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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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                  • UKRAINE BUSINESS NEWS
                    President Zelenskiy is drawing on his close circle of old friends and business partners to staff the presidential team. Reviews are negative.
                    Here is the lineup:
                    Andriy Bohdan, head of presidential administration; former lawyer to Zelenskiy and oligarch Ihor Kolomoisky. On Wednesday evening, he posted on Facebook a copy of his application to suspend his lawyers activity, pledging in a note: I am not a lawyer or a defense lawyer of Kolomoisky.
                    Serhiy Shefir, first assistant to the president; former longtime partner from Kvartal 95 studio.
                    Serhiy Trofimov, first deputy head of the presidential administration; until now executive producer of Kvartal 95.
                    Yuriy Kostyuk, a deputy chief of staff; previously a Kvartal 95 screenwriter and author of Zelenskiys Servant of the People television series.
                    Ruslan Ryaboshabka, a deputy chief of staff; a former member of the National Agency for Corruption Prevention.
                    Kyrylo Tymoshenko, a deputy chief of staff; former CEO of the Good Media video production company.
                    Ruslan Stefanchuk, presidential representative to the Rada; law professor and campaign ideologist.
                    Mykhailo Fyodorov, presidential adviser; former head of digital strategy in Zelenskiys campaign.
                    Andriy Yermak, presidential aide; film producer and founder/CEO of the International Law Company.
                    Andriy Gerus, representative in the Cabinet of Ministers; former Concorde Capital executive director, energy expert and head of Ukraine's Association of Cnsumers of Energy and Utility Services.
                    Ivan Bakanov, deputy head of the State Security Service, in charge of the Directorate for Combating Corruption and Organized Crime charged with fighting corruption; head of Kvartal 95 since 2013; leader of Servant of the People party.
                    Ukraine's New Presdent Raises Eyebrows as He Picks Top Staff headlines a Bloomberg story reflecting wide the skepticism about the new appointees.
                    These first appointments were negative -- the first reaction is negative, Tomas Fiala, president of the European Business Association, told a reform conference in Kyiv. Fiala, who is also CEO of Dragon Capital, said of the new head of Presidential Administration: There is a certain skepticism about his track record and his proximity to one of the oligarchs in the country.
                    Concorde Capitals Zenon Zawada writes of the new head of Presidential Administration: The big question is to what extent Kolomoisky will influence decision-making, now that his personal lawyer will be the brains behind the showman. Certainly, we can expect Kolomoisky will enjoy immunity from the prosecutor generals office.
                    Oleh Lyashko, an opposition party leader, said: He is appointing all of his business partners to government posts. How is it different from Poroshenko?
                    Writing from London, Timothy Ash warned the new head of Presidential Administration: The future of Ukraine is at stake. Do you get this and are you ready to really serve your country? If you serve some other purpose, then you risk the macro financial stability and indeed very future of your country.
                    Looking at the parliamentary elections, 44% of 2,000 respondents to a poll completed Tuesday say they plan to vote for President Zelenskiys Servant of the People party. In the five-day poll conducted by Rating Sociological Group, other party preferences were: 10.5% for the pro-Russia Opposition Platform - For Life coalition; 9% for Petro Poroshenko's Solidarity; 7% for Yulia Tymoshenkos Fatherland; and 5% for Ihor Smeshko's Strength and Honor. The Rada failed to discuss Wednesday a bill to reduce the voter threshold for entering the Rada from 5% to 3%.
                    In the poll, conducted before and after Zelenskiys move to dimiss the Rada, over 70% of respondents supported such a move. In the south and east, support went over 80%. On Wednesday, Rada Speaker Andriy Parubiy said several lawmakers will challenge the decision on dissolving parliament in the Constitutional Court.
                    Why did President Zelenskiys dismissal of the Rada and Prime Minister Groysmans surprise resignation have zero impact on the hryvnia/dollar exchange rate? For the stability of the hryvnia, we must thank the multi-million army of Ukrainians who have left for work in different European countries, economist Andrei Starovoitenko tells Glavred, citing the estimated $1 billion in worker remittances injected into Ukraines economy monthly. The 26.3 hryvnia to the dollar exchange rate changed little in the last week. Through the presidential campaign and handover, Ukraies currency appreciated 5.5%. Analyst Alexander Okhrimenko tells Glavred that Ukraines politics are [now] outside the economy.
                    The completion of Kyv Boryspils long-delayed multi-level parking garage is the pretext for a party tonight. Planned for the Euro 2012 football championship, the covered facing Terminal D opens today with 1,000 parking spaces, half the originally plan. To celebrate the opening, KBPAEROPARTY starts at 18:00, featuring races on Segways and monowheels and music by Onuka, Poligraf Sharikoff, Westlake, Gerollds, and Pomsta. Admission -- and parking -- is free until midnight.
                    Air France joins British Airways as the second European flag carrier to announce this week that it will suspend flights to Ukraine. This winter, from Oct. 27 to March 28, Air France will suspend its Paris Charles de Gaulle Kyiv Boryspil flights. Flights are to resume March 29, with the current twice a day frequency. Air France and UIA face new discount airline competition on the Paris-Kyiv route. One month ago, French carrier Aigle Azur started flying between Kyiv Boryspil and Orly. On June 11, Ukraines SkyUp starts flying between Kyiv Boryspil and Paris Charles de Gaulle.
                    On Monday, British Airways announced it will end flights between London Heathrow and Kyiv Boryspil on Oct. 3. Facing competition from Ryanair and Wizz Air, British Air said its flights to Kyiv are no longer commercially profitable.
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                    • UKRAINE BUSINESS NEWS

                      PrivatBank has filed a lawsuit against its former owner Ihor Kolomoisky and his associates in a Delaware court in the U.S. The 104-page filing accuses Kolomoisky of misappropriating hundreds of millions of dollars and laundering the money through 20 U.S. corporations to buy steel plants and commercial real estate in 12 U.S. states, including Ohio, Texas, Florida and Kentucky.

                      The complaint charges that Kolomoisky and business partner Gennadiy Boholyubov used PrivatBank as their own personal piggy bankultimately stealing billions of dollars from PrivatBank and using United States entities to launder hundreds of millions of dollars worth of PrivatBanks misappropriated loan proceeds into the United States. The lawsuit follows reports that the FBI is investigating Kolomoisky. The oligarch, who returned last week from two years of self-exile in Switzerland and Israel, has dimissed those reports as nonsense.

                      The lawsuit was filed in the US on Tuesday afternoon East Coast time, a few hours President Zelenskiy appointed Andriy Bohdan, one of Kolomoiskys main lawyers, as Ukraines new presidential chief of staff. According to media reports, Kurt Volker, US special envoy to Ukraine, telephoned Zelenskiy and "strongly recommended that he not to appoint Bogdan.

                      On Monday, Clearstream, the international securities depository of Deutsche Brse Group, connects to Ukraine, making all Ukraine government hryvnia bonds tradable be desktop traders around the world. Citibank will act as cash correspondent bank and local operator of Clearstreams account at the National Bank of Ukraine. The Finance Ministry says the link will increase demand for Ukraine government bonds.

                      Expecting a boom with Clearstream, foreign investors increased their holdings of Ukraine bonds six-fold this year, to $1.5 billion. With foreigners holding only 5% of this debt, investment is expected to grow. Oleg Churiy, the central banks deputy governor, predicts: Creating easy access for foreign investors to Ukrainian government securities will foster long-term investments in hryvnia instruments, reduce the states need for financing in foreign currency and respectively currency risks.

                      Nibulon launched Wednesday the largest ship made in independent Ukraine a 140-meter long loading ship designed to move grain from Dnipro river boats to ocean-going Panamax freighters in the Black Sea. When fully completed four months from now, the Nibulon Max will have two German-made Liebherr grab cranes capable of moving 18,000 tons a day. With the autonomy of working offshore for 90 days at a time, the ship will help Nibulons 75-ship fleet double its annual cargo handling to 5 million tons, the company says. Launched from Nibulons shipyard in Mykolaiv, the ship was partly funded by loans from the EBRD, the European Investment Bank and the International Finance Corporation.

                      Ukraine is on track to top Russia as the worlds largest grain exporter in the marketing year that ends June 30. As of Wednesday, Ukrainian farmers have exported 45.4 million tons of grain, reports Ukraines Agrarian and Food Policy Ministry. This year, Ukraine expects to export 49 million tons. Russia forecasts exports of 44-46 million tons. Last year, Ukraine exported 39.9 million tons and Russia exported 43 million tons.

                      Just as Russia seeks to present itself as a reliable supplier of pipeline gas to Europe, EU companies struggle with the worst oil supply disruption since the Druzhba pipeline started pumping oil to East Germany in 1963. Frances Total and Italys Eni have stopped paying for contaminated oil sold them by Russian companies, Reuters reports. Belarus estimates that Russia shipped west 9 million barrels of contaminated oil. If clean, this oil would be worth half a billion dollars.

                      Russian oil exporters Rosneft and Surgutneftegas say Western companies should pay their bills -- then file claims to get their money back. This is probably the biggest Russian oil supply disruption ever, one oil trader tells Reuters. Oil along Druzhba continued to flow during the 1969 Prague Spring uprising, and in 1991 when the Soviet Union was collapsing. Meanwhile, Gazprom, source of 37% of Europes gas, assures EU companies that it can meet gas supply contracts next year without using the pipeline across Ukraine.

                      Russia is using trains, ships, and storage tanks to remove contaminated oil from the Russian section of the Druzhba pipeline, indicates analysis by Reuters. Some of the oil has been shipped by rail to the Black Sea port of Novorossiisk. There it is diluted with clean oil and exported. So far 100,000 tons of this clean oil has been shipped to Italy.

                      Russian oil suppliers should compensate Poland for damage to Polish refineries and pipelines, Polands Prime Minister Mateusz Moravetsky told reporters in Warsaw on Tuesday. Russian suppliers committed business and operational errors and should answer for it, he said. Russia and Russian companies must respond financially.

                      To reduce dependence on Russian gas, Bulgaria and Greece started building Wednesday a 182 km north-south pipeline interconnector. Due for completion at the end of next year, the 220 million gas line is to handle up to 5 billion cubic meters of gas a year, coming through Turkey from Azerbaijans Shah Deniz-2 development.

                      To push Russia to restart gas transit talks with Ukraine and the EU, European Commission Vice President Maro efovi travels to Moscow June 13 to meet with Russian Energy Minister Alexander Novak. With the 10-year-old gas transit contract expiring on Jan. 1, efovi wants rapid progress with a view to concluding a long-term contract and conducting meaningful negotiations before the summer holidays, Anca Paduraru, energy spokesperson for the European Commission, told reporters in Brussels Thursday.

                      Air travelers at Kyiv Sikorsky start using today a $24 million expansion of the airports main terminal. The expansion doubles checkin counters and passport control booths, allowing the airport to handle 1,000 passengers an hour. Widely known as Zhuliany, the airport is Ukraines second busiest, after Kyiv Boryspil. A hub for Wizz Air, the airport saw its traffic grow by 52% last year. During the first quarter of this year, traffic was up 44% q-o-q, to 638,100.

                      Denis Kostrzhevsky, co-owner of Master-Avia, the airport leaseholder, tells reporters he lobbies for a $100 million public-private project to expand the single runway by one quarter, to 3,000 meters. This would be long enough to handle Wizz Airs new Airbus A321 jets.

                      Israeli developer Ofer Kerzner is to start building this year an 8-story, 264-room hotel near Kyiv Boryspils Terminal D, Georgy Zubko, the airports deputy director for development, tells reporters. Owner of property development company City Capital Group, Kerzner built Art-Zavod Platforma, recycling a former weapons plant into a popular cultural center.

                      Foreign and national air freight companies are interested in a public private partnership to build a new cargo terminal for Boryspil, Zubko said. The Infrastructure Ministrys competition will launched this summer, too late for completion in time for the Christmas/New Years seasonal surge in packages. Last season, the airport outraged shipping companies by closing Boryspil to cargo for 10 days. Even without a new cargo terminal, officials say new cargo tracking software and modernized logistics will allow them to handle this years crunch.

                      Next to Boryspils increasingly popular Train to the Plane rail station, airport officials plan to build a $1 million covered bus station. With 16 bus platforms and capacity for 300 passengers an hour, the station would make air travel easier for residents of regions surrounding Boyspil. The airport accounts for two thirds of Ukraines air traffic.
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                      • UKRAINE BUSINESS NEWS
                        Igor Kolomoisky, the oligarch media backer of President Zelenskiy, says Ukraines new government should break with the IMF program and default on its foreign debt. In my opinion, we should treat our creditors the way Greece does...Thats an example for Ukraine, the Dnipro-based industrialist tells the Financial Times in an interview. How many times has Argentina defaulted? he asked Max Seddon, a visiting Moscow-based reporter. So what? They restructured it. Its fine. Addressing the West, he said Zelenskiy can play a geopolitical trump card: This is your game, your geopolitics...You dont care about Ukraine. You want to hurt Russia, and Ukraine is just an excuse.
                        Kolmoisky told the FT he has not met Zelenskiy in over a year, limiting himself to giving advice over the telephone to the comedian turned politician. On Tuesday, Zelenskiy appointed as his chief of staff Andriy Bohdan, one of Kolomoiskys main lawyers.
                        Separately, Kolomoisky told Reuters Friday that he hopes Rothschild bank will help broker an out-of-court deal with Ukrainian authorities to end lawsuits over the 2015 nationalization of his bank, PrivatBank. Give us then our 25% and keep 75%, we will have a joint-stock company, he said, referring to the nations largest bank which was bailed out in 2016 with a $5.5 billion injection of state funds. Kolomoisky has a history of using minority ownerships to control companies. On Tuesday, PrivatBank, now state-controlled, filed a lawsuit in a US court charging the Kolomoisky and his partners stole hundreds of millions of dollars and then laundered the money in the US through investments in commercial real estate in 12 states.
                        Kolomoiskys comments to the FT are irresponsible and raise a catastrophic threat to our economy and even, as a consequence, the risk of a loss of statehood," Hanna Hopko, head of the Radas foreign affairs committee, wrote Sunday on Facebook. A default would send the exchange rate over 50 hryvnia to the dollar and would send the economy into the deepest hole for a long time. Unlike Greece which was bailed out by the EU, and unlike Argentina, which is often bailed out by the US, the only country that would extend the hand to help Ukraine would be Russia, she said.
                        Projecting policy continuity, President Zelenskiy met Friday with Yakiv Smoliy, governor of the National Bank of Ukraine. After posing for photos, Smoliy posted on Twitter that he and the new president discussed the need for cooperation with the IMF and the importance of NBU independence. Tomorrow, Zelenskiy is to meet with the visiting IMF review team.
                        Stressing that compliance with the IMF is essential for continued World Bank funding, Satu Kahkonen, the banks regional director, told reporters Thursday: The IMF program is an excellent defense for maintaining macroeconomic stability in the country. We consider it critical to continue cooperation with the IMF in the next three years. We urge the new president to maintain this cooperation.
                        The European Investment Bank is loaning 200 million for the restoration of key infrastructure in government-controlled parts of Donetsk and Luhansk, Jean-Erik De Zagon, the banks Ukraine representative, tells reporters. The government has selected 293 projects totaling 110 million, largely for the repair of hospitals, clinics, schools, kindergartens, and apartment buildings. Loaned at concessional low interest, long term rates, the loan is part of the banks total Ukraine loan portfolio of 5.8 billion.
                        Veteran bankers from Citibank, ING, EBRD and BNP Group are among the foreigners appointed to supervisory boards of three state-owned banks Oschadbank, Ukreximbank and PrivatBank. Steven Fisher, formerly Citis Ukraine director, and Dominique Menu, formerly of BNP, have been named for Ukreximbank. Sevki Acuner, former EBRD director for Ukraine, and Peter Briggs, formerly of ING Group, go to Oschadbank. For the full list, click here.
                        After Gazprom, Ukraine came in second in the 2019 GlobalCapital Bond Awards for the category "Most impressive Russian, CIS and former CIS issuer. Chosen by polling international capital market participants, the award was presented last week at a ceremony in London. Despite the fact that the past year was very difficult for emerging markets, Ukraine managed to place bonds worth $2 billion, said Finance Minister Oksana Markarova. We remain a responsible borrower and demonstrate success in public debt management. Yuriy Butsa, Ukraines Representative for Public Debt Management since August, was voted third Most Impressive Central and Eastern Europe Funding Official.
                        Starting today, Clearstream allows desktop traders around the world to buy and sell Ukraine hrynia bonds. To familiarize foreign traders with the Ukraine market, Clearstream, the international securities depository of Deutsche Brse Group, posts on its website a new market profile for Ukraine.
                        In what would be President Zelenskiys international debut, he has been invited to Toronto for the July 2 opening of three-day Ukraine Reform Conference, Canada's Ambassador to Ukraine Roman Waschuk tells RFE/RL. Zelenskiy, an advocate of strengthening ties with Ukraines diaspora, could score points with Ukrainian-Canadians by arriving on July 1, Canada Day.
                        Industrial output unexpectedly jumped by 5.2% y-o-y in April, the biggest increase in over two years, reports the State Statistics Service. The locomotive was construction, growing by 30% y-o-y. While residential construction was almost flat, infrastructure construction was up 45% and commercial was up 41%. Other hot spots identified by Alfa Bank are: food processing up 6.6% y-o-y; steel up 9.9%; maching building up 10.8% and chemical production up 14.7%.
                        Kyivs tightening office real estate market is prompting Alexander Yaroslavskys DCH Group to revive a $50 million business center project at the northern end of Podols Mezhyhirska street. With construction planned for next year, the Class A office center would have 40,000 square meters of leasable space. The business center would be a 5-minute drive from Sergei Tigipkos planned $600 million Rybalsky Peninsula Lipki Island City Resort. This complex is to have 36 buildings with 6,200 apartments, 43,500 square meters of office space and 33,300 square meters of retail space.
                        Both projects are to benefit from the Podolsko-Voskresensky Bridge which is to open for road traffic next year, according to Kyiv Mayor Vitali Klitschko. Under construction since 1993, the two-level, 7 km bridge is designed to carry 60,000 cars a day between Podol and the Left Bank. Podolsko-Voskresensky is the largest arched bridge in Europe and will be one of the most durable in terms of loads, Klitschko writes on Facebook. It will be equipped with six lanes for automobile traffic and two railway tracks.
                        With a major bottleneck removed for EU-Ukraine rail traffic, the number of freight trains passing through the new Beskyd tunnel was up almost 19% in the first quarter of this year, compared to the same January-March period last year. Since the two-track tunnel opened under a Carpathian mountain ridge one year ago, on May 24, 10,500 freight trains with more than 500,000 cars have passed through, reports Yevhen Kravtsov, CEO of Ukrzaliznytsia.
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                        • UKRAINE BUSINESS NEWS

                          President Zelenskiys economic advisors spent Monday slapping down Igor Kolomoiskys suggestion that Ukraine follow Greece or Argentina by reneging on paying on its foreign debt. Zelenskiy himself was silent on the controversy, partly because he spent Monday visiting Ukrainian troops at a front line position in Luhansk. Today, the President is to meet in Kyiv with the IMF review mission.

                          Defaulting is the view of a detached oligarch, former Finance Minister Oleksandr Danylyuk told Bloomberg. Danylyuk, who is to join the new administration as head of the National Defense and Security Council, added: Default is not in the interest of the state. Any responsible government must avoid it. Earlier in an interview with Obozrevatel, he said: Cooperation with the IMF will be continued.

                          Danylyuk offered a now standard prediction that once a new government is formed, after the July 21 elections, Ukraine will negotiate transforming the current 18-month standby agreement with the IMF into a longer, extended fund facility. In the meantime, he said: Currently we have a functioning government that will work until the formation of a new government. There is a functioning Verkhovna Rada, which can and will pass laws that are international obligations.

                          Another Zelenskiy economic advisor, Oleg Ustenko, executive director of the International Bleyzer Foundaion, told Interfax-Ukraine: This is definitely not the time to refuse to cooperate with the IMF. This would cut us off from foreign markets for borrowing capital. This is extremely dangerous, considering that investment is the main bet now on the opportunity to get impetus for further economic growth. And this is quite clearly articulated by President Zelenskiy.

                          On Monday, the IMF team, led by Ron van Roden, its longtime point man for Ukraine, met Finance and Social Policy Ministry officials. Afterwards, Social Policy Minister Andriy Reva said: There are no threats to economic stability in Ukraine. Referring to the default call that Kolomoisky made in an interview with the Financial Times, Reva added: There are now many different radical statements that I would ask to treat as residual electoral events.

                          Volodymyr Groysman, who is expected to serve as Prime Minister until a new government is formed, probably in August, writes on Facebook: Even talk of default does not add stability, it is harmful...A default is a global crisis, remember the 1990s. I believe that there are already enough crises for Ukrainians.

                          Yulia Tymoshenko, an opposition politician often tagged as a populist, flatly rejected a default. It should not be allowed in any case and under any circumstances that default is declared in Ukraine, she was quoted on the website of her Batkivshchyna Party. This means a loss of confidence of all investors around the world in Ukraine for many years. No one can predict the hryvnia exchange rate. The exchange rate of the national currency usually plummets during default... default means a complete destabilization of Ukraine's entire life, and this is an economic decay that will last for years.

                          In advance of Russias June 1 bans on energy sales to Ukraine, Moscow is already barring Kazakhstans state railway from sending liquefied petroleum gas and coal through Russia to Ukraine, Reuters reports. Last year, Kazakhstan supplied 15% of Ukraine imports of LPG, gases used for heating, refrigerants and aeroseol propellants. Russias transit ban hits the major supplier, Tengizchevroil, owned by Chevron, ExxonMobil, LUKOIL and KazMunayGaz. Last year, Kazakhstan also shipped 455,000 tons of coal to Ukraine. Sergey Fedorenko, commercial director of UkrGasVydobuvannya, writes on Facebook: Deliveries of the largest liquefied natural gas producer in Kazakhstan have been stopped to Ukraine.

                          Increasing investment in food processing, Delta Wilmar has bought Dragon Capitals stake in Chumak, Ukraines leading producer of ketchup, mayonnaise, and tomato paste. It perfectly fits our group strategy of further downstream integration into food processing with high added value, said Yuriy Golianych, general director of Delta Wilmar, the Ukraine unit of Singapores Wilmar International Ltd, widely considered to be Asias largest agribusiness group.

                          Separately, Delta Wilmar is building a $32 million vegetable oil processing plant at at Pivdenii, Ukraines largest port. Also at the port, formerly called Yuzhne, Delta Wilmar plans to build a plant capable of processing 2,000 tons of soybeans a day.

                          Setting a target of boosting Ukraines farm productivity by 30% by 2025, the World Bank approved Friday a $200 million loan for wide ranging support to small and medium farmers. Noting that agriculture accounts for 42% of exports, the program aims to help farmers meet import requirements of the EU, China, the Gulf, the US and Canada. An advocate of a private farm land market for Ukraine, the World Bank will pay for preparatory steps: transparency in land lease markets; registration of all state land; and strengthening land rights by raising owner awareness of their rights.

                          With European gas prices falling, Naftogaz is cutting gas prices by 8% for households and industrial users, to about $220 for 1,000 cubic meters. Since September, the EU natural gas import price has almost dropped in half. This came too late for President Poroshenko who took a highly unpopular move in November to raise gas prices 23.5% toward European levels. He lost the election in April.

                          Halliburton Ukraine has signed an initial agreement for a $100 million deal with Naftogaz to introduce modern fracking techniques to Ukraine, 3D modeling of gas fields and lateral drilling for 26 wells. The deal between the Ukraine unit of the Texas company and UkrGazVydobuvannya, the Naftogaz production company, is designed to unlock 2 billion cubic meters of gas, the equivalent of 13% of UGVs production last year.

                          Following Mondays launch of government bond trading through the Clearstream depository, primary placements of hryvnia government bonds are to be also handled by the international trading platforms Refinitiv and Bloomberg Tradebook by the end of this summer, according to the National Bank of Ukraine. Currently, Ukrainian stock exchanges handles most primary and second trades of Ukrainian government bonds, about 100 billion hryvnia in trades during the first quarter of this year. Interfax-Ukraine reports that the Ukraines Securities and Stock Market Commission says foreign-based trading platforms need to get permission to handle the trades.

                          With all air passengers counted for last year, Ukraine stands out as the air traffic leader of the former Soviet Union, ex-Russia. Of the 20 airports handling 1 million passengers of more, five are in Ukraine. Kyiv Boryspil leads the list with 12.6 million. Here is the ranking, in millions of passengers: Kyiv Boryspil -- 12.6; Riga 6.1; Almaty 5.7; Vilnius 4.9; Minsk 4.5; Baku 4.4; Astana -- 4.3; Tbilisi 3.8; Talinn and Tashikent 3; Kyiv Sikorsky 2.8; Chisinau 2.8; Yerevan 2.7; Ashgabat 2.5; Bishkek 2; Lviv 1.6 ; Odesa 1.4; Dushanbe 1.3; Kaunas and Kharkiv 1.
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                          • UKRAINE BUSINESS NEWS
                            President Zelenskiy met with the IMF review team for one and a half hours in Kyiv on Tuesday and emerged to announce: Cooperation is being continued. The International Monetary Fund has always been a reliable partner of Ukraine in times when we need support, and Ukraine, for its part, will also remain a partner in fulfilling its obligations.
                            The new Presidents public endorsement of working with the IMF seems to put to rest widespread investor nervousness provoked by comments last weekend made by his top media backer, Igor Kolomoisky. In an interview with the Financial Times, Kolomoisky said Ukraine should follow the examples of Argentina or Greece and stop paying its foreign debt.
                            Addressing a key IMF demand, Zelenskiy also told IMF team leader Ron von Rooden that this week we will definitely submit to the Rada a new illegal enrichment bill. Zelenskiy spoke at the meeting flanked by Yakiv Smoliy, governor of the National Bank of Ukraine, and by Oleksandr Danylyuk, a former finance minister freshly sworn in to a key post -- Secretary of the National Security and Defense Council.
                            In response, von Rooden, who has many years of experience working with Ukraine, said: We do not see obstacles to cooperation. After the parliamentary elections, after the [new] government is formed, we are ready to come to Kyiv immediately and continue negotiations on the way to provide our support.
                            Kolomoiskys comments provoked free market members of the Zelenskiy administration to take a stand.
                            Kolomoiskys person is interesting to many, including journalists, but his comments, of course, do not create a favorable investment background, Aivaras Abromavicius, a former Economy minister and Zelenskiy team member, told Interfax Ukraine Tuesday near the presidential administration building. I am very pleased that many members of the presidents team commented that Ukraine should always be a reliable business partner for internal and foreign investors.
                            After the meeting with the IMF team, Danylyuk said: "It is important that cooperation with the IMF continues. Briefing reporters, he said: This is important both for the citizens of Ukraine who will be assured that the economic and financial situation in the country is stable. Also, it is an important message for investors, for whom cooperation with the IMF is an indicator of the fact, that Ukraine is moving in the right direction.
                            In government hryvnia bond auctions before Zelenskiys meeting with the IMF, sales fell to a recent low -- the hryvnia equivalent of $46 million. With demand weak, the Finance Ministry had to raise the rate of its three-month securities, to 18%, from 17.89% last week. Ukraines Eurobonds declined in the morning, then recovered later in the day, ending down .4% for the day.
                            The EU is dangling 500 million long-term loan before Ukraine -- contingent on the Zelenskiy government implementing key anti-corruption steps. Christian Danielsson, the EUs director general for European Neighbourhood Policy and Enlargement, told reporters in Kyiv Tuesday these conditions are: adopting a law to fight money laundering, reformin customs and tax administration, checking electronic asset declarations, and implementing an electricity market. President Zelenskiy backs these steps, but says he needs a new parliament to implement them. One year ago, the EU approved 1 billion in aid to Ukraine. In December, the first 500 million tranche was released as a loan at 1.25% per annum maturing in 2033.
                            USAID has launched $120 million worth of economic development projects for front line areas in eastern Ukraine. The program was announced Tuesday in Mariupol by Mayor Vadym Boychenko, and by Margot Ellis, the US agencys deputy administrator for Europe and Eurasia.
                            On the June 19, the EBRD board is expected to approve leading an 80 million syndicated loan to support renewable energy and energy efficiency in Ukraine. The EBRD would cover half of the loan, which would go to Ukreximbank, the nations third largest bank in terms of assets. With many buildings and factories built in the era of cheap Soviet gas, Ukraine is investing to modernize and winterize.
                            Retail sales are up 7.9% in real terms for January-April, compared to the same period last year.Sales grew by 9.1% in April, fueled by the highest level of consumer confidence since Januar 2014. Aprils consumer confidence level of 72 points, seems to reflect optimism surrounding the presidential election. Noting that first quarter real wages were up 10.9% q-o-q, ICU writes: Consumer demand keeps rising thanks to solid growth in real household income.
                            Chinese Skywell electric buses will be assembled in Ukraine under an agreement reached Tuesday, reports Elektrovesti.net. Produced by Nanjing Golden Dragon Bus Manufacturing Co., Skywell buses are now in use in Kyiv and Vinnytsia. Initially, the buses are expected to arrive here in SKD, or semi knocked-down, form.
                            A weekly Baltic-to-Black Sea container train will start this summer, according to an agreement signed Tuesday in Odesa by executives of the railroads of Lithuania, Belarus and Ukraine. Called Containerships, the Klaipeda-Brovary-Odesa train will be the 18th regularly scheduled container train in Ukraine, according to Yevhen Kravtsov, Ukrzaliznytsia CEO. In March, a similar north-south container train starting rolling on a Belarus-Ukraine-Romania route. In April, UZ launched an east-west container train on a 1,400 km route between Nizhnedneprovsk and Sawkw, Poland. Also in April, a test container train passed through Ukraine on a China-Hungary route.
                            To speed Ukraine-EU rail freight, Poland is investing in upgrading two rail crossings Medyka-Mostyska, on the Lviv region border, and Dorohusk-Yahodin, on the Rivne border. Within the framework of the Germany-Poland-Ukraine transport corridor, tracks, switches, and traffic control devices are being upgraded. The goal is for the lines to carry longer and heavier freight trains, reports the Center for Transportation Strategies.
                            Marking a return of Black Sea cruises, the Princess of Dnepr docked Tuesday at Odesa with 227 European and Israeli tourists. The cruise ship is on its first of 10 12-day cruises planned for this summer from Kyiv, down the Dnipro to Odesa and on to Vykove, Ukraines Danube delta city. In a sight not seen since the war started five years ago, the Princess of Dnepr docked nose to nose with a second cruise ship, the Viking Sineus, which brought 187 largely American tourists down from Kyiv.
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                            • UKRAINE BUSINESS NEWS

                              Ukraines debt default scare is over, say two Kyiv investment houses.

                              Concorde Capitals Alexander Paraschiy writes: 1) Ukraines default is not being considered by the Zelenskiy administration, 2) Ukraine will be able to get IMF support as soon as the new Cabinet is in place, and 3) early parliamentary elections are a positive development for Ukraine. All in all, we see a high likelihood of at least one IMF loan tranche for Ukraine by the end of this year. We also see a high chance for the country to get a new IMF program as soon as the existing one expires in early 2020. So far, we see the new power brokers doing all their best to improve Ukraine's image among international financial partners.

                              Dragon Capital writes: Ukraines current IMF program, a $3.9 billion Standby, is likely to go off track...the next disbursement would arrive under a new program, to be negotiated in September-October. While the government faces no urgent budget financing needs, its large external debt repayments set for the rest of this year and 2020-2021 keep Ukraine dependent on sizable inflows from foreign creditors and the IMF program.

                              A clear, strong statement by President Zelenskiy ruling out a foreign debt default would reassure investors, according to a note by analysts at New Yorko-based BofA Securities, formerly known as Bank Of America Merrill Lynch. "The majority of investors with whom we spoke, the most concern is the level of dependence of Mr. Zelenskiy on Mr. Kolomoisky," said the analysts. On Tuesday evening, the Presidential Administration press office quoted Zelenskiy saying after his meeting with the IMF review mission: Cooperation is being continued.

                              Adding a new role to the National Defense and Security Council, Oleksandr Danylyuk, the new head, tells reporters the Council will draw up a new plan of cooperation with the IMF over the summer. Finance Minister from 2016 to 2018, Danylyuk ran Ukraines Economic Reforms Coordination Center from 2010 to 2015. This presidential office focused on making recommendations to improve Ukraines investment climate and to intensify cooperation with the IMF.

                              To further put to bed Igor Kolomoiskys calls for a debt default, IMF and Finance Ministry officials held a joint conference call Wednesday with foreign investors. IMF affirmed its strong support/commitment to Ukraine, reports one participant, Timothy Ash. Seems strong commitment from the new president/his team to continue relations with the IMF/reforms. On the call, IMF officials stressed the need for an effective anti-corruption court, a desire frequently expressed by President Zelenskiy. Referring to a deal breaker issue the IMF privatization of Kolomoiskys former bank -- Ash writes: New president seems well aware of the issues related to Privatbank.

                              Canadas Vermilion Energy Inc. is pairing with UkrGazVydobuvannia to jointly apply for product sharing agreements to develop four oil and gas fields. If they win the 50-year contracts next month, the two companies are obliged to invest and take profits on a 50/50 basis. Based in Calgary, Vermilion already has projects in eastern Europe, in Hungary and Slovakia. Tuesday was the deadline for filing bids for the nine onshore production sharing agreements.

                              "This is the first major oil and gas company since Shell to invest in Ukraine for the purpose of extraction of natural gas, said Andriy Favorov, gas business director for Naftogaz, the parent of UGV. Andriy Kobolyev, Naftogaz CEO, writes on Facebook: Vermilion is ready to provide the latest and unique technologies of geological exploration, drilling, development, environmentally friendly technologies for the development of oil and gas fields.

                              Ukraine announces massive licensing rounds in 2019, headlines a story on WorldOil news site. The story notes that concession licenses for nine more oil and gas blocks will go up for auction on June 18. In the two auction rounds this year, licenses were awarded for only nine of the 17 blocks offered. Only Ukrainians gas producers won acreages: UGV, Burisma Group, DTEK Oil & Gas, and Yedyna Oil & Gas Company. By the end of June, winners are to be chosen for the 10 production sharing blocks up for bid.

                              Preparing for a possible cutoff of Russian gas through Ukraine next January, Ukrtransgas has increased Ukraines import capacity of gas from Hungary by 14%. Over the last three years, gas imports from Hungary tripled, hitting 3.4 billion cubic meters last year. So far this year, almost 1 billion cubic meters have been imported, 66% more than during the same period last year.

                              Since the end of the heating season, on April 5, Ukrtransgas has pumped gas at a high rate into the nations 12 underground reservoirs. Today these reservoirs hold 11 billion cubic meters, 20% more than one year ago.

                              With ExxonMobil and Italys Eni announcing big gas discoveries offshore Cyprus, Eliot Engel, chairman of the US House Foreign Affairs Committee, said Monday in Nicosia that Washington wants to work with Cyprus and Israel to head off Russian influence over the eastern Mediterraneans energy reserves. In the future, Cyprus gas could reach Ukraine through pipelines, or as LNG through the Kanal stanbul. Scheduled to open in 2023, this 150-meter wide channel will allow LNG tankers to enter the Black Sea.

                              In a big step to bypass Russian rail routes and connect Ukraine with the landlocked nations of Central Asia and the Caucasus, Georgia has approved a $250 million plan to double the capacity of Poti, its main Black Sea port. Denmarks AP-Moeller Maersk and the Pace Group, a Georgian American transport company, are to invest the bulk of the money, building two deep water, 700-meter long berths and one 1.6 km long protective pier. Served by a trans-Caucasus rail line that starts in Baku, on the Caspian, Potis expanded port is to be capable of handling an additional 500,000 containers and 9 million tons of bulk cargo a year, reports Interfax-Ukraine.

                              With the Kremlin blocking most rail cargo shipments between Ukraine and Central Asia, the Poti alternative is gaining popularity. During the first quarter of this year, the port handled 115,000 containers, up 40% q-o-q, and 2.1 million tons of cargo, up 31% q-o-q. Year round, UkrFerry runs two cargo and passenger ferries between Poti and Ukraines Chornomorsk. Ferries also go from Poti to Constanta, Romania and Varna, Bulgaria.

                              In the latest step to restore the Dnipro as a working river, TransShipOil plans to increase its river fleet from three ships to five this summer, reports the Center for Transportation Strategies. TransShipOil tanker ships work the lower 700 km of the Dnipro, picking up sunflower oil at six river stations -- between Svitlovodsk and Ochakiv, the Black Sea port. The new tankers, with average cargo capacities of 3,000 tons, have been imported and reflagged for use in Ukraine. Ukraine is the worlds largest exporter of sunflower oil.

                              Note from the Editor: Ukraine Business News is available without charge just visit our new signup page: www.ubn.news/subscribe-to-ubn/. UBN the must read for Ukraine investors and business leaders comes every weekday morning to email inboxes by 6:00 am Kyiv time. Jim Brooke jbrooke@ubn.news

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                              • UKRAINE BUSINESS NEWS

                                Although the IMF review mission stayed in Kyiv for half of the expected two weeks, it left Wednesday on a positive note. The IMF staff team has had very productive discussions with the Ukrainian authorities, including with President Zelenskiy, team leader Ron van Rooden said Thursday. The team has found that fiscal and monetary policies remain on track, and it stands ready to return to Kyiv to continue discussions after the forthcoming parliamentary elections as soon as a new government has clarified its policy intentions.

                                Timothy Ash writes: Supportive comments from the IMF. Clearly the Fund is eager to keep Ukraine engaged through the election campaign, hoping to work up a beefed up programme when the new government is in place in September.

                                The IMF team arrived from Washington on May 21, the day after President Zelenskiy announced he was dismissing parliament. Prime Minister Groysman immediately said he was resigning. On Thursday, the Rada failed to support the resignation, meaning that he will continue in office through the July 21 snap parliamentary elections.

                                Foreign investment in Ukrainian government treasuries inched up again with Tuesdays weekly auction, rising 2.1%, to UAH 42.3 billion, or $1.6 billion. Attracted by high interest rates and a stable currency, foreign investors have increased their holdings in the internal state bonds almost seven-fold since the start of the year.

                                Foreign investor interest in hryvnia bonds, combined with the political transition period mean that the Finance Ministry plans to focus this summer on hrvynia bond sales, pushing off new Eurobonds until late summer or early fall, Liga.net reports, citing Wednesdays Finance Ministry/IMF conference call with investors. With demand strong, the Finance Ministry cut the interest rate on its 3.5 month treasuries from 18.5% last week to 17.89% this week.

                                With Naftogaz needing cash to fill reservoirs with 20 billion cubic meters of gas before the winter, US Energy Secretary Rick Perry told reporters in Kyiv last week that the US could provide guarantees to Naftogaz for the placement of Eurobonds for $2 billion. This is one of the possible solutions, he said. However, there may be other financial sources. There are different ways to finance the purchase of gas.

                                World class port operators are starting to work in Ukraines Black Sea ports, Serhiy Vovk, director of the Center for Transportation Strategies, told Odesas Ukrainian Ports Forum 2019

                                --P & O Maritime entered Ukraine over the last year, first towing vessels in Pivdennii (Yuzhne), then in Chornomosk, and this month, in Odesa.

                                --South Koreas Posco International bought 75% of a grain terminal in Mykolaiv.

                                --Cargill will open in September a joint venture terminal in Pivdennii capable of handling half a million tons of grain a month.

                                --The Louis Dreyfus company and its Ukraine partner, Brooklyn-Kyiv, signed an agreement at the Forum to build a 3 million ton a year grain terminal in Odesa.

                                As bigger and bigger ships serve Ukrainian ports, a record load of 63,000 tons of Ukrainian sunflower meal is approaching China. In mid-May, the JY Lake, a Panamax-class vessel, took on the load, partly at Mykolaivs Nika-Tera terminal, and partly in the waters off Ochakiv, with floating cranes. Ukraines previous record was 62,000 tons of meal shipped in January.

                                Aiming to transform Pivdennii port into the Black Sea-Mediterranean vegetable oil hub, the Allseeds Group has more than doubled its storage tank capacity for sunflower and soy oil to 100,000 tons. Pumping 1,200 tons of cooking oil an hour, the company can now simultaneously load six ships docked at its Pivdennii six quays. Under its investment plan, the company plans to triple its oil handling capacity by the end of 2021.

                                Catering to Ukraines surging market for used cars from the EU, Euro Marine Logistics has started regular service between Greece and Chornomorsk of the City of Amsterdam, a roll-on/roll-off vessel. Just as Ukraine lowered import duties on late model year used cars, European countries and cities started imposing restrictions on diesel cars. In Ukraine, sales of used car imports now outstrip sales of new cars.

                                Shipbuilding and ship repair a 200-year-old business in Ukraine are reviving after a deep post-Soviet decline, according to statistics posted on sudostroy.com news site. Revenues for the industry climbed by one third last year, to $113 million. Last year, 108 boats were repaired and 25 boats were built.

                                Examples:
                                Smart Maritime Group, which has shipyards in Mykolaiv and Kherson, is building a third 110-meter, 2 million chemical tanker for Hollands Veka Group. Smart Maritime Group revenue doubled last year, to $23 million.

                                --The Danube Service Company shipyard in Izmail completed its second barge for the Grain-Transshipment Company. This Mykolaiv-based company is using the Izmail shipyard to renovate its entire fleet of eight barges for use on the Dnipro and the Southern Bug.

                                --Nibulon puts to work in September, Nibulon Max, a new transshipment vessel that will allow the company to transfer total of 40,000 tons of grain a day from river boats to sea vessels, without using land ports. Nibulon has a fleet 75 vessels, largely built in the companys Mykolaiv shipyard.

                                --Artel-Stroy of Mykolaiv is building a third tourist catamaran for Nibulon. Designed to carry 120 passengers, the 3-deck vessel will make summer excursions on the Dnipro, the Bug estuary and the Black Sea coast.

                                Regional airports received a boost last week as SkyUp started regular flights from Kharkiv, Odesa and Zaporizhie to Barcelona. Through June 11, SkyUp rolls out new flights from Kharkiv to Odesa, Rimini, Kutaisi, Larnaca and Paris. Next week, SkyUp starts flying from Odesa to Kutaisi and Rimini. On June 15, UIA starts flying three times a week between Odesa and Vilnius.

                                Targeting the Ukrainian market, Ryanair has unveiled a Ukrainian language version of its reservations website. By Nov. 1, Europes largest airline plans to double its Ukraine routes, to 33. On June 16, Ryanair starts flying from Odesa to Krakow and on June 17 from Kharkiv to Krakow.

                                Note from the Editor: On Tuesday, I look forward to attending the annual Ukraine corporate bond conference held by BCP Securities, the U.S.-based global Emerging Markets investment bank. Meeting at the Hyatt Regency Library, eight corporate bond issuers will present. For sign ups or more information, contact Janna Anikina at: janikina@bcpsecurities.com

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