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Old 8th December 2017, 12:42
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Extracts from Ukraine Business Journal

The European Commission is holding back on transferring to Ukraine a third and final tranche of EUR600 million in aid. Stumbling blocks were non-action on four points: lifting the ban on roundwood exports, launching an automatic check on electronic asset declarations, the law on the NBU credit registry, and checking information on beneficial owners of companies. Under the program approved in 2015, Ukraine received EUR1.2 billion out of EUR1.8 billion in the package. EU said it is open to talking about a new program. President Poroshenko told a business group Friday that reform will be becoming increasingly difficult as the 2019 elections approach.

EBRD board has approved a loans of EUR160 million to Kharkiv for the extension of it third subway line toward the airport. Paired with co-financing from the European Investment Bank, the investment will extend the ‘green’ line 3.5 km, build depots and two metro stations - Derzhavinskaya and Odesskaya, and buy 85 subway cars. The project aims to increase the annual passenger flow by 25 million people, or 68,000 a day.

State Department spokesperson Heather Nauert says the United States worries that that the construction of Nord Stream 2 and Turkish Stream gas pipelines will undermine Ukraine as a state transiting gas to Europe. Nauert said: “It would advance Russia's goal of undermining Ukraine – that's a particular concern of ours – by ending Ukraine's role as a transit country for Russian gas exports to get to Europe."

Ukrainians are more optimistic about their nation’s economy, according to the latest public opinion poll conducted by International Republican Institute. In a September - October poll, 42% of the 4,500 respondents predicted the economy would improve or stay the same over the next year, compared to 41% who said it would worsen. One year ago, 32% of respondents to the same poll predicted economic improvements, compared to 54% who predicted a worsening.

Ukraine’s foreign trade deficit grew by 15%, to $5 billion, for the first 10 months of the year, according to National Bank of Ukraine.

Ukraine’s milk production continues its decline, on track to hit 10 million tons this year, or 3% below last year, Olha Trofimtseva, the Agriculture Ministry’s deputy minister for European Integration, told the All-Ukrainian Dairy Business Conference. Behind falling milk and butter production, the number of cows in Ukraine gradually shrinks. Currently, about one quarter of all cows are owned by dairies and three quarters by households.

Ukraine has the second cheapest Internet access in the world, according to a new British survey of 196 countries. Ukraine’s $5.47 average monthly broadband package was narrowly beaten by Iran with a prices of $5.37. Internet was twice as expensive in neighboring Russia and Moldova. According to British consulting firm BDRC Continental and internet provider Cable.co.uk. the price in the US is $66.17; in Canada $54; in Germany $34.2; and in Poland $19.22.

As 2018 shapes up as a road building year, Prime Minister announced the reconstruction of two highways: the 530 km road from Kyiv southwest to Chernivtsi, near the Romanian border; and the 190 km Kharkiv-Sumy highway, which runs parallel to the eastern border with Russia.

On Saturday, Ukrainian Railways started selling tickets online for international trains to six nearby EU nations: Austria, Czech, Hungary, Poland, Romania and Slovakia. Fares vary according to the Euro exchange rate of the day of purchase.

Lviv airport handled its 1 millionth passenger of the year on Friday, reportedly the first time since Independence in 1991 that the airport has handled such a volume. Through October, passenger traffic grew by 46.8%, hitting 918,400 passengers. The number of flights increased by 36.7%, to 10,088. Boosting traffic even more, Ernest Airlines starts next Saturday direct flights from Lviv to Naples and Venice.

Faced with complaints about labor migration out of Ukraine, President Poroshenko responded: “Please: pay more to your workers!” At a meeting sponsored by the European Business Association and the American Chamber of Commerce in Ukraine, Anna Derevyanko, executive director of the EBA, said Friday that, due to steady outflow of workers, the real population of Ukraine in the area controlled by Kyiv is 35 million, not the 42 million figure often used. Vyacheslav Klimov, a co-owner of Novaya Poshta, the “lines of people” waiting to work at his delivery company have disappeared. Poroshenko responded, telling employers to adapt with the times: “These are the positive consequences of reforms, of the opening of borders, and of the European choice.”

President Poroshenko proposed Monday to raised the minimum wage to UAH 4,100 UAH, or about $150 a month, on Jan. 1. This would be a 28% raise in one year, about double the rate of inflation.

Locally generated tax revenues of city budgets have more than doubled in the last four years, hitting $6.3 billion today, President Petro Poroshenko told a conference of municipalities on Monday. As a result of Ukraine’s fiscal decentralization, the locally generated portion of city budgets has grown from 30% a decade ago to about 50% today, he said.

Ukrainians will be offered referendums on joining NATO and the European Union in the "near future," President Petro Poroshenko said Friday. About 43 percent of Ukrainians support joining the Western military alliance and 56 percent of Ukrainians support joining the EU, according to a public opinion poll conducted in November.

Ukraine's steel production through November fell 13% year-on-year to 19.4 million tons, according to Ukrmetallurgprom, Ukraine’s steel producers' union. Last year, steel production rose 5.5%, to 24.2 million tons. This year, steel output is likely to total 21.1 million tons.

A Turkish solar developer is to build a 15 MW solar power plant in Ochakiv, Mykolaiv region. A solar park will be built on a 23-hectare site and several public buildings, such as schools, will be outfitted solar roof panels. The development is to be carried out next year by Eko Yenilenebilir Enerjiler A.S. (EkoRE)

Next spring, construction starts on the Radisson Blu in Odesa, renovating the historic Seamen's Palace on Primorsky Boulevard, overlooking Potemkin Steps. The project, undertaken by Double W developer of Odesa, has attracted EUR40 million in international financing. Part of this money, from the Danish Investment Fund, and the Nordic Environmental Fund (NEFCO) will go for design work and equipment to help the four star hotel meet international LEED green certification.

Minister of Infrastructure Volodymyr Omelyan predicts that in 2018 competition among low cost carriers will drive the average price of tickets for flights between Ukraine and European destinations to the EUR 30 to 50 range. At present, Wizz Air is expanding in Ukraine. Talks are to resume next year with Ryanair.

As part of its Polish expansion, Ukraine International Airlines starts flights Dec. 26. from Kyiv Boryspil to Krakow, Poland’s second largest city. The route is to become daily in mid-January. UIA will use its Embraer 145 regional jets for the 1h45 minute flights. UIA recently won permission to fly next year to three other Polish regional airports: Gdansk, Poznan, Wroclaw.

UIA has placed on sale tickets for its new flight from Boryspil to Toronto, which starts June 6. Round trip tickets, all taxes included, start at $659 for the flight, which is 10h25 minute from Ukraine to Canada.
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Old 9th December 2017, 17:49
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Extracts from Ukraine Business Journal

Up to $7 billion in Chinese investments could flow to Ukraine in coming years, Ukrinform reported Tuesday evening after the meeting between Ma Kai, a visiting Chinese vice premier, and Prime Minister Groysman. The state-owned news agency did not define “the respective agreements” reached between the two leaders.

hina in five years can become the world's largest importer, predicts China International Capital Corporation, according to Xinhua. At present, China is the world’s largest exporter and ranks second in imports, after the United States. In recent years, China has become one of Ukraine’s top three trading partners. In the first nine months of this year, bilateral trade grew by 14.5%, to $5.6 billion.

Ukraine is undermining anti-corruption efforts, Washington warned in a statement Monday. Without citing the Poroshenko Administration by name, the State Department warned that bureaucratic attacks on new anti-corruption agencies “undermine public trust and risk eroding international support for Ukraine.” Concorde Capital’s Zenon Zawada writes: “Western diplomats and policy makers are concerned that Ukraine will slip back into the Russian sphere of influence if the Poroshenko Administration continues to block reforms and anti-corruption activity.”

Average monthly salaries in Ukraine should be raised by one third next year, to UAH 10,000, or $370, Prime Minister Groysman told ICTV Monday night. Last week, President Poroshenko said he planned raise the minimum wage to UAH 4,100 UAH, or about $150 a month. This would be a 28% raise since the last hike, Jan. 1, 2017.

Ukraine’s digital divide may go underground one year from now, when the Kyiv subway system is expected to be wired for 3G/4G mobile service. Ukraine’s big three mobile operators -- - Kyivstar, Vodafone Ukraine and lifecell – are preparing to bid for the service when the tender is announced, probably Q1 of 2018, Liga.net reports. At the start, about 16% of Ukrainians are expected to have phones equipped to use the internet at 4G speeds.

Slightly more than 1.8 million Ukrainians are registered and paying taxes as entrepreneurs, according to Andriy Reva, Social Policy Minister. Many tech workers register as entrepreneurs to be eligible for low tax rates.

Billa, the Austrian supermarket chain, plans to expand its store network by as much as 40% in 2018, by opening up to 10 stores largely in Kyiv and the growing suburban satellite communities. After opening in Ukraine in 2000, Billa now has 24 supermarkets in Kyiv, Zhytomyr, and two other cities.

New car sales up 26% through November, hitting 73,100 for the first 11 months of the year, Ukrautoprom, the auto industry association, reports. The top selling brands are: Toyota, Renault, Skoda and Volkswagen.

Despite Russia’s long term goal of routing gas around Ukraine to Europe, Russia’s shipment of gas through Ukraine was up 16% through November, hitting 85.5 billion cubic meters to date, Ukrtransgaz reports. Gazprom moves half of its Europe-bound gas through Ukraine, but its transit contract expires in 2019.

Once a novelty, now 41% of all Ukrainian Railways tickets are sold online, Yevgeny Kravtsov, acting chairman of the board of the state railroad, reports. In addition, sales of tickets on high speed intercity trains are up by 25% this year, on track to surpass 5 million.

Kharkiv airport increased passenger traffic by 36% through November, as Ukraine’s second largest city paced the capital in year over year air traffic growth. Once largely a feeder to air hubs in Kyiv and Moscow, Kharkiv now sees much of its passengers taking direct international flights south: Istanbul, Sharm El-Sheikh, Kyiv, Warsaw, Minsk, Tel Aviv, and Hurghada. Of the 745,400 passengers so far this year, 77% were international and 23% were domestic.

SigmaBleyzer, the Houston-based private equity fund, is mulling creating a Ukraine energy fund oriented toward gas production, Vadim Bodayev, vice president of SigmaBleyzer Ukraine, tells Interfax. "SigmaBleyzer plans to engage a Texas-based operator company that owns more than 200 wells in the US, uses unique technology, and has more than 50 years of production experience," Bodayev said after signing a cooperation agreement with the Association of Gas Producing Companies of Ukraine in Kyiv on Wednesday. Without naming the Texas operator, he said: "At the initial stage, we are planning an investment of $ 100 million."

Lviv is authorizing construction of two 25-story office towers, Ukraine’s tallest buildings west of Kyiv. Located 6.5 km south of the city center, in the Sykhivsky district, the towers will be part of Avalon Status, a mixed office and residential complex to built on a two hectare lot, at Chervonoyi Kalyny Ave. 60. By contrast, Kyiv has 14 buildings over 25 stories and Dnipro has two.

China and Ukraine have signed a program of investment cooperation in farming. The goal is to identify priority areas for investment, said Olha Trofimtseva, deputy minister of the Agrarian Policy Ministry. She said areas “which may be of interest to Chinese partners include: transport logistics, production and processing of agricultural products, machinery manufacturing.”
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Old 10th December 2017, 16:13
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Over the last four years, U.S. anti-corruption assistance has helped Ukraine discover $3.24 billion in stolen funds, leading to the seizure of about $1.3 billion in cash, the State Department said in a press release before International Anti-Corruption Day, Dec. 9. The release said: “U.S. law enforcement professionals are embedded in Ukraine’s National Anti-Corruption Bureau to help build anti-corruption and asset recovery capacity and strengthen Ukraine’s overall anti-corruption efforts. U.S. support has contributed to 333 criminal proceedings, 207 notices of suspicion, and the finalization of 108 indictments in cases related to corruption.”

In the last two years, 1,052 Ukrainians have been convicted of corruption, 1,747 more have been charged, and 104 fugitives have been arrested, Vasyl Hrytsak, head the State Security Service, told the Rada Wednesday. Public opinion polls indicate that many Ukrainians believe the fight against corruption has been weak or nonexistent.

Next year, for the first time in five years, Ukraine’s banking sector will return to profitability, predicts Fitch Ratings. The forecast reads: “In 2018, profitability should improve because of lower financing costs and higher GDP.” But obstacles remain, notably problem loans which account for 57% of all loans.

As many as 10 more banks will close next year, Sergei Mamedev, chairman of Globus Bank, predicted at a round table on banking forecasts for 2018. Since 2014, the National Bank of Ukraine has closed about half of the nation’s bank, leaving 88 open today. Analysts say that an economy the size of Ukraine’s could function well with 30-40 banks.

Lviv and Ivano-Frankivsk are Ukraine’s most attractive cities for outsourcing, according to a new report by KPMG. Factors cited include: availability and cost of skilled labor, developed infrastructure, the cost of renting offices and convenient geographical location. The international auditing and tax advisory company says that Ukraine now has more than 500 outsourcing IT companies, and 100 global research and development centers.

A "Buy Ukrainian, Pay Ukrainians" bill violates Ukraine’s free trade agreement with the EU, Maxim Nefedov, first deputy minister of Economic Development and Trade, writes on his Facebook page. As approved in its first reading by the Rada, the bill adds 23 new documents to the procurement process and introduce a local component requirement of at least 20% to tender offers. The EU has sent a letter of complaint.

In the Rada’s tug of war over corruption, lawmakers backed away Thursday from a draft law that would have gutted the independence of new anti-corruption agencies. Then, they voted to dismiss Yegor Sobolev, the EU-backed head of parliament's anti-graft committee. Earlier, the EU, the US, the UK, World Bank and the IMF all warned authorities to protect the new anti-graft agency, known as NABU. Business polls repeatedly say that Ukraine’s tolerance of corruption is a big turnoff for foreign investors.

Perhaps emboldening politicians, Ukraine has paid $270 million more to the IMF this year than it has received from it, according to Novoe Vremya news site. After a $169 million transfer last Friday to the IMF, Ukraine has transferred a total of $1.27 billion to the IMF this year. With the reform program on a slow track, Ukraine has received from the IMF this year only one tranche, for $1 billion.

Ukraine will spend almost 25 % more for defense in 2018 than last year, according to the draft national budget. Of the $3.2 billion, about one fifth will be for arms and military equipment, up 34% over last year. Western military analysts have say this part of the budget is largely a black box, creating opportunities for corruption.

The Rada narrowly voted Thursday to extend a ban on farm land sales for one more year. The bill was backed by 236 lawmakers, just over the 226 needed to pass. Since 2001, Ukraine’s more than 40 million hectares of farmland cannot be bought or sold, only leased. This turns off foreign investment, severely restricts bank financing for farming, and keeps yields low. During 2018, the government promises to create conditions for a land market, including a modernized land cadaster and rules on who can and who cannot buy Ukrainian farm land.


Ukraine’s three most modern Black Sea ports handle more cargo, while Odesa’s volume shrinks. At Yuzhny, the nation’s busiest port, cargo through November is up 7% to 39 million tons. At Nikolaev, cargo is up 5% to 21 million tons. At Chernomorsk, cargo is up 10.6% to 16 million tons. While, at Odesa, cargo is down 5% to 22 million tons.

Construction costs in Ukraine rose 12.9% in 10 months, slightly outpacing general inflation which is expected to end the year at 14%. The price rises came in an environment where construction activity was up by 23.4% through October, compared to the first 10 months of last year. Last year, construction costs rose by 9.2% compared to 2015.

Sales of used imported cars have almost quadrupled this year, hitting 50,300 by the end of November. By contrast, new car sales are by 26% to 73,100. Behind the jumped in imports of used cars is a big cut in import taxes put in place in August of last year.

Starting in January, Ukraine’s passport printing capacity at the state printing company will double, reports the parent ministry, Ministry of Economic Development. The difference will be a $2 million investment in equipment for printing of biometric passports.

Yanair will start weekly flights next summer between Odesa and Barcelona-El Prat Airport, Spain’s second largest airport, after Madrid. Yanair, a low cost airline based in Kyiv, largely flies to Black Sea and Mediterranean destinations. Four airlines offer flights from Kyiv to Barcelona – Azur, UIA, Vueling and Windrose. Most flights from Odesa go south. None go further west than Vienna.
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Old 13th December 2017, 13:35
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Ukraine Business Journal

EU leaders will agree tomorrow to prolong economic sanctions on Russia, Reuters reports from Brussels. Sanctions were imposed over the annexation of Crimea and Moscow's support for separatists in Eastern Ukraine. Due to expire next month, the sanctions now will be extended through mid-summer.

Turkey has closed its ports to ships from Russia-occupied Crimea, Ukrainian Prosecutor General Yuriy Lutsenko reports. In October, Lutsenko and a representative of the Crimean Tatar community visited Turkey and asked that maritime links with Crimea be cut. “Turkey adopted a rather tough decision afterwards,” Lutsenko told UNIAN. “It was immediately introduced and is being implemented to prevent the entry into Turkish ports of ships that violate economic sanctions over Crimea occupation.”

Hyundai Corp, Ukrsotsbank and several Ukrainian banks were victims of a fraudulent scheme for $30 million, according to a joint press release by Hyundai and Ukrsotsbank. The companies say that OOO Rona Company of Ivano-Frankivsk received loans based on fraudulent real estate documents. The release says: “The guarantors for loans were companies that provided security on real estate objects that exist only ‘on paper’ and registered in the state real estate registry on the basis of counterfeit documents.” Hyundai lawyer Yeo Young-Chan told a press conference Tuesday that formal complaints were made in March to Ivano Frankivsk law enforcement agencies. But no action was taken and “the scammers walked quietly around the city.” Hyundai, now with the support of Lee Yang-goo, South Korea’s Ambassador to Ukraine, is asking the General Prosecutor’s Office to prosecute the case.

Moody's forecasts Ukraine GDP growth will rise to 3.5% next year, from 2% this year. By contrast, the Ukraine government prediction is 3% for 2018.

Prices in November were 13.6% higher than in November 2016, according to the National Bank of Ukraine. Earlier in the year, the central bank predicted that Ukraine’s 2017 inflation rate would be 12.2%

Andriy Kobolev, chairman of the Naftogaz board, lobbied extensively in Washington last week against Russia’s North-Stream 2 bypass pipeline. Meeting with Trump Administration officials and members of Congress, he warned that pipeline would cost Ukraine more than $3 billion in annual transit revenues. The Russia-Germany pipeline “would increase the dependence of America's European allies on Russia and make them far more susceptible to Russian influence,” he warned. No longer dependent on Ukraine’s gas transportation system, he said: “Moscow will be able to deploy a full-scale war in the east of Ukraine. The United States should not allow this."

A fiery explosion Tuesday at a gas pumping station in Baumgarten, Austria, resulted only “in a slight decrease in gas supplies from Ukraine in the Hungarian direction,” Ukrtransgaz reported.

Naftogaz, the nation’s largest taxpayer, paid the equivalent of $3.8 billion in taxes and dividends to the national budget of Ukraine through November, the state gas company’s press service reports. That is the equivalent of 15% of total revenues for the budget.

JKX Oil and Gas, a major private producer in Ukraine, is about to appoint three non-executive directors “in the wake of two boardroom overthrows in the last two years,” the Telegraph newspaper reports. The new directors of the London-listed energy company are to be: Adrian Coates, a director at Canada’s Thor Exploration, Michael Bakunenko, chairman of Ukrnaftoburinnya, and Vladimir Rusinov, a managing director at Proxima. Ousted are: Tom Reed as chief executive and Russell Hoare as CFO.

A Lithuanian company, Global BOD Group, plans to make solar panels in Kherson, Serhiy Savchuk, head of Ukraine’s department of Energy Efficiency, said after meeting with Widmantas Janulevičius, chairman of the board of the Lithuanian company. After the 2014 loss of Crimea, Kherson, its northern neighbor, has become a focus for solar energy investment. This year, Ukraine is expected to install over 200 mw of solar power, double the solar capacity installed last year.

In January, the EU will start funneling EUR 100 million into the Energy Efficiency Fund of Ukraine, Prime Minister Groysman said. Fresh from a trip to Brussels, Groysman said he “talked about expanding the EU funding of our energy efficiency programs.”

The Ukrainian Association of the Gaming Industry is offering to open a ‘pilot’ casino at the Premier Hotel Palace Kharkiv. Such a casino would demonstrate the benefits of legal gambling, such as taxes and jobs, said Elena Derevyanko, press advisor to DCH, owner of the hotel. Gambling has been illegal in Ukraine since 2009.

Tomorrow, SkyUp, a new Ukrainian discount airline, will be launched, Infrastructure Minister Volodymyr Omelyan told Interfax. Separately, Omelyan told Direct TV program that Ryanair and Boryspil Airport have found “common ground.” Last summer, Ryanair reversed a decision to enter Ukraine, citing intransigence by the management of Boryspil, where Ukrainian International Airlines is the principal tenant. On Nov. 24, UIA President Yuri Miroshnikov predicted that a national discount airline “will soon die.” Undeterred, Omelyan told Direct TV: "2018 will definitely be a year of cheap air transportation.”
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Old 15th December 2017, 12:41
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Sergei Tigipko, a prominent Ukrainian businessman and politician, has bought VS Bank, one of Sberbank’s two subsidiaries in Ukraine. Tigipko plans to combine the bank with his own TASKombank without closing branches. Last March, after nationalist attacks on Russian banks, President Poroshenko imposed sanctions on VS and four other Ukrainian banks with Russian capital. Herman Graf, CEO of Sberbank, Russia’s largest bank, says he hopes his bank’s second subsidiary, Sberbank of Ukraine, also will be sold soon.

Alexander Yaroslavsky, the Kharkiv-based owner of DCH, applied Friday to buy Prominvestbank, the Ukraine subsidiary of Russia’s Vnesheconombank, according to Kateryna Rozhkova, a deputy governor of the National Bank of Ukraine. Last week, Sergey Gorkov, chairman of Vnesheconombank told Rossiya 24: "We are in the final stage of selling, we are waiting for the decision of the regulatory bodies." The sale price is estimated at $100-120 million.

Ukraine kicked off an international search Wednesday for a partner to jointly manage the nation’s massive gas transmission system. In advance, Naftogaz has signed memoranda of cooperation with four European companies: Gasunie, of Holland; GRTgaz of France; Snam of Italy; and Eustream of Slovakia.

With Poland’s first LNG landing terminal to go fully on stream next year, Poland’s President Andrzej Duda is offering to supply Ukraine with gas. The terminal is located in Świnoujście, a Baltic port 1,000 km northwest of Lviv. At a Kyiv press conference with President Poroshenko, Duda said he hopes a Poland-Ukraine interconnector pipe will start operating in 2020, two years ahead of schedule. Pawel Stanczak, head of Ukrtransgaz, tells Interfax that this pipe could carry 5 billion cubic meters a year, helping Ukraine to become a regional gas hub.

A major European gas exporting nation “is interested and ready to give Ukraine enough gas to develop a gas hub, given infrastructure existing in the country,” Igor Nasalik, Minister of Energy and Coal Industry, told journalists Wednesday. Such a hub could function without Russian gas. At the same time, Ukraine should more than triple production from its proven reserves of 1 trillion cubic meters of gas. He said: "We now produce less than 2% [of reserves]. The average production in Europe is 8-9%...Ukraine should produce 70 billion cubic meters of gas."

Ukraine’s gas flows to Europe are back to normal after Tuesday’s explosion and fire at Austria’s gas hub in Baumgarten, Maxim Belyavsky, advisor to Ukraine’s Energy Ministry, tells Interfax. At one point on Tuesday gas flows west from Ukraine dipped by 23%.

Ukraine’s production of steel pipe increased by almost one quarter through November, the Economic Development and Trade Ministry tells Interfax. Compared to the same period last year, pipe production is up 23.4%, on track to top 1 million tons this year.

Interpipe Steel, one of Ukraine’s largest steel makers, increased its production by 36% to 779,000 tons through November, Interfax reports. Owned by Victor Pinchuk and his family, Interpipe is one of the world's top 10 seamless pipe manufacturers and the world’s third largest manufacturer of solid-rolled railway wheels.

Ukraine will export 20.5 million tons of corn this marketing year and 17 million tons of wheat, according to US Department of Agriculture forecasts. Overall, grain exports will total 42.41 million tons, about 5% below last year.

UkrAgroConsult reports that grain transportation to the Black Sea port is moving more smoothly compared to the last harvest season. The consultancy writes: “Compared to last year, grain transportation by railroad has improved, due to dispatch routes optimization, growth of rail car turnover, and new approaches to agricultural cargo transportation.”

To speed grain to the Black Sea port of Mykolaiv, EUR300 million is to be loaned to Ukrainian Railways to electrify and double track two separate rail lines from interior farming regions. The European Bank for Reconstruction and Development and the European Investment Bank approved loans in recent days to upgrade the 148km Dolinskaya-Mykolaiv line and the 105km Kolosovka-Mykolaiv line.

Debt restructuring for Mriya, the once London-listed agro-holding is nearly complete, Rothschild’s Moscow-based managing director Giovanni Salvetti told Ukrainska Pravda. Restructuring of the nearly $1 billion debt should be completed this spring, he said. Creditors took the company over almost two years ago. No member of the previous owner family, the Gutas, has been arrested. Salvetti said of the new management: “They saved the company, preserved its integrity and all 3,000 employees."

Dragon Capital continues its commercial real estate investments buying RM Logistic, a 32,000 square meter warehouse terminal in Bucha, northwest of Kyiv. The complex is located on the E-373/M07 highway, which links Kyiv and Poland.

President Poroshenko’s Roshen Corp. was not sold due to foreign buyer nervousness after Russia’s 2014 confrontation with Ukraine, Rothschild’s Giovanni Salvetti tells Ukrainska Pravda. During the spring 2014 presidential campaign, Poroshenko promised to sell his candy company and gave Rothschild and ICU investment bank the mandate to sell it. Salvetti said the company failed to attract buyers. "The Ukrainian-Russian crisis was at its peak, and its development was unpredictable, especially at that time,” he told the news site. “In fact, all interested parties told us that they were not prepared to take on such a high risk and politely rejected such an opportunity." He said Poroshenko then put his 85% company stake in a blind trust managed by Rothschild.

Ukraine has applied to the EU for a new program of macro-financial assistance. The European Commission will determine the feasibility of a new program in coming months, Hugues Mingarelli, the EU Ambassador to Ukraine, told journalists on Wednesday. In a press release, the EU mission noted that Ukraine failed to receive a final EUR600 million tranche because it failed to fulfill four requirements. Looking forward, the note said: “We encourage Ukraine to maintain the reform momentum in the many areas that have progressed well, and complete the measures outstanding under the current program.”

The US government is targeting two priority areas for economic modernization in Ukraine: establishment of an anti-corruption court and “energy sector reform, particularly with regard to gas tariffs,” Assistant Secretary of State A. Wess Mitchell told a U.S. Senate committee hearing Tuesday. “I have raised these subjects repeatedly. And I’m in constant contact with Poroshenko, Groysman, Foreign Minister Klimkin, [Rada Speaker] Parubiy, others, as is the Secretary [Tillerson]. We’re also coordinating very closely with the IMF to make sure that our messaging is in sync.”

Ash Carter, US Secretary of Defense until 2017, calls for transparency in Ukraine’s defense budget. Speaking at a security panel organized in Kyiv by the Victor Pinchuk Foundation on Monday, he noted that 95% of US Defense Dept. budget is open to taxpayer inspection. He said: “5% of the defense budget is closed in the US. While 95% of the defense budget is closed in Ukraine.”

Ukraine’s airports handled 29% more people through November than during the same period last year. Of the 15.3 million passengers, 89% percent flew internationally, according to the State Aviation Service.
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Old 17th December 2017, 12:31
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Faced with stubbornly high inflation, the National Bank of Ukraine will raise its discount rate on Friday by one percentage point, to 14.5% per annum. Prices through November were up 13.6%, year over year. This is well above the central bank’s forecast of 12.2% for the entire year. “Tightening monetary policy is necessary to bring inflation down to the bank’s target in the medium term,” the bank said in its statement. “If fundamental inflation risks increase further, the NBU may resort to further key rate hikes.” Timothy Ash writes: “NBU showing its mettle and independence, despite foot dragging from Poroshenko in naming a new governor.”

International reserves will be "just below" $19 billion at the end of this year, Oleg Churiy, deputy head of the National Bank of Ukraine, told reporters Thursday. This will be a 17% increase over the end 2016 level of $15.54 billion.

Oleg Churiy, NBU deputy governor, predicted Thursday in Kyiv that Ukraine will receive two IMF tranches for a total of $3-3.5 billion. But a few hours later, in Washington, IMF spokesman William Murray told reporters: "We have not yet scheduled the arrival of the mission for revision. And Ukraine and I still have to resolve a number of issues to complete the next revision."

The NBU has relaxed rules for importing cash foreign currency by residents of Ukraine. Now individual Ukrainians can bring cash to the country in the amount of more than 10,000 euros, if the money is declared in the full amount, and if there are documents confirming the withdrawal of cash from accounts in financial institutions.

“China to build monsters of the sky with Ukraine company” headlined Asia Times about the plans of Aerospace Industry Corp of China and Antonov to assemble two An-225 Mriya in Chengdu and Shaanxi. The Hong Kong-based news site cited CCTV and Sino Military as saying the Chinese aircraft company is considering ‘mass production’ of the six engine cargo planes at the two cities, which are 1,000 km apart in Central China.

Electric car imports through November – 2,676 vehicles -- surpassed imports for all of last year – 2,274. Imports are expected to surge after Jan. 1 when import duties – about 20% of current prices – are dropped.

Azerbaijan and Ukraine plan to establish a joint venture to produce railway cars, AzerNews reports. Ihor Manayenkov, deputy director of Kryukovsky Railway Car Building Works in Kremenchuk, said after meeting with Azer Khudiyev, Azerbaijan's Ambassador to Ukraine: “With the commissioning of the Baku-Tbilisi-Kars railway line, Azerbaijan has opened a wide corridor between Europe and Asia. From this point of view, Azerbaijan needs to produce new passenger and freight cars."

Yuzmash aerospace manufacturing plant in Dnipro will open its doors to tourists next year, Xinhua reports. The rocket engine and spacecraft factory will be open only for tour groups, who will undergo advance security checks. Individual tourists will be prohibited from visiting the site. Anna Kolyeda, head of the Dnipro Development Agency, said: "We are following the path of real development of innovative space tourism in our city."

Emigration is on the minds of half of 8,117 Ukrainian IT professionals surveyed by DOU.ua, the popular Ukrainian online IT community. Of the poll participants, 4% already emigrated, 9% are going to relocate, and 43% of IT professionals are considering moving abroad. Of the rest, 34% have no plans, 8% are definite about staying and 2% have returned home after work abroad. Among emigres, the top countries are: Poland -- 26%; Germany -- 19%; the USA -- 13%; and the Netherlands – 6%. Twice as many senior software engineers are leaving, compared to junior engineers.

Houston-based Cub Energy Inc. and Slovakia’s Nafta a.s. are going to drill their first well in their Uzhgorod gas area in 2018, Cub Energy said in a statement. Last year, Nafta acquired half of the field from Cub and then conducted a 3D seismic survey. Elsewhere in Ukraine, Cub also plans to drill a well next year in its Zapadno-Olgovskoye field.

Energoatom, the source of about half of Ukraine’s electric power, increased output of electricity by 7% through November, compared to the same period last year, according to the state-owned nuclear power company. Much of the extra 5 billion kWh has been exported to Ukraine’s European neighbors to the west.

A bureaucratic impasse at the National Energy and Utilities Regulation Commission was broken Thursday when President Petro Poroshenko signed a law that grants him the powers to to appoint new members of the Commission. Without the law the Commission would have gone through the winter without a quorum, freezing energy investments that depend on Commission approval of tariffs.

Canadian defense contractors can now sell to Ukraine such lethal weapons such as automatic firearms. Each sale will have to be approved by Canada’s government and will need an end user certificate. The approval comes one week before the arrival in Kyiv of Foreign Minister Chrystia Freeland, a strong advocate of an independent Ukraine.

A new cyber attack on Ukrainian energy companies could be in the works, according to The Atlantic, the New York-based magazine. In a new article, titled "Will Ukraine Be Hit by yet Another Holiday Power-Grid Hack?" Robert Lee, CEO of the industrial-cybersecurity firm Dragos, says that in recent weeks he observed an unusual spike in activity in Ukraine by the group of developers who engineered the malware used in the 2016 attack."

SkyUp, a Ukrainian discount airline, will start operating in April with an all Boeing fleet flying from Kyiv to such international destinations. Barcelona, ​​Dubai and Larnaca, Cyprus. Two months later, domestic flights will start, connecting Odessa with Kyiv, Kharkiv and Lviv. The airline will follow a no frills, no free bags model, an approach that will allow it to offer one way flights from Kyiv to Odesa for 499 hryvnia, or $18.50.

Kyiv’s Boryspil, Ukraine’s busiest airport, expects to end the year with a 20% increase in passengers over last year. On Dec. 7, Boryspil recorded its 10 millionth passenger of the year, a record since its opening in 1959.
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Overseas Private Investment Corporation has approved $400 million in loans and insurance for a massive wind farm for the shore of the Sea of Azov. The U.S. government agency’s board voted Thursday for what is to be to a 500 MW, $560 million wind farm developed by EuroCape Ukraine in collaboration with General Electric, supplier of 62 wind turbines. Designed to be one of Europe’s largest wind farms, EuroCape will increase Ukraine’s wind energy capacity by 40 percent.

The first load of US-produced LNG has made it Ukraine, via Poland, through a deal brokered by ERU Trading LLC, Kyiv-based subsidiary of ERU Corporation USA. ERU, which negotiated a 20-year political risk insurance contract from OPIC last April, has placed the gas in underground storage in Ukraine. Dale Perry, an American who is president of ERU Corporation, said on the company website: “We are proud in our work with our Polish strategic partner to have made the historic, first shipment of LNG to Ukraine.”

USAID is preparing a $90 million multi-faceted energy program for Ukraine, according to Olga Belkova, member of the Rada’s Energy Committee. The project will focus on: introducing competition in energy markets, identifying new incentives for renewable energy, advising city governments, building cybersecurity, establishing an energy market regulator, creating market transparency, offering new models of managing the gas transmission system, and integrating Ukraine with EU energy markets.

Ukraine’s steel output is to fall 12% this year, to 21.3 million tons, due to loss of capacity in the East and a lack of raw materials, says Ukraine’s steel producers’ union Ukrmetallurgprom. Rolled steel could fall 14%, to 18.5 million tons. Pig iron could fall 15%, to 20 million tons.

Ukraine’s trade with Russia and with the EU jumped by the same amount – 26% -- through November, compared to the same period last year, the State Statistics Service reports. The most dynamic changes were: imports from Russia, up by 36.5% -- to $ 5.5 billion; and exports to the EU, up 30% -- to $534 million.

Ukraine’s oil imports increased by 6.7% in volume and by 28.5% in monetary terms through November. About three-quarters of the imports -- $2.8 billion worth – came from Russia and Belarus. With a low level of domestic production, Belarus is a major transit country for oil from Russia.

Ukraine nearly doubled coal imports through November in monetary terms, importing $2.4 billion, the State Statistics Service reports. As with oil, the lion’s share -- 56% -- comes from Russia. Ukraine was self-sufficient in coal until the separatist conflict in the East broke out in 2914

Addressing a major stumbling block with the IMF and EU, President Poroshenko promised Friday to submit a draft law for an anti-corruption court next week – if lawmakers first revoke their version. Timothy Ash writes: “Let's see what this means in practice, and what is Poroshenko's new game plan: is he serious enough to try and get IMF lending back on track?”

Perfectial, a Lviv-based custom software development company, is expanding to Ivano Frankivsk, opening a new development office, occupying a full floor in a downtown office building. Two weeks ago, KPMG cited Lviv and Ivano-Frankivsk as the most attractive destinations [for outsourcing} given availability and low cost of the qualified labor force, existence of developed infrastructure, real estate market and convenient geographical position.

Ukrzaliznytsia plans to allocate nearly $1 billion for capital investments next year, Evgeny Kravtsov, acting head of the state railway, said. About one third of this money will go to modernizing and rebuilding rail infrastructure. Ukrainian Railways is the nation’s main carrier of cargo and passengers, accounting for 82% of total cargo traffic (excluding pipelines) and 36% of passenger traffic. The railroad has almost 20,000 km of tracks. Almost half of the lines are electrified.

Russia responded dismissively to a suggestion by Ukraine’s Infrastructure Minister Volodymyr Omelyan to end passenger rail trains between Ukraine and Russia. Mixing his metaphors, Vladimir Dzhabarov, deputy chair of the Federation Council committee on international affairs, said: “They are cutting off their nose to spite their face. This railway is used mostly by the Ukrainians, who travel to Russia for work or to visit relatives. They are sawing off the branch they are sitting on.”

Dnipro is to receive EUR10 million in loans from the EBRD next year to purchase 50 new electric trams. The new, low riding, air-conditioned trams are to complete a citywide renovation of the fleet which started last year with the purchase of 52 trams. Ukraine’s fourth largest city, Dnipro has 13 tram lines.

Ukravtodor, the State Highway Agency, conducted tenders worth $2 billion for road work in 2017, the agency head, Slawomir Nowak told reporters Friday. He estimated the agency saved $93 million by placing the tenders on the ProZorro electronic bidding system.

Turkish company Onur will take over from a Ukrainian company reconstruction of the 90 km section of the Kyiv-Odesa highway from Kyiv to Bila Tserkva, Ukrainian infrastructure minister Volodymyr Omelyan. The Ukrainian company, Altcom, misses deadlines, he said. "In terms of quality, the difference is immediately visible: where the Turkish company works, normal European quality is absolutely visible, where we work with Altcom, we have questions," he said. “I'm tired of listening for the third consecutive year about the problems."

SkyUp, Ukraine’s new low cost carrier, plans to carry 650,000 passengers in 2018, founder Yuriy Alba tells journalists. In addition to opening domestic flights between Odesa and Lviv and Kharkiv, Alba plans to fly from Kyiv’s two airports to 16 international vacation destinations including: Barcelona, Dubai, Hurghada, Larnaca, Sharm el Sheikh, Tenerife Sur, Varna. Alba, owner tour operator JoinUp!, said his new airline will starting service in April and will also fly to resorts in Albania, Italy and Turkey.

Kyiv Zhuliany, Ukraine’s second busiest airport, aims to grow 30% in 2018, carrying 2.5 million passengers. Zhuliany expects to finish this year near the 1.9 million mark, a nearly two thirds jump over 2016, Oleksiy Yakovets, director general of Master-Avia, the airport operator, told journalists.

Flights between Kyiv and Tashkent, Uzbekistan are to resume next year, restoring service suspended in 2015 after Russia’s attacks on Ukraine. Representatives of Uzbekistan Airways and Ukrainian International Airways met last week in Tashkent and agreed to restore the twice weekly flights. Currently, the only flights from Ukraine to Central Asia are to Kazakhstan. Air Astana and Ukrainian International Airlines have flights from Boryspil to Astana and Almaty.

Blue Air, Romania’s biggest airline, will start flights in March between Lviv and Brno, Czech’s second largest city and historical capital of Moravia. At present, Czech Airlines offers flights from Odesa to Prague and from Kyiv Boryspil to Prague and to Košice, the second largest city in Slovakia.
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