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Extracts from Ukraine Business Journal

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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 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.

  • #2
    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, 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.”


    • #3
      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.


      • #4
        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.”


        • #5
          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.


          • #6
            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, 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.


            • #7
              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.


              • #8
                The Cabinet of Ministers abolished about 300 state regulations over business on Monday. With more changes planned for 2018 on state control over business, Prime Minister Groysman said next year provides an opportunity to get rid of "this rudiment of the Soviet system of supervision and control."

                Ukraine’s foreign trade deficit more than doubled through November, hitting $4.6 billion. Imports grew faster than exports: 27% vs 21%. Imports grew on higher oil prices and the need to import coal. Alexander Paraschiy of Concorde Capital writes: “For 2018, we anticipate the goods trade deficit to keep growing on the back of a steady recovery in domestic consumption, which translates into stronger imports. We project a $7.2 billion trade deficit in 2018.”

                Farm exports accounted for 42% of all of Ukraine’s exports through October, according to Maksym Martyniuk, first deputy minister of Agrarian Policy and Food. For the recently completed marketing year, he said, Ukraine ranked first place worldwide in exports of sunflower oil; second - in barley; third – in corn, nuts and honey; and sixth – in wheat and oilseeds. Of the nearly $15 billion worth of produce exported through October, the top five buyers are: India, Egypt, the Netherlands, Spain, and China.

                Wheat exports to the Middle East are up by 46 percent during the July-October period, compared to the same period last year, APK-Inform reports. Although Ukraine’s overall grain harvest is down 5% from last year’s record, Reuters expects the nation to draw on stocks to export this year a record volume of 44-45 million tons of grain.

                Prometey Group, a major Mykolayiv agroholding, plans to increase its grain exports by 50% in 2018, to 1.5 million tons of grain, Rafael Goroyan, owner of the company, tells Focus magazine. For the 2017/2018 marketing year, he forecasts sales revenues at $240 million. With trading margins low, the company plans to continue investing in its storage capacity. With 18 silos, Prometey now has a storage capacity equal to its 2017 sales volume – 1 million tons.

                Dnipro-based Interpipe has reached a milestone: delivering more than one million tons of pipe to Middle East customers over the last decade, TradeArabia News Service reports. Andrey Burtsev, Interpipe regional trade director, noted that since opening the office in Dubai a decade ago, 58.5% of pipe supplies have gone to oil and gas projects and 41.5% to construction.

                Exports of steel building structures are up by 50% to 15,000 tons, topping the historic peak of 2013, Vyacheslav Kolesnik, executive director of the Ukrainian Steel Construction Center, tells Interfax. Internally, consumption of steel structures for non-residential real estate is up this year by 18-20%.

                Ukraine intends to extend for one more year import duties on goods from Russia, Interfax reports. The duties were introduced in early 2016 in response to Russian trade bans and restrictions on Ukrainian goods.

                Next year, Ukraine’s Export Credit Agency is to start work, Prime Minister Groysman said. A second agency, the Export Promotion Office, also opens next year, operating with technical assistance from Britain and Canada.

                ArcelorMittal has reaffirmed its plan to invest $1.5 billion over the next three years to upgrade its Kryvyi Rih plant, the largest integrated steel plant in the country. Girish Sardan, deputy general director for supply, talked to reporters Monday at a supplier conference.

                Kyiv’s Ukrplastic, the largest manufacturer of flexible plastic packaging for consumer goods in Eastern Europe, is to receive a EUR20 million loan from the World Bank’s International Finance Corporation. Approved in Washington on Friday, the IFC loan is to be matched by EUR20 million from commercial banks. The money is to be used to modernize processes and facilities at Ukrplastic, a privately-owned company which spreads over 34 buildings on an 11-hectare site near Livoberezhna metro station.

                Ukraine needs to get back on track with its IMF program, otherwise it will face serious financing problems over the next three years, Vitaly Vavrishchuk, financial stability director of the National Bank of Ukraine, told reporters Monday. He warned: "Ukraine should refinance over $20 billion of foreign currency debts in 2018, 2019 and 2020, without active cooperation with multilateral financial organizations, this will be problematic." Without an IMF program, he said, Ukraine will face steep interest rates to win needed financing from the private sector.

                Gosta Ljungman, the IMF country head, told Reuters last Friday that he sees real risks on the revenue and expenditure side of Ukraine’s 2018 budget. Later, in an email to UNIAN, Ljungman said the IMF wants domestic gas prices to be on a par with import prices. He wrote: “Market gas prices in the domestic market will stimulate the implementation of energy saving measures and promote the efficient allocation of resources…It ensures that the gas sector is able to recover costs, and has resources to invest in gas infrastructure.”

                Non-performing loans account for 56 percent of the debt portfolio of the Ukrainian banking system, Vitaliy Vavryshchuk, director of the central bank’s financial stability department, told reporters Monday. At the same briefing, Deputy Bank Governor Kateryna Rozhkova said that more than 400 cases have been launched against the central bank, PrivatBank, and the Finance Ministry in connection with last year’s nationalization of PrivatBank.

                The currently monthly $5 million limit on repatriation of dividends will be either raised or scrapped in coming weeks, Yakiv Smoliy, acting governor of the National Bank of Ukraine told the European Business Association. The central bank is gradually easing currency controls.

                Yakiv Smoliy, acting governor of the central bank, is not a fan of crypto currencies, but does not mind if other Ukrainians hold them. He told the European Business Association: "I do not have bitcoins. Yet, I don't mind if others have them." The National Bank of Ukraine and other financial regulators issued a note Nov. 30 saying they were evaluating the legal status of crypto currencies, but were not considering a ban.

                Biofarma, a leading Ukrainian pharmaceutical company, is investing $35 million in construction of a blood plasma fractionator plant. Importing equipment from Germany, Italy and the U.S., company president Kostiantyn Yefymenko plans to open the plant in July. Noting that it will have the capacity to process 500 tons of blood plasma a year, he writes on his Facebook page: “We have the ambition of being among the seven largest global producers of blood plasma.”

                Seedstars World, an international start-up competition, has selected 12 start-ups to represent Ukraine at the Seedstars Summit in Lausanne, Switzerland, on April 12. Winners compete for a main prize of $500,000 of equity investment. All participants win exposure to international investors looking for new ideas.

                By March, Ukraine is to introduce electronic visas for foreigners entering the country, Andriy Zayats, Secretary of State of the Foreign Ministry, told

                Direct flights between Lisbon and Kyiv are to resume next year, under an agreement reached during President Poroshenko’s visit Monday to the Portuguese capital. About 50,000 Ukrainians work in Portugal, a foreign community second in size only to Brazil’s. Through September, bilateral trade increased 35%, Poroshenko wrote on his Facebook page.


                • #9
                  KEA plans to enter Ukraine, opening its first store in Kyiv by 2019, an executive of the Swedish-based retailer said Tuesday after meeting Kyiv Mayor Vitali Klitschko. Development of stores in Ukraine will be handled by IKEA South-Eastern Europe, which operates stores in Croatia, Romania, Serbia and Slovenia. Stefan Vanoverbeke, sales manager for this IKEA unit, said in Kyiv: “Our company will present in Ukraine a wide range of affordable home products to meet the high demand from consumers.”

                  Retail trade through November is up by 8%, compared to the first 11 months of 2016, the State Statistics Service reports.

                  Dragon Capital plans to attract to Ukraine up to $300 million in investments in 2018, Tomas Fiala, general director and founder of the investment house, told reporters Tuesday. Fiala said Dragon would work with co-investors: Goldman Sachs, George Soros, and OPIC. He said: "We have about 10 deals in the pipeline." Due to perceptions of country risk, he said, asset prices in Ukraine today are the cheapest since 2004. In the West, similar assets would be three times more expensive.

                  The Rada is to vote Thursday on whether acting central bank chief, Yakiv Smoliy, should become Governor of the National Bank of Ukraine. Vadym Denysenko, the government's representative to parliament, told 112 TV: “One candidate is being considered, and it's acting governor Smoliy.” Smoliy took over last May after Valeriya Gontareva resigned as governor. He has proved to be a supporter of Ukraine’s program with the IMF.

                  Ukrainian banks have set a 'world record' for the highest share of non-performing loans – 56%. Vitaliy Vavryshchuk, director of the Financial Stability Department at the National Bank of Ukraine, said a press briefing Monday: “We have established a somewhat unpleasant and very costly record for the economy and banking sector: the highest share of non-performing loans has been recorded in Ukraine in the entire history of world observations." Since 2014, the central bank has closed half of the nation’s banks and has ordered surviving banks to raise reserves. Looking forward, he said: "We need to do something with the bad debts. They need to be more actively handled by clearing up, writing off or restructuring."

                  The Finance Ministry sold $402 million in foreign exchange bonds Tuesday at 5-5.4%. At auctions, the government sold annual domestic bonds, or OVDP, for $378.46 million at 5% per annum and two-year bonds for $23.63 million at the previous rate of 5.4% per annum. All applications to buy were satisfied.

                  In 2018, the Finance Ministry will sell a maximum of $2 billion Ukrainian Eurobonds, the maximum agreed under the current Extended Fund Facility with the IMF, Deputy Finance Minister Yuriy Butsa said Tuesday at a press conference. In September, Ukraine placed 15-year eurobonds for $3 billion at 7.375 percent per annum. Demand for the eurobonds was $9.5 billion.

                  Ukraine’s gross foreign debt on Oct. 1 was $117.3 billion, or 3.3% higher than at the start of the year, according to the website of the National Bank of Ukraine.

                  Finance Minister Oleksandr Danylyuk predicted Tuesday that Ukraine will meet IMF conditions for ‘more’ than two tranches of fresh funding in 2018. Speaking at an end of the year press conference, he said: "There are a few key conditions that have not been fulfilled, but it is absolutely realistic that they will be fulfilled next year."

                  Without an IMF loan, the hryvnia will fall in 2018 below 30 to the dollar, predicts Tomas Fiala, general director of Dragon Capital and president of the European Business Association. He told reporters Tuesday: “If, from the second quarter of 2018, we can not resume IMF financing, we can forget about the stability of the hryvnia." So far this year, the hryvnia has been Eastern Europe’s worst performing currency, losing 2.5% to the dollar and 14% to the euro.

                  The new transparent and largely automatic VAT refund system has resulted in about $3.2 billion of VAT refunds paid to businesses since its launch on April 1, Finance Minister Danylyuk said Tuesday: "The launch of the transparent VAT refund register was one of the greatest anti-corruption achievements of the Finance Ministry over this year.”

                  A bill to simplify procedures for oil and gas companies to obtain land use rights passed its first reading Tuesday in the Rada. Prime Minister Groysman, who is trying to encourage investment in oil and gas drilling, tweeted: “The draft law adopted today is an important step towards the large-scale increase in our own production and the launch of new domestic projects in the gas sector."

                  Robert Whalley, a British board member of Ukrnafta, Ukraine’s largest producer of oil and gas, has resigned. Whalley, a 30-year veteran of Schlumberger, had been Ukrnafta’s executive vice president for Technology and Services for the last two years.

                  Portugal and Antonov may jointly develop a firefighting aircraft, President Poroshenko's press secretary Svyatoslav Tsegolko tweeted at the end of Poroshenko’s visit to Lisbon. In mid-October, almost 8,000 forest fires broke out in northern Portugal and Spain, killing 45 people in Portugal. On the worst day, firefighters battled 440 fires in Portugal.

                  Most of Ukraine was digging out Tuesday from a blizzard that dumped 30 cm of snow in parts of the nation. The snowfall caused massive traffic jams in Kyiv, delayed 30 trains, and delayed dozens of international flights in and out of Kyiv’s two commercial airports, Zhulyany and Boryspil. Wizz Air temporarily shifted flights to Boryspil. At London’s Luton airport, the flight cancellation and story switching by Wizz Air counter clerks so enraged 120 Kyiv-bound passengers that police had to escort them from the terminal.

                  Hutchison Ports, the world's largest container terminal operator, has applied to lease six berths at Chornomorsk port, 30 km south of Odesa city. Infrastructure Minister Vladimir Omelyan wrote on Facebook of the Singapore-based company: “There is still a tender, a ton of bureaucracy, but this is the most important step for Ukraine.”

                  Showcasing IT, Ukraine House will operate in Davos, Switzerland, during World Economic Forum's annual meeting, from Jan. 22-26. The goal is to promote investment opportunities in Ukraine’s IT and innovation sector to global business, technology and investment leaders. The organizers are: Ukrainian Venture Capital and Private Equity Association, Western NIS Enterprise Fund and Victor Pinchuk Foundation. The Ukraine Business Journal is preparing an in depth, forward looking IT Opportunity Supplement. For advertising, contact UBJ CEO Christian Kalkar at:


                  • #10
                    Ukraine Business Journal

                    Naftogaz plans to offer $1 billion in Eurobonds in a sale in the second quarter of 2018, Yuriy Vitrenko, the company’s chief commercial officer, told Bloomberg in an interview in Kiev on Monday. It would be the first time that the state gas company taps international markets since restructuring its debt a decade ago.

                    Naftogaz hopes the Stockholm Arbitration Chamber will order Russia’s Gazprom to pay $6.5-16 billion in compensation for losing a gas transit contract dispute with Ukraine’s state energy company, Yuriy Vitrenko chief commercial officer of Naftogaz Group, tells UNIAN. The ruling is to be made in February.

                    Noting that royalties on new gas wells have been cut in half – and guaranteed for five years -- a guest opinion writer argues in Wednesday’s Financial Times: “The new tax rules make Ukraine the most attractive country in the region for gas extraction investments.” Citing “de-monopolization and liberalization of our energy markets,” Rada energy committee member Nataliya Katser-Buchkovska says Ukraine now seeks $4bn in international gas investment. She concludes: “If achieved, this would set Ukraine on course to become energy independent by 2022.”

                    Planning to increase gas production by one third over the next three years, Ukrgazvydobuvannya, the state gas producer, has signed a contract with Germany’s Bentec to buy five drilling rigs for a total of $110 million. Scheduled for October delivery, the rigs are part of the gas producer’s three year, 20-rig expansion plan. By 2020, the company hopes to produce 20 billion cubic meters. This year. Ukraine’s gas consumption is 29 bcm.

                    Ukrnafta has conducted three successful hydraulic fracturing operations at its wells. The state oil and gas production company hopes to pump an extra 63,000 barrels through fracking in 2018. Ukrnafta is searching for foreign partners for fracking, a technology which is boosting oil and gas production in the United States.

                    Ukraine’s electricity exports are up 61% through November in dollars, compared to the same period last year. So far this year, Ukraine has earned $222 million selling electricity to its western neighbors, according to the State Fiscal Service. The top buyer is Hungary, accounting for 57.5%, followed by Moldova -- 23% -- and then Poland – 14.5%. Belarus’ decision to stop electricity imports in 2018 will not effect Ukraine. Sales north are negligible.

                    In a rail turnaround, Ukrzaliznytsia’s cargo transportation is up by 2% compared to 2016, according to Yevhen Kravtsov, the acting board chairman. Ukrinform reports he told a government meeting Wednesday: “This means that the Ukrainian economy is recovering. In this process, it is extremely important that Ukrzaliznytsia be able to transport Ukrainian goods and ensure the development of Ukrainian exports.”

                    Ukraine’s solvent banks posted $80 million in net profits through October, the National Bank of Ukraine reports. Retail deposits are up 13% through November, to the hryvnia equivalent of $8 billion.

                    The National Bank of Ukraine is liquidating Rodovid Bank, which was nationalized in 2009. Similarly, the central bank is listing Boguslav Bank as insolvent.

                    Through September, four million square meters of new apartments entered Kyiv’s housing market, a 35% jump over the same period last year, the National Bank of Ukraine reports. During the first six months of 2017, construction permits issued for new apartment buildings jumped 34%. Noting that construction costs are up 15%, slightly higher than the annual inflation rate, the central bank warns: “Lowering the market value of housing and increasing the cost of its construction led to the fact that today the price has practically reached the level of the cost price.”

                    About 200 state companies are listed for sale in 2018 by the State Property Fund. The list includes: Kyiv’s President Hotel, coal mines, 13 Black Sea ports, Ukrspyrt liquor manufacturer, Dniprovsky Electric Locomotive Plant, Ukrainian Danube Navigation, and shares in several regional power companies. The government hopes to raise almost $1 billion through privatizations in 2018. The full list appeared Wednesday in Vidomosti Pryvatyzatsii newspaper.

                    Rinat Akhmetov’s Metinvest, Ukraine’s leading steel holding, increased its EBITDA by 39% through September, to $1.4 billion. According to preliminary financial results, the Mariupol-based company increased capital investments - by 55% - to $308 million. Profits were boosted by mining, where iron ore sales to the EU rose by two thirds to nearly 5 million tons.

                    On GDP growth, Concorde Capital’s Alexander Paraschiy writes: “In light of the poor grain harvest (-6% as of Nov. 1), we still expect 1.5% yoy GDP growth in Q4. For 2018, we anticipate GDP accelerating to 3.5% yoy growth.”

                    Ukraine boosted chocolate exports to EU by 35% through October, to over 10,000 tons, Olha Trofimtseva, deputy minister of Agrarian Policy and Food, tells UNIAN.

                    Neighboring Poland is the top trading partner of Lviv region, accounting for 28% of exports and 27% of imports. Behind Poland, comes Germany, with 13% of exports and 18% of imports. For exports, next comes Czech at 7% and Denmark at 6.5%. Through October, exports to the EU increased by 30% to $1 billion, according to Daily Lviv news site. The region has a nearly $500 million trade deficit, but IT exports do not seem to be counted.

                    More than $1 billion a year moves through Ukraine’s underground lotteries, Finance Minister Oleksandr Danylyuk tells reporters. He said: “Not a single penny is paid to the budget. Everything is in the shadows, while the society suffers negative effects from this business." After the Rada failed to approve a law legalizing gambling, he now intends to issue at least two lottery licenses in 2018 to draw some of this untaxed economic activity out of the shadows.

                    Kyiv’s Premier Hotels and Resorts is overseeing construction of a ‘five star’, 130-room hotel in Bukovel, the nation’s biggest ski resort. The developer, Lev Development of Lviv, hopes to finish the two-year project in early 2019, in time for the tail end of the ski season.

                    A visa-on-airport-arrival policy for Chinese visitors is credited with boosting Chinese visits by 50 percent last year, to 20,555. Now, this e-visa system will be expanded to other nations to allow visa application online before traveling to Ukraine.


                    • #11
                      Extracts from Ukraine Business Journal

                      Finance Minister Oleksandr Danilyuk accuses the Prosecutor General's Office of hindering an investigation into actions by former managers and owners of PrivatBank. Citing five cases presented earlier this year to the Prosecutor General, he said: “None of these cases have been submitted to the court for consideration, as pre-trial investigations in these industries are progressing very slowly, and in some cases, investigative actions are not conducted at all.” He noted an “accidental meeting in Amsterdam of Yuriy Lutsenko with I. Kolomoysky, just on the eve of the trial in London, raises even more questions." Danilyuk told reporters Thursday: "I demand the resignation of Prosecutor General Yuriy Lutsenko.”

                      Real, post-inflation salaries of Ukrainians are 19% higher than last year, Economic Development and Trade Minister Stepan Kubiv, told reporters Thursday, citing figures through October. At the same press conference, his deputy minister, Mykhailo Titarchuk, forecast that 2017 will close with inflation at 13.4% . Separately, Prime Minister Groysman predicts that real, average salaries will increase by 35% next year.

                      Ukraine is preparing international tenders for three oil and gas projects for production sharing agreements, Energy and Coal Industry Minister Ihor Nasalyk, told reporters Thursday. The projects are expected to require investments from $200 to 600 million. He said: "We expect that companies with medium and high level of technologies will enter the Ukrainian market."

                      Coal production is down 13.6% through November, the Ministry of Energy and Coal Industry reports. Of the 5.5 million ton drop, the biggest drops were in Donetsk region - 26.4% - and in Luhansk – down 62.7%. In March, DTEK announced loss of control over all its enterprises in the separatist-controlled portion of the Donbas, notably Sverdlovanthracite, Rovenkyantratsit and Komsomolets Donbassa. Before the armed conflict, these three coal companies were producing a total of about 18 million tons of coal annually, Interfax reports.

                      The EBRD is loaning EUR 25 million to convert chicken excrement into biogas, or methane, at a Vinnytsia plant of Myronivsky Hliboproduct, Ukraine's biggest chicken meat producer, MHP CEO Yuriy Kosyuk writes on Facebook. With a capacity of up to 20 MW, this will be MHP's second biogas plant. The first was launched in 2013 in Dnipropetrovsk region. According to the Ukraine Bioenergy Association, Ukraine, a major food power, has the potential to produce 9.5 billion cubic meters of biogas per year from agricultural and food waste. This is the equivalent to 2.6 billion cubic meters of natural gas, almost 10% of current national gas consumption.

                      Ukraine's exports to Canada in 2017 are increasing by 76%, and imports - by 93%, Foreign Minister Pavel Klimkin said Thursday at a joint press conference in Kyiv with Canada's Foreign Minister Chrystia Freeland. A Canada-Ukraine free trade pact went into effect last August.

                      Nordic countries will loan EUR30 million to increase energy efficiency at Ukrainian universities through 2022. The loan by Northern Environmental Finance Corporation, or NEFCO, will cover almost 20% of the program to modernize university buildings in Chernihiv, Kharkiv, Kyiv, Lviv, Poltava, Sumy, Kharkov and Vinnytsia.

                      Ukraine is doubling funds for film production in 2018, Prime Minister Groysman writes on Facebook. He wrote: “This means that Ukrainian children and adults will see more high-quality domestic movies and animation.” As an example, he noted “The Stolen Princess: Ruslan and Lyudmila” animation feature will be released in the spring.

                      Cyborgs goes into the Christmas season as Ukraine’s strongest film, earning $303,000 in its first weekend. About half of its $1.7 million budget came from the national budget. This war drama follows a Ukrainian unit doggedly defending Donetsk airport from assaults by mixed Russian-separatist troops in the winter of 2014-2015.

                      Uber is opening in Kyiv its regional headquarters for Central and Eastern Europe, Alexey Stach, regional general manager, told reporters Wednesday. He said: "All employees of the company from the countries of Central and Eastern Europe will move to Kyiv and will work here.” Focusing on regional development, Stach plans to double staff in 2018 at the new Uber headquarters, at 9 Naberezhne Highway, in Podil. Launched last year in Odesa, Lviv, Dnipro, Kharkiv, Vinnytsia, and Zaporizhia, Uber gradually raised rates five times in the capital. Stach said there had not been a dropoff in users. In time for holiday travel, Uber launches this week a new service, uberVAN, with vehicles capable of carrying six passengers.

                      US-based Marriott International Int. will open its second hotel in Kyiv on Feb. 15. Aloft Kiev, a 310-room hotel, stands at Esplanadna 17, next to the Olimpiskiy Sports Complex. Under its Design brand, Marriot also has 11 Mirrors hotel in Kyiv.

                      Ukraine’s air traffic control agency is starting to invest again in new equipment, ending a spending freeze imposed after the July 2014 shoot down of the Malaysian Airlines flight over eastern Ukraine. That event prompted a 55-60% drop in overflights and a 70% drop in revenue, Dmytro Babeichuk, director of the agency, UkSATSE, told Interfax. Now, $24 million dollars in equipment upgrades are scheduled, with about $5 million coming from European Bank for Reconstruction and Development and the European Investment Bank.

                      Ukraine's shortest commercial flight – between Kyiv and Vinnytsia -- will be launched March 25, avianews reports. Ukrainian International Airlines will use an Embraer 145 regional jet to fly twice a day from Vinnytsia to the airline’s Boryspil hub. A one-way ticket for the 200 km flight will be about $50.


                      • #12
                        China’s CCEC trading firm is to loan $500 million to provide mortgage financing to build 30,000 low cost apartments for war veterans, military personnel, police and internally displaced people. Cabinet of Ministers approval of the loan was published Friday in Uriadovy Courier newspaper. In 2012, CCEC, or China Complete Engineering Corporation, signed a 15-year, $1.5 billion loan-for-grains deal with Ukraine’s state-run grain company GPZKU. CCEC also is interested in building light rail link to Boryspil airport and a big solar farm near Chornobyl.

                        The EBRD will provide a $350 million syndicated loan to ArcelorMittal Kryvyi Rih, Ukraine's largest steel mill. The loan supports a larger investment plan of $1.1 billion at the mill. Anton Usov, EBRD regional spokesman, wrote on Facebook: “It is the largest private sector investment program in Ukraine in recent years." The loan supports the mill's modernization and environmental upgrade, reducing CO2 and nitrogen oxide emissions as well as cutting yearly dust emissions from 14,700 tons to 3,000 tons. Francis Malige, EBRD regional managing director, said: “This particular investment brings to Ukraine the highest standards in corporate governance as well as advanced environmental practices and technologies."

                        Western support for free market changes in Ukraine must continue, Francis Malige, EBRD regional managing director, writes in a guest essay in the Financial Times. “While the pushbacks are real, they also show that reforms are biting,” writes Malige, a French national. Representing the largest lender in Ukraine, he writes: "International support is tangible and delivers results." Bolstering western resolve, he notes, in 2018, the G7 presidency “rotates to Canada, a country with a large Ukrainian diaspora and a vocal friend of Ukraine.” He concludes: “Now is not the time to give up on Ukraine. It is in the power of the international community to not allow the empire of vested interest to strike back.”

                        Pawel Jozef Stanczak, a Polish citizen, is to become the new president of Ukrtransgaz, the Naftogaz affiliate that moves gas across Ukraine. Previously, Stanczak was chief technology officer of PGNiG Technologie S.A., an affiliate of Poland’s state-controlled oil and gas company. The appointment was held up for five months pending a security check by the SBU, Ukraine’s State Security Service, Interfax reports.

                        Today through Friday, the newly reconstituted energy rate setting commission is to consider 100 issues, including approval of 2018 tariffs for Energoatom, Ukrhydroenergo, Ukrenergo and renewable, ‘Green’ energies. One month ago, the National Commission for Regulation of Energy and Utilities lost its member quorum through illness and resignation. Facing paralysis in the energy sector, President Poroshenko appointed on Friday Viktoria Morozova and Vadim Taratun as temporary members with 90-day mandates.

                        Applicants to provide 4G mobile service to Ukraine have until Jan. 26, to submit their documents. The tender is to be decided on Feb. 26, according to the National Commission for State Regulation of Communications and Information Technology. With six lots, minimum payments range from to $10 to $47 million.

                        KPMG-Ukraine increased revenue by one third in 2017 and increased staff, according to Andrey Tsymbal, managing partner of KPMG in Kyiv. By contrast, KPMG International increased global revenues by 5% in 2017.

                        President Trump is preparing to approve the supply of 210 Javelin anti-tank missiles and 35 rocket launchers, news site reports, citing anonymous State Department officials. This sale -- or gift -- of $47 million worth of lethal military equipment, requires U.S. Congressional approval. Separately, The Washington Post reports that the State Department has approved the sale of $41.5 million worth of Model M107A1 Sniper Systems, ammunition, and parts, made by Tennessee-based Barrett Firearms Manufacturing. In Moscow, Russia’s Deputy Foreign Minister Sergei Riabkov, complained that such arms are “not in the framework of commercial contacts.”

                        The National Anti-Corruption Bureau has been investigating reports of corruption in Ukroboronprom, the state-run conglomerate of about 130 defense production companies, according to an article in Foreign Askold Krushelnycky, a British journalist with Ukraine experience, writes that he was shown a NABU internal report alleging that two executives at UkrSpecExport, Ukroboronprom’s export arm, siphoned money from a $39 million contract to supply parts for Antonov AN-32 aircraft to Iraq’s defense ministry. In reply, Roksolana Sheiko, spokeswoman for Ukroboronprom, is quoted saying the prosecutor general's office investigated the allegations, but "there was no violation detected by the company or its officials."

                        The defense industry may become a driver of the economy in 2018, Prime Minister Groysman told reporters Friday. Citing a figure close to $600 million, he said: "We are allocating UAH 16.5 billion next year to produce new weapons and modernize [weapons]."

                        A state-owned Belarusian bank has applied to Ukraine's central bank to buy the Ukraine subsidiary of Russia's Sberbank. Paritetbank, the bidder, is the 15th largest of 25 lenders in Belarus.

                        Odesa port has accepted its first 5,000 container ship, the 294-meter long Zim Haifa from Israel. The Container Terminal was able to handle the ship last week thanks to investments by the German operator, HHLA International GmbH. Anastas Kokkin, CEO of the terminal, said his three new dockside gantry cranes can unload up to 90 containers an hour. He said: “For us it is a sign that the service we provide is close to the European level.” HHLA says it can now handle the Black Sea’s largest ships, the Bosphorus Max. Measuring up to 310 meters long, these vessels can carry 10,000 containers.

                        Starting Jan. 1, foreign ships are allowed to enter Ukraine's ports and to start unloading goods 24 hours after providing electronic information about the cargo, EU4Business reports. The new system will speed up customs procedures and reduce opportunities for corruption, the EU-funded project says in a press release.

                        Starting Monday, all foreigners arriving at Ukraine’s border posts will give their fingerprints through fingerprint readers as part of a biometric data registration system. Foreign Minister Pavlo Klimkin told UNIAN that “in the pipeline is monitoring the movement of Russian citizens throughout Ukraine.” This could be a modern version of Soviet-era visas, which were issued only for defined itineraries.

                        Kherson region officials are to travel to Dublin in January to talk with Ryanair about flights to Kherson International Airport. Currently Ukraine’s 8th busiest airport, Kherson and nearby Mykolaiv make for a combined passenger catchment area of 1 million people. After Crimea closed to domestic tourism, Mykolaiv-Kherson tourism boomed. With scheduled flights to Kyiv, Egypt, and Turkey, Kherson gains a Belavia flight on April 1 to Minsk, a transfer airport for flights to Moscow. Mykolaiv airport has not had commercial flights for several years.


                        • #13
                          Ukrposhta has won permission to offer limited banking services to clients of the national postal service. The National Bank of Ukraine extended privileges on Wednesday “in order to increase access to financial services for the transfer of funds, in particular in rural areas and remote regions of Ukraine, stimulating the development of cashless payments.” Ukraine’s four big state-owned banks oppose the creation of a postal bank. But Igor Smelyansky, the US-trained acting CEO of Ukrposhta, argues that 10 million Ukrainians, many of them elderly, do not live within five kilometers of a bank branch.

                          The central bank has revoked the banking licenses of two more small banks -- Apex Bank and Industrial and Financial Bank -- under the new procedure of voluntary termination of banking activities. Kateryna Rozhkova, deputy chairman of the National Bank of Ukraine, praised the owners’ recognition that their banks had failed as “an adult step.”

                          UNIAN headlines: “PM Groysman to Ukroboronprom CEO: "Look for another job." The news agency reports that the Prime Minister is submitting to President Poroshenko a motion to dismiss Roman Romanov, CEO of the state-owned military industry conglomerate. The public pretext is Romanov’s failure to follow through on government order to pay back salaries to shipyard workers in Mykolaiv. Separately, Interfax reports that anti-corruption activists and “representatives of the Western military establishment” may be appointed to Ukroboronprom’s supervisory board.

                          Five Ukrainian rockets launched payloads into space this year – three for the European Space Agency, one for NASA, and one for Russia’s Roscosmos, from Baikonur, Kazakhstan. Roscosmos initially reported that Tuesday’s launch was successful, but later reported it lost contact with the payload, Angola’s first telecommunications satellite. Ukraine plans to launch its own communications satellite Lybid in the second half of 2018. The Space Agency of Ukraine estimates that Ukraine’s space industry expanded by almost one third in 2017.

                          Construction grew by 22.5% nationwide through November, compared to the same period last year. Of the $3 billion in building, the hot spots were: Zhytomyr +45%; Kirovohrad +41%; Odesa +40.3%; Dnipropetrovsk +29% and Kyiv city +31%. Building decreased in only four regions: Luhansk -27%; Sumy -4%; Volyn -0.6%; and Zakarpattia -0.2%.

                          Half of Ukraine’s elevators were installed during the Soviet era, making for an enticing modernization market, OTIS Ukraine general director Ladislav Zeman tells Interfax. With 500 employees and elevators in over 20 Ukrainian cities, the American company lifts 8 million Ukrainians a day.

                          Agrarian Fund, one of Ukraine’s largest state food companies, boosted its flour exports by 70% in 2017 to 17,000 tons, according to Novoe Vremya. Boosted by this results, Andriy Radchenko, director general the fund, said he is talking with a Turkish supplier of milling equipment. He told the business weekly: “We're considering the possibility of building a modern milling complex. We're trying hard to raise Turkish financing under the project.”

                          Sugar production is matching last’s year production of 2 million tons, reports Ukrtsukor, the National Association of Sugar Producers. Exports should hit 500,000 tons.

                          Norteda, a Lithuanian oil trader, plans to invest over $10 million in processing of Ukrainian grains and oilseeds. On opening an office in Kyiv, Igor Shklyarus, UAB Agrarinė norteda, said: "Today Ukraine is one of the most attractive agrarian countries of Eastern Europe. We are considering investment projects for the storage and processing of cereals, are also ready to finance and process oilseeds."

                          To jumpstart a year of privatizations, the State Property Fund plans to auction off shares in eight state companies, during the week of Jan. 17-23. Total sales may only net $1.4 million, but the Fund hopes it will spark investor interests. Interfax reports that minority holdings will be sold in: Ukrnafteprodukt, Stebnitsky mining and chemical enterprise, Polymineral, Ukrhudozprom, Boryspil Enterprise Sortasninnovoch, Scientific and Technical Test Center Spectrum-T, and Brailovsky base of storage and sale of plant protection products. A majority holding -- 89.5% of shares – will be sold in Bila Tserkva Rubber Technical Products Plant.

                          The Prosecutor General's Office of intends to recover in early 2018 another $180 million illegally obtained by runaway ex-President Viktor Yanukovych and his allies, according to Radio Free Europe/Radio Liberty. In September, Prosecutor General of Ukraine Yuriy Lutsenko reported that the state budget had received the first part of $200 million confiscated from Yanukovych and his team.

                          Low interest loans and technical expertise for renewable energy may flow from Ukraine joining the International Renewable Energy Agency. On Wednesday, President Poroshenko a law allowing to join the decade old association of 154 member nations.

                          AVentures Capital has invested $3.5 million in seven Ukrainian IT startups in the past 18 months. Andriy Kolodiuk, managing partner of the Kyiv-based investment firm, tells reporters that the average investment is $500,000. In the last year, the fund has invested in Spinbackup, Bookimed, Teamfusion, and Petcube. He said: “Three more deals for $500,000-$1.5 million remain secret, including with two companies at the growth phase with over 100 employees.” He said his firm is negotiating with a dozen companies and plans to invest in 2-3 in the first half of 2018.

                          Ukraine has issued a tender for dredging its two Azov Sea ports, Mariupol and Berdyansk, Xinhua reports. China’s news agency may have noticed the tender before Ukraine’s media because China Harbor Engineering Company Ltd. is dredging Ukraine’s busiest Black Sea port, Yuzhny, and is bidding to dredge a second port, Chornomorsk. On its website, Ukrainian Sea Ports Authority says the deadline for Azov Sea bids is Feb. 2. For what could be an $18 million contract, China Harbor has two advantages: it already has equipment in the region, and Russia, which now controls two thirds of the Azov coastline, is not expected to interfere with a Chinese company.

                          Ukraine should reassume its historic role as a transit country between east and west, says Boris Kolesnikov, co-chair of the Opposition Bloc party. Kolesnikov, a Donetsk native, expressed the feelings of many Eastern Ukrainians when he told reporters in Kyiv Wednesday that Ukraine’s trade war with Russia had left Eastern Ukraine at a commercial dead end. Referring to Russia, a country with an economy 16 times larger than Ukraine’s, he said: "The resumption of transit is the number one task. We lost all transit during political actions and applications. We lost aviation and automobile transit."

                          Infrastructure Minister Volodymyr Omelyan is confident the Ryanair will enter Ukraine next year. He told Priamy TV Channel Wednesday: "It will enter next year - 200%." Earlier, he told Expreso TV that he is talking with two other discount airlines. He predicted: “There is an 80 percent probability that they will enter the Ukrainian market next year.” These two airlines would have 49 percent foreign capital and 51 percent Ukrainian, an ownership structure that would allow them to conduct domestic flights.


                          • #14
                            China and Ukraine have agreed to speed the construction of modern grain elevators, silos, port terminals, highways and railroads, according to an action plan posted Thursday on the website of the Ukraine’s Ministry of Economic Development. The plan calls for promoting renewable energy in agriculture and to strengthen interaction between customs authorities of both countries. China sees Ukraine as a major source of food for its population of 1.4 billion.

                            Three months ahead of schedule, China Harbor Engineering Company completed on Wednesday the dredging of 4.4 million cubic meters of soil from the bottom of Yuzhny, Ukraine’s busiest port. Andrey Stavnitser, founder of M.V. Cargo stevedoring company, wrote on Facebook that it is “the fastest dredging in the history of the Black Sea ports.” M.V. Cargo and Cargill, the American commodity trader, can now open in March the first phase of a massive, $150 million grain terminal. Capable of handling 10% of Ukraine’s actual grain exports, the terminal will have 14 silos and a warehouse for a total one time storage capacity of 290,000 tons. The EBRD and the International Finance Corporation are providing $74 million in financing.

                            President Poroshenko is opening the door to resuming imports of gas from Russia. On a trip to Odesa Thursday, he is quoted by Interfax saying: "What has happened in the past two years? We are energy independent. They [Russia] are knocking: ‘Can you take our gas?’ No, everything is fine in our country. If it's cheap and fair, not corrupt, then, please."

                            Ukraine’s state railroad has won the right to set rental rates for its hopper and gondola cars, used for moving grain and coal. Previously, state regulations set Ukrzaliznytsia’s rental rates at one third or below market rates. This led to a rail car black market, supported by exporters desperate to get grain to ports. Concorde Capital’s Alexander Paraschiy writes: “A price difference created a shadow market for state railcar rentals, which will likely vanish once railcar rent is liberalized… the negative effect from the liberalization won't be significant for Ukrzaliznytsia clients.”

                            Privatizations netted only 20% of the 2017 target, Vitaly Trubarov, acting head of the State Property Fund, posted on his Facebook page Thursday. Sales brought in only $125 million to the Fund. Although low, this is the largest amount since 2012. Trubarov hopes that a ramped up privatization program will net almost $1 billion in 2018.

                            Visa free travel to the EU is cutting unemployment in Ukraine, Social Policy Minister Andriy Reva told reporters Thursday. Over the last year, the total number of unemployed people in Ukraine has declined by 9%. Referring to the opening last June of the EU to 90-day visa free visits by Ukrainians, he said: “Opportunities to work in neighboring countries has led to a decline in applicants who live and desire to work in Ukraine."

                            The US has displaced Russia for the first time as the leading source of private money transfers from abroad to Ukraine, reports the National Bank of Ukraine. Overall, the transfers, largely wage remittances, increased by 30% to $5.2 billion during the first three quarters of this year. As tracked by the central bank the top five sources of transfers were: US - $547 million; Russia - $460 million; Germany - $252 million; UK $243 million; and Cyprus - $218 million. Largely uncounted are the hundreds of millions of dollars in cash that travelers carry across the land borders with Poland and other Central European countries.

                            The number of Ukrainians with incomes below the subsistence level fell sharply in 2017, from 54.5% to 39.4%, Minister of Social Policy Andrei Reva said at a press conference. He urged employers to raise salaries to compete with pay levels in Poland. Separately, the State Statistics Service said Thursday that in November real, post-inflation wages were up 21.4% compared to one year earlier.

                            Ukraine’s inflation is the highest in Europe and the CIS, according to year end research by FOREX CLUB. In 2017, consumer prices in Ukraine rose by 13.6%, far above the EU average of 2.6% and double the average for former Soviet countries, 6.7%. Wage hikes, higher prices for coal and oil, and poor weather contributed to Ukraine’s high level. In 2015, inflation hit a recent peak of 43.3%, then receded to 12.4% in 2016. Despite this year’s up tick, Andriy Shevchyshyn, senior analyst at FOREX CLUB, tells news site: “We expect that next year inflation will not exceed 10-10.5%.”

                            Ukraine’s hryvnia crossed the psychological barrier of trading at 28 to the dollar on Thursday. On the interbank foreign exchange market, the rate was UAH 28.09/$1.

                            The European Investment Bank is providing EUR12 million in loan guarantees to Raiffeisen Bank Aval for the support of small and medium-sized enterprises. Part of the EU-Ukraine free trade agreement, the loan project could grow to EUR140 million.

                            Credit Optima Bank is the fourth small bank this month to voluntarily surrender its banking license to the National Bank of Ukraine. An industry check in October found that Credit Optima was one of four banks that did not have the minimum registered capital of UAH200 million, about $7 million. The others were: Center Bank, UBRD, Polikombank, and Alpari Bank.

                            Saudi Arabia and Ukraine have agreed on a health certificate for the supply of processed food products to the Kingdom. This form will allow the export of about 80 types of processed foods according to the Gulf Council Regulation Guide, reports the website of Ukraine’s State Service for Food Safety and Consumer Protection.

                            Romania and Odesa will be connected by a modern highway by the end of 2018, said President Poroshenko. A final stretch of the M-15 from Odesa to Reni, on the Danube River, will be rebuilt next summer, he promised Thursday on a visit to Odesa. Poroshenko was born 30 km north of what is now the international highway. At present, speeds on the 318 km road average` 60 km an hour. "I am confident that next year we will complete the construction and repair of the last 90 km of the road and get the road to Romania and a large transport corridor that will give a second wind to business, tourism, and production in the settlements, towns and villages that are located along the road." Often seen as Ukraine’s forgotten neighbor, Romania does not have regularly scheduled air flights to Ukraine.

                            Visa free tourism starts Sunday between Ukraine and the United Arab Emirates. Citizens of each country will be able to stay for up to 30 days for each visit. In 2017, about 120,000 Ukrainians are believed to have visited the UAE. Flydubai has direct flights from Kyiv Zhuliany and Odesa to Dubai. From Kyiv Boryspil, Ukraine International Airlines flies to Dubai and Air Arabia flies to Sharjah.

                            UIA started flights Tuesday between Kyiv Boryspil and Krakow, Poland’s second largest city. Lasting 1h45 minutes, the flights become daily on Jan. 9. Playing catchup with LOT Polish Airlines, which now has flights to five airports in Ukraine, UIA will launch flights on March 2 from Boryspil to Gdansk, Poland’s third busiest airport, after Warsaw-Chopin and Krakow.


                            • #15
                              A global stock market survey by Bloomberg found that the fastest growing exchange in the world in 2017 was the Ukrainian Equities Index, which rose by 80%. The Ukraine UX tracks trades on the Kyiv-based Ukrainian Exchange. Ukraine’s other main exchange, the PFTS, saw its index increase by 19% in 2017. By contrast, the WIG Ukraine Index fell by 8% last year. This index charts the seven Ukrainian companies listed on the Warsaw Stock Exchange. Last year, it rose by 41%.

                              A kidnapped crypto currency exchange executive was released in Kyiv after a $1 million ransom was paid in bitcoin, Anton Gerashchenko, an adviser to Interior Minister Arsen Avakov told Reuters and the Financial Times on Friday. Pavel Lerner, a Russian citizen, was kidnapped by six gun-toting men in dark clothing and balaclavas who grabbed him off a street in Kyiv on Tuesday and pushed him into a minibus with stolen number plates,, news website reports. The next day, a denial of service attack hit his company, EXMO Finance, which is based in Britain.

                              Chinese companies are negotiating with Kyiv officials to build “ring-road around Kyiv, a traffic intersection in the city center, and a 37 km long road connecting the capital with its [left bank] suburb of Brovary,” Xinhua reports. In a survey of China-Ukraine relations, China’s news agency cites: a Chinese agreement in November to build Kyiv’s fourth metro line; Chinese dredging of Yuzhny port “aimed at expanding maritime productivity while boosting Ukraine's grain exports by 15 percent,” and new contracts won by two Chinese companies to “modernize three key highways in western, northern and central Ukraine.” With bilateral trade to be up around 17% this year, Xinhua said China now is Ukraine’s third largest trading partner, after the EU and Russia. “This year, Ukrainian exporters delivered more than 220 new products to the Chinese market, with agricultural goods leading the list,” reported the article, headlined: “Sino-Ukrainian partnership gains new vigor in 2017.”

                              Odesa Region, the major point of entry for trade with China, has signed a cooperation agreement with China’s Jiangxi province. Spanning the banks of the Yangtze River, in southeast China, Jiangxi has a population of 45 million, slightly bigger than Ukraine’s. Unlike Ukraine, Jiangxi’s economic has been growing at double digits for most of the last decade. As a result, the provincial economy is now almost twice as large as Ukraine’s. From Odesa, cooperation is foreseen in food processing and developing ports and highways under China’s “Silk Road” program.

                              Ukraine's grain exports will decline for the first time in five years in the current marketing year, Maksym Martynyuk, the country's First Deputy Minister of Agrarian Policy and Food. During the marketing year, which runs between July 1, 2017 and June 30, 2018, Ukraine expects to sell 41 million tons, down 6% from last year, he told Interfax. Martynyuk places much of the blame on logistical bottlenecks, notably lack of rail wagons to carry grain to Black Sea ports. Ukraine supplies 8% of the world’s internationally traded grain.

                              With grain harvests growing far faster than storage capacity in Lviv region, eight grain elevators with a combined storage capacity of 68,000 tons are under construction. Last November, UkrAgroConsult reports, a ninth elevator, with a 7,500 storage capacity was built for Dzvony Agrofirm in the village of Bolotnya. Last fall, the region’s harvest of grains and oil seeds topped 1.4 million tons.

                              Poland will build 1,000 km of fencing along roads and highways near Ukraine and Belarus in an attempt to stop deadly invaders from the east: wild boar. Major carriers of African swine fever, wild boar are blamed for pockets of infection that have reached the Warsaw region. Domestic pig herds infected with the fever have been destroyed across Ukraine, Russia and Belarus. In addition to spending $37 million on fencing, Poland is giving hunters paid leave of up to six days to shoot wild boar. Harmless to humans but deadly to pigs, the current virus outbreak started in Georgia’s port of Poti a decade ago and has spread through Russia, the Baltics, Belarus and now Ukraine.

                              Foreign gas drillers are invited to bid through Feb. 8 on tenders for 42 new wells for Ukrgazvydobuvannia, the state gas production company. Placed through the ProZorro tender system, the winning bids value is expected to hit $225 million. As part of a drive to return Ukraine to self-sufficiency in gas by 2020, the state company earlier tendered 90 wells for drilling in Kharkiv and Poltava regions. During the 1970s, Ukraine was largest gas producing republic of the Soviet Union.

                              In 2017, the hryvnia lost 5% against the dollar, 11% against the ruble, and 21% against the euro, the National Bank of Ukraine reports. On Friday, the last day of interbank trading the exchange was 28.0672 hryvnia / dollar, compared to 26.6924 hryvnia / dollar on the first day of trading last January.

                              Ukraine's balance of payments surplus grew 2.6 times through November, to $2.6 billion, against a surplus of $987 million in the same period of 2016, according to the National Bank of Ukraine.

                              Bolstered this year by two Christmas holiday dates, the nation’s Christmas ornament business is thriving, with exports up 34% this year, Nataliya Mykolska, Ukraine’s chief trade negotiator writes on Facebook. “During the first 10 months of 2017, Ukraine exported $6.1 million worth of Christmas ornaments,” Mykolska wrote Sunday. “Germany, Netherlands, Poland, Russia, and Belarus are among the top five countries that import Christmas decorations from Ukraine.” Next Sunday, much of Ukraine celebrates orthodox Christmas, taking Monday Jan. 8 off as a bank holiday

                              Kyiv will soon have a new tourist attraction – an Apple museum 10,000 km east of the U.S. company’s California headquarters. Expected to open this summer, the museum is the brainchild of Oleksandr Kosovan, founder and CEO of MacPaw, a company that makes CleanMyMac software and Setapp, a Mac application subscription service. A Mac fan since his days at Kyiv Polytechnic Institute, Kosovan learned in 2016 that Tekserve, the legenday Mac repair store was closing. Friends brought the store’s historic collection from New York to Kyiv, one computer at a time. Then Kosovan bought a Mac collection from Poland. The museum is to open in Kyiv in July as part of festivities marking MacPaw’s 10th anniversary.

                              Flights from Odesa to Berlin, Frankfurt and Bergamo (Milan) are to start this summer. At present, Odesa has only one flight to Western Europe, to Vienna on Austrian Airlines. Interfax reports that last week the State Aviation Service approved flights by Ukraine International Airlines from Odesa to the two German cities. The airline is negotiating with the airport about the flight to Italy.

                              Reflecting Wizz Air’s commitment to expanding flights from Ukraine this year, the discount airline will hold a “Pilot Open House Day” next week in Kyiv. Wizz Air is looking for pilots, with preference to Air Force veterans, to fly the additional Airbus A320 that will be based in Zhuliany starting this spring.