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  • UKRAINE BUSINESS NEWS
    President-elect Zelenskiy aims to double Ukraines economy in five years, Igor Kolomoisky, his primary financial backer, tells RBK-Ukraine. Seen as the grey eminence of a Zelenskiy administration, Kolomoisky says in an interview in Tel Aviv that he backs retaining Yakiv Smolii as chairmen of the National Bank of Ukraine. Kolomoisky, owner of 1+1 TV, favors advancing the Rada election from the current Oct. 27 date, referring to Zelenskiys 73% vote tally in the April 21 presidential runoff: To put it simply, there is a momentary rating that needs to be converted into the maximum possible number of deputies.
    Separately, former Finance Minister and current Zelenskiy advisor Oleksandr Danylyuk tells Liga.net that top priorities of Zelenskiys first 100 days will be to restart the anti-corruption bodies" and "restart the recruitment and certification of judges. Other priorities will be to reform the State Security Service, or SBU, to eliminate the Tax Police, and to create the Financial Investigation Service.
    Turning to the parliament, Danylyuk says: A non-working [Rada] just needs to go. Looking to Rada elections, he warns: It is possible to make their low trust turn into their loss in the next elections.
    Judging by spring plantings and favorable weather, Ukraine will export slightly more grain next year than its forecast record 50.4 million tons of exports for this year, predicts the US Department of Agriculture. Bolstered by a record harvest last fall, Ukraine exported 43.5 million tons of grain and legumes as of Friday 25% more than this time last year. The marketing year ends at the end of next month.
    Looking at this years harvest, the USDA predicts that wheat exports will be up 15%, to 19 million tons. Corn exports will recede 8.5% from their record level, to 27 million tons next year. Barley exports will be 4.5 million tons, almost the same as this year. Overall, grain exports will be 50.7 million tons, 300,000 tons over this year. The harvest will slightly surpass last years record, hitting 72.1 million tons, up 3% over last year, the USDA says.
    With the EU predicting its lowest harvest of rapeseed in five years, Ukraines strong crop could fill the gap, Bloomberg reports. Known for fields of bright yellow flowers at this time of year, rapeseed is crushed for cooking oil and marketed as canola. The EU has cut its official production forecast to 19.2 million tons. But one British oilseeds trader interviewed by Bloomberg predicts EU production will fall below 18 million tons. Ukraine and Australia will fill the EU production shortfall, the USDA predicts.
    To shift from global breadbasket to global supermarket, Ukraine has to train world class marketers and open its promised Export Credit Agency to provide risk insurance for processed food exports, according to analysis by Yelizaveta Dorontseva of UNIAN. Last year, commodities accounted for 80% of Ukraines $19 billion in food exports, according to the Ukrainian Club of Agrarian Business.
    Oleh Bakhmatiuk owner of Avangard Holding, one of Ukraines largest egg producers, tells UNIAN that after losing assets in Crimea, Donetsk and Luhansk in 2014: We decided to reorient ourselves to foreign markets. We export our products to Iraq, the UAE, Qatar, Saudi Arabia, Bahrain, Kuwait, and Hong Kong. Now we plan to enter the market of Singapore, and about 20 African countries.
    Norways Baltic Pipe gas link to Poland will be ready in the fall of 2022, in time to allow Poland to drop its gas supply contract with Russias Gazprom, Polands Foreign Minister Jacek Czaputowicz tells reporters in Oslo. Built via Denmark, the pipeline will ship 10 billion cubic meters of gas a year, enough to fully replace Polands imports from Russia.
    Ukrtransnafta resumed shipping Russian oil to EU via the Druzhba pipeline on Saturday, ending a 16-day suspension due to dirty oil from Russia. Before the suspension, Russia shipped an estimated 5 million tons of contaminated oil to the West. Today, over 10 tankers are filled with the oil, unmarketable because of heavy contamination with organochlorides.
    Estimates of hundreds of millions of dollars of damage to Belarus two refineries and oil pipelines are not far from the truth, Belarus President Alexander Lukashenko told reporters Saturday in Minsk, according to Belta news agency. He blamed laxity and laxity on the territory of Russia. Russias Transneft was slow to detect the problem and failed to communicate with customers, Reuters reports. Russias state pipeline company says a criminal case has started with the detention of four company heads in the Samara region, about 1,700 km east of Belaruss Mazyr refinery.
    Russias June 1 restrictions on exports of light oil product and energy coal do not pose any problems at all, Prime Minister Groysman said Saturday. While alternative suppliers are lined up, coking coal, diesel and gasoline present more problems, he said. Last year, Russia supplied 70% of Ukraines imported coal. Ukraine imported 15 million ton of coal from Russia, paying $1.8 billion. Russia supplied 39% of Ukraines oil products imports. Ukraine imported 3.2 million tons, paying $2 billion.
    Ukrainian An-124s are flying Black Hawk UH-60 helicopters from Huntsville, Alabama to Afghanistan. Under a 3-year contract that started Jan. 1 with NATOs Strategic Airlift Interim Solution program, Antonov is using two of its massive Ruslan military transports to ferry NATO military equipment around the world. The Blacks Hawks are part of a $7 billion US program to supply 159 US-made helicopters to the Afghan Air Force, replacing Russian-made Mi-17s.
    UIAs Kyiv-Beijing flight makes a 4-hour detour around Russia, costing Ukraines flag carrier $120,000 extra for each flight, says Pavel Ryakivin, general director of Kyiv Boryspil, UIAs hub. Infrastructure Minister Volodymyr Omelyan tells Interfax-Ukraine he is looking for a non-discriminatory mechanism to compensate Ukrainian carriers hurt by Russias overflight ban.
    The daily Kyiv-Beijing flight run at 95% occupancy and SkyUps new flight from Kyiv Boryspil to Chinas Hainan resort island runs at 97% occupancy, Omelyans deputy, Viktor Dovhan, writes in the Kyiv Post. He says China-Ukraine air passengers traffic hit 200,000 last year, double the level of 2015. With Chinese now eligible for Ukraines e-visas, air passenger growth with Ukraine is expected to keep growing at 25% a year.
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    • UKRAINE BUSINESS NEWS

      The IMF review mission arrives in Kyiv next Tuesday (May 21) and will work here for two weeks, says Mikhail Dovbenko, a Rada finance and banking committee deputy chairman. A favorable review should lead to disbursement this summer of a $1.3 billion loan tranche from the IMF -- and unlock more loans on concessional terms from other international financial institutions.
      A deal breaker for the IMF would be the return of PrivatBank to Igor Kolomoisky, the most prominent backer of President-elect Zelenskiy. On Monday, a Kyiv bank issued the latest of three rulings in one month against the Naitonal Bank of Ukraine on the Dec. 2016 nationalization of PrivatBank. At the time, an injection of $5.6 billion in public funds saved the bank, Ukraines largest, from collapse. One year later, Kroll Inc., the New York corporate investigators, reported: PrivatBank was subjected to a large scale and coordinated fraud over at least a 10-year period ending December 2016, which resulted in the Bank suffering a loss of at least $5.5 billion. It stated that 95% of corporate lending had been to parties related to former shareholders and their affiliates.
      It is unclear if Kolomoisky seeks return of the bank, compensation for its nationalization, or cessation of lawsuits to seize his properties in Ukraine and overseas. The Zelenskiy camp is split. One Zelenskiy advisor, Andriy Bogdan, provided legal advice to Kolomoisky in his lawsuits over PrivatBank. Zelenskiys main economic advisor, Oleksandr Danylyuk, was an architect of the banks nationalization when he served as Finance Minister in 2016.
      We were on different sides of the barricade, Danylyuk told Liga.net in an interview posted Saturday. He says restitution of the bank to its previous owners will not be possible, as the owners would be obliged to repay the treasury $5.6 billion. The option of returning is impossible from the practical point of view...therefore, the option of compensation was chosen by the former owners, he said. Looking to a future Zelenskiy administration, he said: A wall must be built between us and the cause of Privat -- otherwise it will undermine trust and discredits the president.
      Today, Zelenskiy meets with executives of foreign capital banks, such as Citibank, Credit Agricole and Raiffeisen Aval, reports Interfax-Ukraine. Playing to the host audience, Ukraine plans to ask international donors for a US$63 million ice hockey rink for Kyiv when Toronto hosts the third Ukraine Reform Conference July 2-4. Economic Development Minister Stepan Kubiv, a frequent visitor to Canada, is pushing the proposal at his inter-agency commission on state investment projects. Drawing foreign ministers from G7, EU and NATO countries, the conference is designed to support Ukraines transition to a free market economy. Kyivs Kryzhani Vovky, or Ice Wolves, play at Shallett Arena, a 400-seat covered rink in Darnytsa.
      Exports through Ukraines ports were up by 20% from January to April, compared to the first four months of last year. Imports and transit cargo were down, making for an overall cargo increase of 12%, to 49 million tons. Containers were up 19%, iron ore up by one quarter and grain up by one third. Confirming the trend toward bigger ships, the number of cargo ships docking at Ukrainian ports was down 1%, to 3,787.
      Winners were: Yuzhne, with cargo handling up 20% to 15.5 million tons; Mykolaiv up 20% to 10.7 million tons; and Chornomork up 21% to 8.4 million tons. Losers were: Odesa up only 5.5% to 8 million tons, slipping to fourth place nationwide. The two Azov seaports saw cargo diverted to Mykolaiv to avoid delays caused by Russian inspections of ships serving Ukrainian ports.
      Dnipro river cargo is up 60% through April, compared to the same period last year. The surge in cargo, to 2 million tons, is due to three factors: a mild weather allowing an early start to the river shipping season; last years bumper grain harvest straining trucks and trains; and Nibulons investment in river ports and barges. Grain cargoes nearly tripled, to 1 million tons. Construction cargo and metal products doubled.
      As HBOs Chernoboyl miniseries focuses world attention this month on the 1986 nuclear disaster, Belarussian and Ukrainian dredging experts are surveying a 188 km stretch of the Pripryat River with the goal of restoring cargo shipping and passenger cruises, reports the Center for Transporation Strategies. Surveyors check the width and depth of the Pripryat, from Mazyr, an oil refinery city in Belarus Gomel region, to the confluence of the river with the Dnipro, in northern Kyiv region.
      With Kyiv tourism operators interested in Chernobyl cruises, half of route would go throughPalieski State Radiological Reserve, the largest nature reserve in Belarus. Formerly the home to 22,000 people, the Palieski is now the wilderness home of boars, brown bears, European bison, Przewalski horses, foxes, wolves, Golden eagles and White-tailed eagles. The Chernobyl Disaster Might Have Also Built a Paradise, headlines an article released Monday by Wired magazine.
      This summer, a team of British scientists plans to resume drone studies of the Red Forest and surrounding areas in the Chernobyl Exclusion Zone, reports Wings. Last year, Britains National Centre for Nuclear Robotics used fixed wing and quadcopter drones to map much of the zone. Several unnmapped hot spots were found, presumable areas where contaminated soil has been dumped and forgotten. Last year, 70,000 tourists visited Chernobyl. After a 1MW pilot solar power unit opened there last October, foreign investors are competing to build massive solar arrays generating as much as 1 gigawatt of power.
      In the latest use of EU gauge tracks dating back to the Hapsburg empire, Slovakia and Ukraine start direct service June 9 between Koice, Slovakia and Mukachevo, Zakarpattia. Running twice a day along a 146 km route, the trains will cut travel time by 40%, to four hours, reports Britains Railway Gazette. The trains will be jointly operated by ZSSK, Slovakias state passenger rail company, and Ukrzaliznytsia. Six months ago, using the same EU gauge tracks, UZ started a dedicated Mukachevo-Budapest train.
      Separately, after a seven-year break, ZSSK restores service June 9 to a 26 km local route in eastern Slovakia. Running four times a day from Bnovce nad Ondavou, the trains will end at Vek Kapuany, five km west of Ukraines border, near Uzhgorod.
      In time for the summer driving season, 100 TruCam speed cameras will deployed on Ukraines highways by the end of May, Alexey Bilo****sky, deputy director of the Police Patrol Department, writes on Facebook. Ukraine is starting a multi-year traffic safety program designed to cut the accident rate, which takes a high human and economic toll.
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      • UKRAINE BUSINESS NEWS

        Two U.S. senators have introduced a bill targeting the Nord Stream 2 Russia-Germany gas pipeline, Bloomberg reports. Drafted by Texas Republican Ted Cruz and New Hampshire Democrat Jeanne Shaheen, both members of the Senate Foreign Relations Committee, the bill targets ships that lay the pipes and denies visas to executives from companies linked to the ships. It blocks transactions in U.S.-based property belonging to these executives and penalizes companies providing insurance to Nord Stream 2.

        Modeled after Iran oil sanctions legislation, the bill would target the two pipelaying companies: Swiss-based Allseas Group SA. and Italys Saipem S.p.A. Uniper SE, Engie SA, Royal Dutch Shell Plc, OMV AG and BASF SEs Wintershall are European partners of Gazprom in financing the project, designed to double the existing Nord Stream by adding 55 billion cubic meters a year. The project is half built, but commissioning is expected to go past the December 2019 target date due to changes in EU laws and a lack of Danish construction permits.

        European gas futures do not reflect worry over the future of Russian pipeline gas through Ukraine after the 10-year transit contract expires Jan. 1, says Andree Stracke, chief commercial officer for gas for RWE AG, a large German electricity generation company. "If you look at the spread between prices in the fourth quarter of 2019, when there will be transit, and prices in the first quarter of 2020, when the transit situation is not clear, you will see that it is small - this means that the market does not expect real problems, he said, Interfax-Ukraine reports from Flame 2019, the annual gas conference in Amsterdam. He said this small spread reflects the belief that Russia and Ukraine will ultimately sign a new contract, the belief that EU reservoirs will be filled with gas by this fall, and the fact that growing amounts of non-Russian gas are available to the EU.

        In addition to denting Russias reputation as a reliable energy supplier, the price for cleaning up Russias month-old dirty oil problem could run as high as $1.5 billion, according to a note by Citigroup Inc. cited by Bloomberg. This doesnt include the cost of cleaning [Russias] Transneft pipelines or refining equipment in Belarus and eastern Europe, reports Bloomberg. In Belarus, where one of the nations two oil refineries is still closed, the clean up is expected to cost hundreds of millions of dollars and stretch to the end of the year.

        An estimated 5 million tons of Russian oil were contaminated with organochlorides, compounds that can corrode refinery equipment. Ukraines oil pipeline operator will pump 350,000 tons of contaminated Russian oil it is storing to Hungary and Slovakia by November, Nikolai Gavrilenko, Ukrtransnafta CEO, told Reuters Tuesday.

        One impact of Russias dirty oil scandal may be to breathe new life into Ukraines 674 km Odesa-Brody pipeline. The oil pipeline was built in 2002 to carry Azeri and Kazakh oil north from the Black Sea to Brody, a junction in Lviv region with the east-west Druzhba pipeline. In practice, the pipeline flow was reversed, taking Russian oil south to Odesa. But, as Sergei Kuyun, director of A-95 Consulting Group, writes in DT.UA, loss of confidence in Russian oil supplies could lead to the Odesa-Brody supplying Central Asian oil to Ukraine, Belarus and Poland. Five years from now, Belarus is to start paying market prices for Russian oil. As a result, Belarus is studying alternate sources of supply, either from Lithuania or Ukraine.

        President-elect Zelenskiy told executives of foreign banks Tuesday that Ukraines macroeconomic stability depends on an independent central bank, continued cooperation with the IMF and following sound financial policies, his press service reports. Judicial reform and protection of the rights of investors and creditors are cornerstones for economic growth and attracting foreign investment, he said. Talking to the bank executives, largely Ukrainians, he said: Reducing interest rates will be a boost to economic growth. For now people are scared and do not trust the banks.

        Joining Zelenskiy were: Aivaras Abromavicius, Oleksandr Danylyuk, Andriy Bogdan, Ivan Bakanov, Victoria Strakhov. Banks participating were: Alfa Bank, Citibank, Credit Agricole, Credit West, Deutsche Bank, Piraeus, Pravex Bank Intesa Sanpaolo, ProCredit Bank, Raiffeisen Bank Aval, SEB, and Ukrsibbank BNP Paribas.

        Lviv is taking steps to win a 50 million loan to buy 100 electric trolley buses and to modernize the citys 210 km of electrified routes for trams and trolley buses. On Monday, the Lviv City Council a letter of intent to take the loan from the World Banks International Finance Corporation on concessional terms an interest rate around 5%, 13-year repayment period, and a 3-year grace period. A tender for the buses is to made public later this year, with the goal of receiving buses next year. The City Council calls the loan one of the largest in the history of attracting funds from an international institution to the development of the city.

        Today UIA starts to double the frequency of its Kyiv-Toronto flights, to four a week. A third Wednesday flight starts today. A fourth, Thursday flight, starts on June 13. Eying profit in long haul routes, UIA President Yuri Miroshnikov tells avianews that later this year, he would like to start a direct flight from Kyiv Boryspil to Guanzhou or Shanghai.

        To ease train travel to Ukrzaliznytsias new top international destination, tickets for all trains to Poland may be bought online, starting today, Yevhen Kravtsov, the railroads CEO writes on Facebook. The railroad also is working on online bookings for auto transportation by train. Meanwhile, passengers traveling to CIS countries, including Russia, may pay for tickets on line, but they have to pick up paper tickets at rail stations.

        To change the face of Kyiv from post Soviet to European, Mayor Klitschko plans to start towing illegally parked cars next month. A team of parking inspectors has been hired and trained, he tells Interfax-Ukraine. We will tighten the screws on parking issues - it will be expensive to park illegally, especially in the city center, said the Mayor of a city where drivers enjoy free parking on sidewalks. Without fines and towing, public garages sit half empty. To cut the number of cars going into the center, Kyiv is building parking lots near key metro stations.

        From the Editor: Red tape is strangling Ukraine, suffocating economic activity, encouraging emigration, and shutting the country off from new blood and outside experience. Those are my conclusions after going through a four-month, $3,000 obstacle course to simply renew my 1-year residency permit. Cutting red tape will be a big challenge for a Zelenskiy administration. This week, the Atlantic Council kindly opens their UkraineAlert space to my warning: Will Ukraine Become a Giant Moldova.
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        • UKRAINE BUSINESS NEWS
          Accelerating Ukraine economic divorce from Russia, Ukraine imposes a new duty on most imports from Russia, starting Aug. 1. The unspecified duty, levied as a percentage of value, will apply to all imports, but five exceptions considered strategic: anthracite coal, coking coal, gasoline, liquefied gas and pharmaceutical drugs.
          In addition, the Cabinet of Ministers banned all imports of cement and plywood from Russia -- $37 million of goods last year. The Economic Development and Trade Ministry backs a wider import ban on Russian industrial goods, fertilizers, food and vehicles. Prime Minister Groisman told the Cabinet: We will impose an embargo on goods that we produce today or that we can replace.
          The new duty and bans come as Ukraines trade deficit with Russia grew last year to $4.4 billion, 38% of Ukraines overall trade deficit. Revenue generated from the new import duties are to go to a new fund for import substitution investments, Ukraines Cabinet of Ministers said. The decision also comes two weeks before Russia imposes a series of restrictions on exports largely energy products to Ukraine.
          During the first quarter of this year, Ukraines overall trade deficit increased by 13%, compared to Q1 2018, to $1.5 billion, the State Statistics Service reported Wednesday. Exports were up 7.4%, to $12.3 billion. Imports were up 7.9%, to $13.7 billion. The EU took 43% of Ukraines exports of goods and one third of its exports of services in the first quarter, the State Statistics Service reported Wednesday.
          Sales of food to the EU increased by 24% during the first quarter. Exports hit $1.9 billion, giving Ukraine a surplus of $1.1 billion, according to Mykola Pugachev, deputy director of the Institute of Agrarian Economics. By April 1, Ukraine had fully used its annual EU quotas for honey, corn, sugar, apple juice and grape juice. Separately, Hugues Mingarelli, EU ambassador to Ukraine, told a conference in Kyiv on Wednesday: I hope that there is an opportunity to discuss the issue of quotas, especially in agriculture.
          European farmers alarmed over EBRDs loan to MHP headlines GlobalMeatNews about European Bank for Reconstruction and Development approval of a 100m loan to the Kyiv-based poultry giant to acquire Slovenian poultry processor Perutnina Ptuj. European poultry farmers complain to Brussels that MHP is using a legal loophole to flood the EU with their breast fillets. MHP says its exports were up 47% Q1-o-Q1, to 93,000 tons. It does not say how much went to the EU.
          President-elect Zelenskiy will inherit a low growth economy, according new GDP numbers released Wednesday by the State Statistics Service. During the first quarter of 2018, growth was 2.2%, down from 3.5% the previous quarter. Ten days ago, the National Bank of Ukraine had forecast Q1 growth at 2.4%. Economists forecast 2019 growth at 2.7-2.8%.
          If a Kyiv court voids the 2016 nationalization of PrivatBank, Ukraines largest bank, the central bank would face a stark choice: shut it down, or re-nationalize it. Kateryna Rozhkova, deputy governor of the National Bank of Ukraine, tells Reuters that voiding the nationalization would force the government to reverse the 2017 injection of $5.9 billion. This would leave the bank insolvent. Since 20 million Ukrainians well over half the adult population have accounts at PrivatBank, the government would be forced to nationalize it all over again.
          Igor Khomoloisky, former owner of the PrivatBank, says the solution is to fire Rozhkova and to pay him $2 billion compensation. Kolomoisky was the primary media backer of Volodymyr Zelenskiy in his successful campaign for president this spring. In the Zelenskiy camp, the point person on PrivatBank appears to be Viktoriya Strakhova, a financial reformer who served as corporate secretary of the bank for one year after its nationalization.
          Rozhkova predicts to Reuters that PrivatBank will top the agenda of the IMF review team that comes to Kyiv next week. She warns that if Kyiv courts keep ruling against the central bank on PrivatBank, they will undermine the central banks independence and encourage owners of the other 80 banks declared insolvent since 2014 to challenge the regulators decisions.
          An international standard audit of UkrOboronProm should start within 10 days, Prime Minister Groysman ordered the Economic Development and Trade Ministry on Wednesday. The audit was authorized 10 weeks ago in the wake of news reports indicating major procurement scandals. Groysman said a country at war needs a corruption-free, transparent and accountable military-industrial complex. It is important for us to understand how the concern Ukroboronprom functions, he said at the Cabinet of Ministers meeting. Everything that is not secret there should be open to people.
          Half of Ukrzaliznytsias stations generate only 2% of its revenue, a rail executive says as part of a campaign to pressure local governments to save 300 underforming freight loading stations. About 46% percent of the networks 1,700 stations and halts cost $300 million to service, but generate only $20 million in revenue, says Andriy Ryazantsev, finance director of the state railroad. The worlds seventh largest rail freight transporter, Ukrzaliznytsia has 23,000 km of track.
          Twenty EU-Ukraine projects in the Danube river corridor were approved by the Cabinet of Ministers Wednesday under the EUs Danube Transnational Program. With 5 million in seed money, the projects in transportation infrastructure, energy, environment and tourism are to benefit communities of Zakarpattia, Ivano-Frankivsk, Chernivtsi and Odesa regions.
          In a worldwide ranking of cost effective cities for foreign investment, Kyiv came in fifth and Lviv came in eighth, according to fDi Intelligence, a Financial Times unit. In this annual smart locations of the future survey, the two Ukrainian cities made the top 10 ranking in the category of cost effectiveness. Kyiv came in after Skopje, Sofia, Kaunas and Gdansk, rated on such criteria as: cost per square meter of class A office space, wages of skilled workers, price of hotel rooms, tax rate on profits, cost of setting up a company, registering property rights, and connecting to electricity grids.
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          • UKRAINE BUSINESS NEWS
            Volodymyr Zelenskiy will be inaugurated President of Ukraine on Monday morning at 10:00 at the Radas session hall. The May 20 swearing in date gives Zelenskiy one week to call a snap parliamentary election. Zelenskiy wants to take advantage of his 73% victory in the April 21 presidential vote to elect a support bloc in parliament. Forty percent of poll respondents said they would vote for his Servant of the People party, according to a poll completed Friday by a consortium led by the Rating Sociological Group.
            Svyatoslav Vakarchuk, the popular singer, announced Thursday that he will run for the Radawith a new party called Holos voice or vote in Ukrainian. Independent of Zelenskiy, Vakarchuk is expected to support free market, anti-corruption, pro-European legislation backed by the future president. In the same vein, Prime Minister Groysman plans to run at the head of a new independent, centrist party.
            By using presidential powers, Zelenskiy plans to take very concrete steps in coming days to fight corruption, Oleksandr Danylyuk, his chief economic advisor, told Concorde Capitals international investment conference Thursday. These include: relaunching the National Agency on Corruption Prevention; making the new High Anti-Corruption Court operational as soon as possible; winning Rada approval for a new law on criminal responsibility for illicit enrichment; and protecting whistleblowers on corruption.
            Direct Putin-Zelenskiy talks are needed to unlock real negotiations to renew Russias gas transit contract with Ukraine, Naftogaz CEO Andriy Kobolyev said Thursday, relating Russias position to attendees at Concorde Capitals international investment conference. After the last talks, in January, Gazprom officials said they would only negotiate again after the inauguration of Ukraines new president.
            At present, chances are quite high that Gazprom will shut off gas though Ukraine next January, Kobolyev said. To minimize an economic crisis he said Ukraine should go into next winter with 20 billion cubic meters in storage. If Russia stops using Ukraines gas transportation system, Slovakia and other western neighbors will not have excess gas to sell Ukraine, he predicted. Russia is storing record amounts of gas in the EU in order to be able to meet minimal contractual requirements without sending gas through Ukraine.
            Fearing a Russian cutoff of gas supplies through Ukraine next winter, Hungary is filling its gas storage reservoirs to 100% of their 6.3 Bcm capacity, MFGT, Hungarys state-owned storage company, said Wednesday at the Flame gas conference in Amsterdam. "If there is no flow from Ukraine from January 1, 2020, there is the real possibility, the real threat, that we might face problems," said Akos Kriston, MFGTs deputy CEO. Asked if traders consider storing gas in Ukraine, he replied traders fear "they might not get their gas back." Last year, Gazprom supplied 7.6 Bcm of Russian gas to Hungary, a 9.3% increase over 2017, reports S&P Global Platts.
            DTEK's energy holding has purchased controlling interests in two of Ukraines largest power generation companies, Odesaoblenergo and Kyivoblenergo, the company tells Interfax-Ukraine. The companies were bought from VS Energy International NV.
            Naftogaz sees September as the earlier date for going into the Eurobond market, Kobolyev told the Concorde Capital conference. First, the state energy company wants to see the level of demand and prices for a Eurobond launch planned by the Finance Ministry by mid-June. Noting high foreign demand for hryvnia treasury bonds, Kobolyev said local bonds could be a good source of financing.
            The recent jump in foreign purchases of hryvnia bonds also has caught the eye of Ukrzaliznytsia, the state railroad. We are seeing a high level of interest, a lot of activity on this instrument from the Ukrainian and international players, Yevhen Kravtsov, CEO of UZ, said at the Concorde conference. Referring to issuing Eurobonds and borrowing money from EBRD and EIB, he added: Our strategy is to use such a mix and continue to replenish our portfolio with hryvnia instruments.
            The International Finance Corporation carried out its debut issue of hryvnia bonds, denominated at 15.75% per annum, to support its operations in Ukraine. The bonds were issued Monday, redeemable in 2020, said Jason Brett Pellmar, IFC manager ro Ukraine, Moldova and Belarus. IFC, a World Bank unit, has a AAA rating.
            Representatives of international financial institution are hewing to a hard line on any backtracking on the nationalization of PrivatBank. Tough decisions were taken they were the right ones and they should not be reopened, Gosta Ljungman, the IMF representative in Ukraine, told the Concorde conference. It is important to recover as much as possible the cost of this crisis to Ukrainian taxpayers.
            Pellmar, the regional IFC head, said: It would be such a painful signal, that it is unlikely to happen. If Igor Kolomoisky, former owner of PrivatBank, prevails in courts: Then it will be possible to forget about international financial institutions in Ukraine.
            Kolomoisky, the main media backer of Zelenskiy in his presidential campaign this spring, returned to Ukraine Thursday morning, ending two years of self-exile, first in Switzerland, then in Israel. According to Radio Free Europe, he flew on a private jet from Tel Aviv to Dnipro, an airport he owns.
            Ukraines Central Post Office, a Stalinist landmark on Kyivs Maidan, should be sold, possibly for use as a hotel, recommends Igor Smiliansky, director of Ukrposhta. Noting that he rents out street level space in the building to Rozetka, the e-commerce company, and to Pf Retail LLC, a Vodafone Ukraine unit, he says the historic post office wastes space and slows mail delivery when demonstrations block the Maidan. Offering opportunities to real estate developers, he says post office sorting centers should move from traditional locations near rail stations to suburban locations near ring roads. Near train stations, you can open wonderful offices and hotels - there is absolutely no need for Ukrposhta trucks to go there and clog traffic," he told reporters Thursday while presenting the state postal companys annual report.
            In June 3, Motor Sich Airlines resumes Kyiv-Uzhgorod flights, says Mikhail Rivis, head of Zakarpattias regional council, according to Mukachevo.net. The flights are to be direct, on Mondays, Wednesdays and Fridays, and coordinated with Motor Sich flights from Kyiv Sikorsky to Odesa. With an eye to the start of the tourist season, the Zakarpattia council decided on an unspecified mechanism of financial support for the flight.
            A four-year, $90 million road safety program is start this summer in Kyiv. Features are: more traffic lights and crackdowns on speeders, drunk drivers, and driving without seatbelts. Coping poorly with a growing number of cars, the capital has seen a 48% increase in the number of road traffic deaths since 2016, the city reports. Separately, the Rada voted Thursday to delay for 90 days, until Aug. 24, the imposition of fines on the owners of illegally imported cars from the EU. Fines will be as high as $6,400.
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            • UKRAINE BUSINESS NEWS
              With Volodymyr Zelenskiy to be inaugurated this morning at the Rada, cautious praise comes from one observer of Ukrainian leaders for the last 30 years. He is pro business, pro market, and pro Western, writes Timothy Ash, senior sovereign analyst for Blue Bay Asset Management in London. Drawing on interviews in Kyiv last week, he writes: The consensus from those that have had any interaction with the President-elect is that he is clever, business-savvy, a quick learner, that he genuinely has the good of the country at heart and does want to deliver change, which is really what his electorate voted for. He is a joker, but certainly no fool.
              While predicting that Zelenskiy will succeed in dissolving the Rada and holding parliamentary elections this summer, Ash said the major threat to the new government will be efforts by Igor Kolomoisky, Zelenskiys main media backer, to win back PrivatBank. While some in Kyiv say Zelensky is his own man, knows the issues and problems and will box off Kolomoisky, Ash writes, his presidency will likely stand or fall on this very issue. Given the question mark hanging over PrivatBank, the IMF is unlikely to disburse the second tranche, $1.3 billion, until this fall, Ash writes in his widely circulated email.
              In parting public comments, President Poroshenko said Saturday that he is proud that Ukraines trade with the EU has more than doubled since the free trade zone went into effect on Jan. 1, 2016.Speaking on Europe Day, he also said that 2 million Ukrainians have traveled to the EU since the new 90-day visa-free regime started June 11, 2017. More and more flights are opening, airports and terminals that have not worked for years have reopened, he said. I am proud that during the period of my presidency, Ukraine and the EU have become closer than ever before in history.
              5G mobile service should start next year in Ukraine, according to a decree signed Friday by President Poroshenko. The decree sets a schedule for releasing the necessary frequencies. Separately, Oleksandr Zhyvotovsky, head of the National Commission for Communications Regulation, writes on Facebook that this work will be done by fall. The Rada will have to pass implementing legislation.
              Given Ukrainians low cell phone bills, construction of 5G would take decades to pay off, warns Oleksandr Kohut, director of regulator support for Kyivstar, the nations biggest mobile phone company. Implementation of 5G could require the purchase of a large number of frequencies, the costs of which, given the subscribers low mobile check and investment risks, could be paid back in decades, he tells Interfax-Ukraine. It is necessary to create conditions for improving the countrys economy, reducing tax pressure on the industry and adapting it to European regulatory practices.
              One year after the launch of 4G, about half of Ukrainians have access to the fast service,according to separate reports from the nations two largest mobile phone companies, Kyivstar and Vodaphone. Kyivstar, which has 26.4 million subscribers of all levels of service, plans to invest about $110 million a year through 2022 to expand 4G service, Alexander Komarov, company president, told reporters recently. By comparison, Vodaphone has about 20 million subscribers of all service levels.
              Tenders for Ukraines first two big public-private partnerships Kherson and Olvia Ports are to be launched by the end of June, reports the Infrastructure Ministry. Both ports are located 15 km from the Black Sea Kherson on the right bank of the Dnipro, and Olvia on the left bank of the Dnipro-Bug estuary.
              The winner of the 35-year concession at Olvia is expected to invst $650 million to develop of the port, starting with construction of a grain terminal capable of handling 2 million tons a year, reports InfraPPP news site. The 30-year concession of Kherson requires investment of $53 million. The EBRD, World Bank and International Finance Corporation have worked with Ukraine to write feasibility studies for international standard public-private partnerhips.
              Looking ahead, Infrastructure Minister Volodymyr Omelyan is working with the International Finance Corporation to develop concessions to manage airports possibly Kyiv Boryspil or Lviv, with two or three regional airports. In addition, the government is talking about concessions for management of rail stations and for construction of highways. If there are no early Rada elections, most current ministers are expected to remain in place until the end of this year.
              Omelyan is asking the Rada to put an additional $2 billion in the governments 2020 budget to continue systematic repair and rebuilding of major roads connecting the 24 regional capitals.Noting increased roadwork this year, he said: It is possible to repair 10,000 kilometers a year. Prime Minister Groysman has set a national goal of connecting all regional capitals with high-quality roads by the end of 2021.
              Ukrtransnafta is to resume pumping Russian oil today, ending a weekend suspension caused by lack of storage tanks for dirty Russian oil in Ukraines pipelines. In the month since Belarus discovered the contaminated oil, Ukraine has only pumped oil west to the EU from May 11 to 17. Belarus has not been able to pump oil to Poland for one month.
              In a filing with a Danish regulatory agency, Nord Stream 2 warns the 9 billion gas line across the Baltic might be completed in the second half of 2020 well after the Dec. 2019 completion target. Rosbalt, the Russian news agency, blames the delay on Denmarks recent request for a third route option through Danish waters.
              An average of 1.1 million crossings were recorded in March and April at Ukraines five Donbas checkpoints with the Russia-controlled section, reports the United Nations Office for the Coordination of Humanitarian Affairs. Crossings through the Donetsk and Luhansk checkpoints are expected to peak in the summer as residents check on relatives and apartments in the Russia-controlled areas. There is speculation that as part of a wider dtente deal, President Zelenskiy may allow pensioners in Russia-controlled areas to receive their pensions at home without having to cross the front lines.
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              • UKRAINE BUSINESS NEWS
                In his first minutes as president of Ukraine, Volodymyr Zelenskiy moved aggressively, dismissing parliament in order to hold early elections by the end of the summer. But before MPs disburse, he wants them to pass laws removing parliamentary immunity, allowing for more democratic elections and establishing criminal liability for illegal enrichment. So, dear deputies! the president said. You have appointed the inauguration on Monday, a work day, which has one benefit - it means you are ready to work. Inside the Rada, deputies looked glum. Outside, crowds cheered.
                Referring to his mandate -- 73% of vote cast one month ago -- Zelenskiy lectured the Rada: My election proves that our citizens are tired of the experienced, pompous system politicians who over the 28 years, have created a country of opportunities the opportunities to bribe, steal and pluck the resources.
                Dismissive of Ukraines stifling bureaucratic red tape, the new president quoted Ronald Reagan, saying: The government does not solve our problems. The government is our problem.
                Within minutes of the inauguration, Prime Minister Groysman announced that he will resign on Wednesday. In office for three years, Groysman developed a reputation as a centrist performer. He will run in the upcoming Rada elections. Assuming Zelenskiys early election order survives legal challenges, other cabinet members may step down to run as opposition candidates.
                Hours before the inauguration, then-President Poroshenko signed into law the bill providing for the transition from green tariffs to auctions for renewable energy facilities commissioned next year. The move came after green energy accounted for 2% of energy produced in 2018, but 8% of the nations electricity bill. In the new law, the solar tariff drops next year by 25%, followed by an annual 2.5% decrease for three years. For wind, the tariff drops by 10%. The auction regime, which is to start July 1, is to work in parallel with the green tariff regime.
                The presidency was costly for Petro Poroshenko as his personal fortune shrank by almost 40% during his five-year term, reports Bloomberg. Inaugurated as a billionaire in June 2014, Poroshenko saw his fortune dwindle to $705 million. Today, his most valuable asset is Roshen, the candy company. Most of Ukraines super rich suffered similar fates, writes Bloomberg. Since 2014, Rinat Akhmetovs fortune was cut in half, falling to $5.5 billion.
                The EU wants talks to renew Ukraines gas transit contract with Russia to start as soon as possible, Maro efovi, Vice-President of the European Commission for the Energy Union, told reporters in Kyiv on Monday. efovi, a Slovak politician, plans to fly to Moscow in early June to jump start the talks, which have not taken place since January. We need very rapid progress, efovi said, referring to the 10-year gas transit contract that expires Jan. 1. It is not only about finding a solution for the coming winter, but about concluding a new long-term contract for the transit of natural gas.
                Russia may duck talks until Demark takes a decision that could effect whether the Nord Stream 2 gas pipeline opens this December or late next year, Yuriy Vitrenko, Naftogaz executive director, writes on Facebook. The new Russia-Germany trans Baltic pipeline is designed to make the pipeline across Ukraine redundant.
                Since the end of the heating season on April 4, Ukraine has increased its gas reserves by 20% to 10.5 billion cubic meters, reports Ukrtransgas. With no guantees that Russian gas will be available after Jan. 1, the Naftogas goal is to start the late fall heating season with 20 bcm of gas in reservoirs.
                Estimating that one third of the 65 million people born in Ukraine now live outside the country, Zelenskiy appealed in his inaugural address: We really need you. To all who are ready to build a new, strong and successful Ukraine, I will gladly grant Ukrainian citizenship. You must come to Ukraine not to visit, but to return home. We are waiting for you. There is no need to bring souvenirs from abroad, but please, bring your knowledge, experience and values.
                The appeal comes as emigration looms as a problem for the 2020s.
                EU competition for Ukrainians workers is expected to increase, according to Losing Brains and Brawn: Outmigration from Ukraine, a Kennan Institute Focus Ukraine blog by Denys Kiryukhin. After aggressively recruiting ethnic Hungarians from Zakarpattia, he writes: Its likely that the Hungarian authorities will ease immigration laws for migrants from Ukraine instead of opening borders for Middle Eastern and North African refugees.
                Germany is expected to compete with Poland for Ukrainian workers in the 2020s. To hire skilled non-EU workers, Germanys Skilled Labor Immigration Act is to start in early 2020, according to Deutschland.de, a government information site. Currently around 1.2 million [German] job places are unfilled, the site reports. A new law is therefore intended to open access to the German labour market for skilled workers from countries outside the EU. It is an immigration law...skilled workers are welcome to stay.
                No longer will the Federal Employment Agency have to check if there are suitable German or EU applicants. Priority will be given to graduates of overseas German language PASCH schools. Ukraine has 46 of these German government accredited schools, the fifth largest number in Europe, after Poland, Croatia, Romania and Hungary.
                Faced with discount competition on Kyiv-London flights, British Airways plans to end its flights between London Heathrow and Kyiv Boryspil on Oct. 3. Ryanair now flies from Boryspil to London Stansted, and UIA flies to London Gatwick. From Kyiv Sikorsky, Wizz Air flies to London Luton. Unfortunately, we suspend flights to Kiev, British Airways tells Interfax-Ukraine. We have a long history of flights to Ukraine, which we are proud of, but this is no longer commercially profitable.
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                • UKRAINE BUSINESS NEWS
                  President Zelenskiy has scheduled snap parliamentary elections for two months from now, on Sunday, July 21. Today the Rada meets in special session to consider and vote on two Zelenskiy-backed electoral reforms: abolishing single-member districts and lowering the vote threshold for parties to get into the Rada, from 5% to 3%. Zelenskiy also is pushing for bills to remove parliamentary immunity from lawmakers and to allow impeachment of a president.
                  The bills are being shepherded by the Presidents new chief of staff Andriy Bohdan. Zelenskiys longtime legal adviser Bohdan is also lawyer for his major media backer, Igor Kolomoisky. He is seen as an able manager, Timothy Ash writes. Bogdan will be viewed with some suspicion due to his connections to Kolomoisky, and will be held to account if he is seen to favor his former client by Ukraine's vibrant media, civil society and the international diplomatic corps.
                  In a major public poll released last week, Zelenskiys political party, Servant of the People, received 40% support of decided respondents. A Russia-friendly consortium and the Petro Poroshenko Bloc tied with 11% each. Yulia Tymoshenkos Batkivshchyna took 9%.
                  US sanctions against European companies building Nord Stream 2 will come in the not too distant future, US Energy Secretary Rick Perry told reporters in Kyiv on Tuesday. The United States Senate is going to pass a bill, the House is going to approve it, and its going to go to the President and hes going to sign it, that is going to put sanctions on Nord Stream 2.
                  In his second visit to Ukraine in six months, Perry met Monday evening with President Zelenskiy and Naftogaz CEO Andriy Kobolyev to discuss ways for Ukraine to get through next winter in the event of Russian gas shut off on Jan. 1. Both sides discussed promoting foreign investment in gas production, financing of gas stocks prior to the winter, and building a permanent path of import of liquefied natural gas through the re-gasification terminal in Poland to Ukraine, reports Naftogaz. Perry was joined by Kurt Volker, Washingtons special envoy for Ukraine, and US Senator Ron Johnson, Republican of Wisconsin, a prominent sanctions backer.
                  At the meeting, Zelenskiy asked the U.S. to continue strengthening sanctions against Russia, reports his press service. We cant overcome Russian aggression in Donbas and Crimea independently. Thats why we need your help. Zelenskiy also requested a meeting with President Trump.
                  In Moscow on Tuesday, President Putins spokesman Dmitry Peskov denounced the sanctions threat as an overt manifestation of unfair competition, which the United States has been doing for a long time. Turning to Zelenskiys appeal for more sanctions, he warned: This is the rhetoric that will not help Ukraine to sort out the problem of the southeast.
                  An IMF review mission started work in Kyiv on Tuesday, meeting with outgoing Prime Minister Groyman and Finance Minister Oksana Markarova. On Monday, President Zelenskiy asked the Rada to approve a new law against illegal enrichment, a key IMF demand prior to approving a second tranche. Analysts predict this tranche, probably for $1.3 billion, would only be disbursed after the July 21 Rada elections. After these elections, Ukraine could start negotiating a new program with the IMF, Oleg Ustenko, a Zelenskiy advisor tells Interfax-Ukraine.
                  President Zelenskiy and his wife Olena earned $570,000 last year, according to his online assets and income declaration. His production company Studio Kvartal 95 paid him $160,000, less than half of his $380,000 total earnings. His wife earned much of her $190,000 total earnings from Kvartal 95. The couple has extensive real estate holdings: a UK apartment with a 2014 purchase price of $2.8 million; an Italian villa with a 2015 purchase price of $4 million; and three apartments and one house in Kyiv with a total estimated value of $872,000. The president has $190,000 and 107,000 euros in cash, and accounts at several banks, including PrivatBank.
                  The EBRD is moving toward loaning 250 million to Ukrainian cities to modernize mass transit systems. On July 24, the EBRD board of directors is to review the project. It would largely involve paying for new buses, trolley buses, trams and subway cars. The EBRD will sign loan agreements with relevant utilities transport companies, as well as agreements on guaranteeing and supporting projects with the cities, the EBRD writes. Each loan will be guaranteed by the municipality.
                  This summer, anti-dumping duties are to go on imports to Ukraine of cement from Russia, Belarus and Moldova. Scheduled to last for five years, the duties, as a percent of value, are: 115% for Russia; 94% for Moldova; and 57% for Belarus. Separately, virtually all cement imports from Russia are banned starting Aug. 1, reports Economic Development and Trade Ministry.
                  Betting on the future of cement, Concorde Capital has bought HeidelbergCement Ukraine. On May 14, Overlin Limited, a Cyprus company associated with Concorde, bought 99.8% of the Dnipro unit of the German building materials company.
                  Height restrictions on new buildings are being increased by 50%, to 150 meters, or 50 stories, Lev Partskhaladze, deputy minister of Regional Development, Construction and Housing, writes on Facebook. Design requirements for tall buildings are being adopted. Ukraines tallest building, Klovski Descent 7A in Kyiv is 48 stories high. The two runners up, both in Kyiv, are: Gulliver 35 stories, and Parus 34 stories.
                  Transporting freight from China, rail shippers annually overpay from 10-15 million by bypassing Ukraine, writes the Center for Transportation Strategies, citing Ukrzaliznytsia data. Trains are backing up at the Belarus-Poland rail gauge frontier, Yevhen Kravtsov argued Friday at the CSCMP logistics conference in Warsaw. Noting that freight trains from China are starting to cross Ukraine, he said the wheel change from Soviet gauge to EU gauge can be done at to Western Ukraines rail crossings with Poland, Slovakia, Hungary and Romania.
                  Pushing the boundaries of the state rail monopoly, DTEK Holding proposes using one of its leased Estonian locomotives to move cargo down a 69-km stretch of Ukzraliznytsia track between the Zaporizhzhya Thermal Power Plant and Tavriches station. SCMs Lemtrans, owner of 20,000 cargo wagons, has leased several locomotives to use on internal company tracks. Infrastructure Minister Volodymyr Omelyan has promised to start a pilot project with private locomotives this year.
                  Suspended for five years, Oslo-Kyiv flights return this fall with SAS Airlines flying three times a week from Norways capital to Kyiv Boryspil. "This decision is another reflection of the significant strengthening of Ukrainian-Norwegian relations in recent years, Vyacheslav Yatsyuk, Ukraines ambassador to Norway, said of the flights which start Oct. 26. Dispensing with stopovers in Copenhagen or Stockholm, SAS will fly directly, making the 1,660 km trip in 2h45 minutes.
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