeting. The hotel, with 157 rooms and apartments, is to be built on a site in Bohdan Khmelnytsky Park, the city’s best-known park. “They want to build a hotel, it seems, Hilton,” the mayor said. “Half of the building should be a classic hotel, half of the building – an apartment hotel. This should be a building of high architectural level – a work of art.”
The World Bank reports that Ukrainians sent home last year $14.4 billion in wages, almost one third more than the $10.9 billion figure reported by the National Bank of Ukraine. Ukraine is now the largest recipient of wage remittances in Europe and Central Asia, says the World Bank. For comparison, $14.4 billion is 11% of the nation’s GDP and 10 times the $1.4 billion disbursed by the IMF to Ukraine last year.
Labor is now Ukraine’s second largest export, after food. Wage remittances now are more than the total exports of metals and IT services combined. With more than $1 billion a month coming into Ukraine, economists say wage remittances boost retail sales and residential construction and help explain why the hyrvnia / dollar exchange is basically unchanged for three years.
Almost two years after the start of the 90-day visa-free regime with the EU, part-time work in the EU is increasingly common. Of the 7-9 million Ukrainians who work abroad, only one third do so full time, estimates Andriy Reva, Minister of Social Policy. Poland’s Foreign Minister Jacek Czaputowicz estimates about 2 million Ukrainians work or study in Poland — about 5% of the people living there. In turn, about 2 million Poles work further West in Europe, largely in Germany and Britain.
Poland’s average wage is $1,050, about three times higher than in Ukraine. In a recent Channel 24 report, economist Alexander Savchenko said a fast way to increase monthly salaries by one third would be to slash payroll taxes.
On average, Ukrainian companies raised wages last year by 15-20%, Yuriy Perch, Ukraine director for the ANKOR job agency, tells 112.ua for a detailed story about labor migration. To hold on to employees, Metinvest and OKKO raised salaries by 30% last year. since 2015, the average farm salary has tripled, says Leonid Kozachenko, president of the Agrarian Confederation. With farms in neighboring countries recruiting Ukrainian tractor drivers and combine operators, “labor shortage” suddenly displaced ‘corruption and raiding’ for second place on the Confederation members’ worry list, after the shortage of credit.
Ukrainian builders, welders, plumbers, and truck drivers are most sought after abroad, according to Vasyl Voskoboynik, who runs a Ukrainian employment agency association. An experienced tiler who earns $7-10 per square meter in Ukraine, can earn $30 per square meter in Belgium. On his return home after 90 days, he has little incentive to do the same work here for one quarter the wage, Perch of ANKOR, tells 112.ua.
In Ukraine, 42 domestic and international payment systems were in use at the end of last year, reports the National Bank of Ukraine. These included credit card companies and international transfer systems. On Wednesday, PrivatBank announced that it has set up an international transfer system with Israel, through STB Union. PrivatBank, Ukraine’s largest bank, said: “Now you can send a transfer from Israel for a few clicks through the mobile STB Union application at the best exchange rate.”
The Finance Ministry sold the equivalent of $304 million bonds Tuesday, fulfilling 99% of all bids without changing yields from the 18-19% range. ICU writes: “Demand for local-currency bills remains high, allowing the MoF to borrow more funds than needed for debt repayments. Foreign investors purchased more than UAH 8 billion during recent weeks.”
Horizon Capital has acquired a minority stake in Dobrobut, the Kyiv-based private healthcare provider. Financial terms weren’t announced for the investment which is from Horizon new $200 million Emerging Europe Growth Fund III. Dobrobut CEO Oleg Kalashnikov said the company plans to shortly open a 10,000 square meter facility in Kyiv that will offer surgery and heart and cancer care.
Dentons law firm moved last week from Volodymyrska, Kyiv’s law firm avenue, to the new Astarta Organic Business Center on Podol’s Naberezhno-Khreshchatytska Street. Billed as Kyiv’s first “green” business center in Ukraine, the Astarta building has its own park with fountains and lines of trees. Oleg Batyuk, the managing partner of Dentons Ukraine, which has 30 fee earner lawyers, said: “For over 25 years, we have been devoted to the Ukrainian market and we will continue to invest in growing our capabilities.”
Businessman Vadim Grigoryev has made his second big Kyiv office center purchase in a year, buying a 28,200 square meter building in western Kyiv currently occupied by Innovecs, the Israeli software outsourcing company. Hryhoryev bought the center for $13 million at a ProZorro.sale auction of assets owned by the now-defunct Ukraine subsidiary of Russia’s VTB bank. Last year, he bought the 17,100 square meters Renaissance Business Centre for $25 million, Kyiv’s largest office purchase of the year. With IT companies grabbing space, office vacancies in Kyiv have fallen to 3%.
Starting July 1, 5% of all new parking spaces – in public garages and apartment blocks – will have to be equipped with chargers for electric cars. By 2030, 100% of parking spaces in garages are to have chargers. “In the span of the next 5-10 years, the global community will entirely switch to electric cars,” predicts Lev Partskhaladze, deputy minister of Regional Development, Construction, and Housing. “This will not happen at once. We need to begin preparing now.”
Investments by foreigners in Ukrainian domestic treasury bills hit a new record last week, increasing by UAH 2.5 billion, to nearly UAH 23bn, or $852 million. ICU writes: “For three weeks in a row, domestic bills have been favored by foreign investors. It is very likely that demand from this category of investors will continue to be high during the following weeks.”
A new China-Hungary container train, rolling 1,200 km through Ukraine, starts weekly service on Friday. Last week, a 41-container test train carrying consumer goods from Shanxi, China, completed the 12-day trip to Eperjeske, Hungary, arriving on Sunday. The train enters Ukraine at Zernove, Sumy, and then runs in a southwest diagonal to Batevo, Zakarpattia. Promoters of the service — Rail Cargo Logistics of Russia and KTZ Express of Kazakhstan — say the train opens a “southern corridor” from China to Hungary, Austria, Romania, Italy, and Balkans.
Planners are drawing up blueprints for a €600 million industrial park and logistics hub to turn Kovel into a gateway for Chinese goods to the EU. Trains from China to the EU face two railroad gauge breaks. The first is at Dostyk, Kazakhstan, where the wide Soviet gauge starts. The second is at Poland’s eastern border, where the narrow European gauge starts. Currently, the main gauge transfer point – Brest, Belarus / Małaszewicze, Poland – is overloaded, says Yevhen Kravtsov, CEO of Ukrazalinytsia.
With five rail lines radiating out of Kovel, Western Ukraine’s rail hub, Ukrzaliznytsia is electrifying the 85 km stretch southwest to Izov on the Polish border and planning to use EU loans to rebuild the 65 km of European gauge section that runs due east to Chelm, Poland. The rail route from Dostyk, on the Chinese-Kazakh border, to Kovel is only 4% longer – 206 km – than the rail route to Brest. By shipping products by rail, some Chinese factories can cut shipping times to the EU in half, compared to sending by sea.
“The [Kovel] region has a unique opportunity to turn into a transport and logistics hub and become the western gateway of Ukraine to Europe,” Oleksandr Savchenko, Ukraine’s chairman of regional administration, recently told a meeting in Kovel of the Volyn Regional Development Council, according to Zalіznichne postachannya magazine. He estimated construction of an international “dry” cargo port with a track side industrial park would create 3,500 jobs.
One year after restoring its Zurich-Kyiv route, Swiss International Air Lines increased its frequency last week by 50%, to six times a week. In July, the flight will increase to daily, says Rene Koinzack, country manager for Lufthansa Group, the parent company for Swiss. The flight had been dropped Oct. 1, 2014, due to the hostilities between Ukraine and Russia.
Ukraine new discount airline SkyUp starts flying to France in the first half of June, company CEO Eugene Haynatsky tells U Vidpustku travel site. SkyUp will fly three times a week from Kyiv Borispol to Paris Orly and two times a week from Kharkiv to Orly. It will also fly twice a week to Nice, competing with a UIA flight on that route. In a reciprocal deal, discount French carrier Aigle Azur, starts flying between Kyiv Boryspil and Orly on April 18.
Metinvest, Ukraine’s largest steelmaker, plans $1 billion capital investments this year, a 20% increase over last year, the company tells analysts. Metinvest CEO Yuriy Ryzhenkov, says more than 60% of CapEx will be for maintenance and 35% will be for strategic development projects. Concorde Capital’s Dmytro Khoroshun reviews the company’s spending on debt, dividends, and CAPEX and writes: “We think that it is realistic for Metinvest to cover this deficit with investment-related debt facilities and with withdrawals from its $1.9 billion in working capital.”
Metinvest made $1.2 billion in net profits last year – almost double the 2017 level, the company reports. “Underpinned by favorable steel and iron ore prices and ongoing economic growth in Ukraine…revenues soared by 33% year-on-year,” Metinvest CEO Yuriy Ryzhenkov, writes of the 2018 company results. “In 2018, Metinvest delivered some of its best results in the last four years.” After the report, Ryzhenkov told S&P Global Platts in London that Metinvest’s crude steel output should rise by about 1 million tons this year, to 8.5 million tons.
Nearly $900 million of investments in Metinvest’s two Mariupol steel mills last year helped push Ukraine’s steel production up 4.5% during the first quarter, to 5.5 million tons. Last month, Metinvest launched a new continuous casting machine with an annual capacity of 2.5 million tons at its Illyich Steel MMKI mill. Next month, Metinvest’s other big project goes on-stream: a modernized blast furnace at Azovstal will increase the plant’s annual hot metal capacity by up to 1.6 million tons. Dragon Capital writes: “Domestic steel production keeps recovering gradually, driven by a pipeline of CAPEX projects that are likely to continue powering the steel sector through 2020.”
Exports of steel products through Mariupol were down 30%, to 455,000 tons, in January and February, compared to the same period last year. By contrast, at Mykolaiv, the Black Sea alternative for Mariupol’s steel mills, steel exports were up 20%, to 615,000 tons. Last year, Mariupol was the nation’s top steel exporting port, shipping out 4.1 million tons of steel. But last May, Russian border controls ships started harassing shippers in the Azov, causing some companies to stop serving Ukraine’s largest port on the Azov. At Kherson, a smaller Black Sea port closer to the Azov, cargo handling during the first two months of this year was up 27.5% y-o-y. From Mariupol, Kherson is 420 km or seven hours by truck.
The EU and the European Investment Bank are preparing new concessional loans to finance the rebuilding roads and railroad tracks from Mariupol northwest to Zaporizhia and west to Mykolaiv, reports the EU Delegation to Ukraine. The move comes after a high level EU delegation visited Ukraine’s Sea of Azov ports and reported on Feb. 18 to a EU Foreign Affairs Council’s discussion dedicated to Ukraine. Soon, the EU will open in Mariupol an office dedicated to promoting decentralization and curbing corruption.
In the latest investment in Mariupol port, a successful auction was held last week for dredging 2 million cubic meters of sediment from the approach channel and port. Five previous auctions failed due to a lack of bidders. Companies feared their dredges and barges could be bottled up in the Azov due to Russian control of the Kerch Strait. Azimut, a Ukrainian company, won the ProZorro auction with a bid of $13.3 million. Now, the Sea Ports Administration plans to issue a tender for dredging Berdyansk port.
The World Trade Organization, or WTO, has upheld Russia’s “national security” justification for banning the transit of Ukrainian exports through Russia to Central Asia and Mongolia. Russia imposed restrictions on a truck and train cargo in 2016. Since then, Ukraine’s trade plummeted with the “Russian-speaking world.” Concorde Capital’s Alexander Paraschiy writes of the ruling: “It will hardly have any economic implications for Ukraine. Even if the WTO experts had decided that Russia did something wrong by limiting Ukrainian transit, the Russian side would hardly have changed its behavior in the short term.”
The EU will finance almost two thirds a €208 million project designed to expand Poland’s sole LNG terminal by 50%, reports Polish Radio. Located in Świnoujście, a Baltic port on the German border, the project is due for completion in 2021. Separately, Poland’s government announced last month that they will build a second, floating LNG landing terminal at Gdansk. In the 2020s, Poland is to become Central Europe’s hub for LNG from the United States.
By 2023, a pipeline is to bring Norwegian gas through Denmark to Poland. With American LNG and Norwegian pipeline gas, Poland plans to stop buying gas from Russia in 2023. Currently, Russia supplies two third of Poland’s gas needs. Alluding to Ukraine and other countries dependent on Russian gas, Peter Naimsky, Minister for Strategic Energy Infrastructure, told Poland’s Senate: “We want to give our neighbors access to gas through the Polish gas transmission system.”
Created by a Ukrainian, Nigeria’s largest online marketplace for classifieds, has acquired its main competitor on the African market, OLX and its businesses in Kenya, Ghana, Uganda, and Tanzania. Founded in Lagos in 2014 by Kyiv native Anton Wolyansky, Jiji lists 1.1 million items and has six million active users. With these acquisitions, Jiji’s population base expands by 50%, to 300 million. In face of Jiji’s growth, South Africa-based OLX pulled out of Nigeria last year.
Inc.com, the New York-based business news site, ranks Kyiv’s UICE Group at the top of its list of “the Top 10 Fastest-Growing Private Companies in Europe.” The Ukrainian Interbank Currency Exchange became an authorized exchange platform in the early 2000s. Led by Oleksandr Ginzburg, the exchange trades stocks, derivatives, oil, gas, and coal. The site reports: “Inc. 5000 Europe rank No. 1: Three-year growth 24,845% 2017 revenue €79.3 million.”
Setting an ambitious goal for air travel, the government wants to nearly quadruple air passengers in the 2020s, to 80 million in 2030. Building on a 25% jump last year, to 20.5 million air travelers, the Infrastructure Ministry sets this 2030 target in its new Aviation Transport Strategy. By comparison, Poland with roughly the same size population of Ukraine, but half the territory, carried only 38 million air passengers in 2017.
Kyiv Boryspil passenger traffic was up 15% during the first quarter, to 2.6 million people, compared to Jan-March of last year. Ukraine International Airlines, the airport’s main tenant, carried 8% more passengers in the first quarter, about 1.5 million. With the fast growth of discount airlines, UIA lost $100 million last year.
Foreign companies and investment funds now can open accounts in Ukrainian banks, without setting up representative offices, the National Bank of Ukraine reports on its website. Part of a wider currency liberalization started in February, foreign companies have greater freedom in using their Ukraine bank accounts.
Foreign companies are invited to bid in a project to build a half kilometer long cable way in Lviv, taking sightseers from Na Valakh park to Vysoky Zamok, or High Castle Park. Mayor Andriy Sadovy says the project is being coordinated with UNESCO and is expected to cost around $12 million. A ProZorro tender will be issued.
This spring, the April winds blowing across Ukraine are spinning wind turbines. Currently $1.3 billion worth of onshore wind projects is underway across Ukraine. By comparison, $100 billion was spent worldwide last year on onshore wind, Bloomberg reports. Worldwide, wind energy was the second fastest growing renewable energy source in 2018, adding 49 GW. In the first place was solar, adding 94GW, the International Renewable Energy Agency announced last week.
Here are Ukraine’s major projects:
NBT has signed an agreement with Unit Venture Investment Fund develop a €1 billion 742 MW wind power plant along the northern shore of the Azov, in Yakymivka district, Zaporizhia. With the working name of ‘Zophia,’ this would be the largest onshore wind power plant in Europe. Currently, the largest is a 600 mw plant, Fântânele & Cogealac, in Romania. The second largest is Whitelee, a 539 MW plant in Scotland.
By June, DTEK plans to complete construction of the first 100 MW phase of Prymorsk, or ‘Seaside,’ on the north shore of the Azov, in Zaporizhia region. As of Friday, 18 of the 26 planned GE turbines were generating electricity, with a capacity of 69 MW. A second 100 MW phase of the plant is under construction. Separately, DTEK is building Oryol, a €135 million, 100 MW plant, powered by Vestas turbines from Denmark. The three projects add up to a €400 million investment in 300 MW of wind power on a 50 km stretch of Azov coast, west of Berdyansk.
Belgium-based GreenWorx Holding N.V. broke ground two weeks ago on a €188 million, 110 MW wind power plant on the north shore of Kherson’s windswept Gulf of Dnipro. Located in Oleksandrivka, Bilozerka district, the project is to use 25 Nordex turbines of 4.4 MW each. According to Eco Town news site, GreenWorx CEO Tom Hanson said at the groundbreaking that construction will create 300 jobs and the plant will create 40 fulltime jobs.
Germany’s eab New Energy Group has opened an office in Lviv and is helping Ferozit Wind Energy build a total of 85MW of wind power capacity at three sites in Lviv region, in Pustomyty and Radekhiv districts. A leader in wind energy, Germany drew 34.4% of its electricity in March from wind power plants.
The Ukraine partner of German’s Fuhrländer AG is starting to make 4.5-4.8 MW wind turbines at its Kramatorsk plant, double the size of the first turbines made by Fuhrlaender Windtechnology LLC when it started production in 2012. With 15-20 of these turbines to be built this year, a special crane will be imported to erect them, Andriy Sergienko, a director of Wind Parks of Ukraine, tells ExPro Consulting site. While electronics are imported, largely from Siemens, about 70% percent of the turbine/tower package is produced in Ukraine, he says.
About 15 km south of the Belarus border, 189 MW of wind power capacity is to be built in three stages at Pokaliv, Zhytomyr by Wind Solar Energy, of Cyprus. Called Lisova, or forest, the plant’s first stage is to be 111 MW, reports Interfax-Ukraine.
About 15 km east of the Polish border, a 100 MW wind power plant is being planned for the Volyn region village of Myshiv. The plan is to raise 35 turbine towers on a 150-hectare site. As a first step, the developer, Wind Power GSI Volyn, is erecting this spring a 120-meter high wind gauge, according to bug.org.ua news site.
Near the Danube, a five-turbine, 19.5 MW wind power station is planned for Kiliya, Odesa region, Pavel Boichenko, head of the unified territorial community, tells Oblesvesti.com.
Building on the Dniester estuary, Turkey’s Güriş Construction plans to inaugurate this month Ovid 1, a 34.4 MW wind farm powered by GE turbines. Güriş is obtaining permits for the second phase of 50.4 MW, also on land 40 km south of Odesa.
The original English version is from our partner UBN – Ukraine Business News. For more information and news archive, go to: www.ubn.news.