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  • UKRAINE BUSINESS NEWS
    All flights between Russia and Georgia are to end two weeks from today, on July 8. In response to anti-Kremlin demonstrations in Tbilisi, President Putin on Friday ordered an end to sales of package tours to Georgia and an end to flights. On Saturday, Russias transportation ministry banned Georgias two airlines from flying to Russia. The bans affect six Russian airlines and effectively kills a fast-growing tourism industry that brought 1.4 million Russian tourists to Georgia last year, 16% of the total.
    In response, Mamuka Khazaradze, founder of Georgias TBC Bank, writes on Facebook: I am ready to finance 10 charter flights of Georgian Airways for Ukrainian tourists from Kiev to Tbilisi, in order to assist the Georgian tourism industry! Georgia drew 177,000 tourists from Ukraine last year, the sixth largest nationality. Ukrainians and Georgians enjoy visa-free, passport-free travel, needing only to show their national ID cards to enter each others country. Coincidentally, on Thursday, the day of the anti-Russia demonstrations in Tbilisi, Georgia opened an honorary consulate in Lviv.
    With 'new blood' in the Rada, Zelenskiy will push for laws to create a farm land market, to strip members of parliament of immunity from prosecution and to crack down on officials using government jobs to get rich. In an interview with Reuters, Dmytro Razumkov, head of Zelenskiys party, did not set a timetable for the land market. He also implied that control of the Rada would give a Zelenskiy government the power to pass necessary free-market changes. The IMF has recently begun to take a rather tough position because this organization is fed up when it is constantly being deceived, he said. I can cite many examples when certain agreements were reached between Ukraine and the IMF, and then we did not fulfill our commitments.
    Its Amateur Hour in Ukraine, and Thats Good, headlines a Bloomberg Opinion piece by Leonid Bershkidsky, a Russian migr journalist who is often skeptical of Ukraine. Zelenskiy gets a rare opportunity to drain Kievs post-Soviet swamp, Bershidsky writes from Berlin. Predicting that the July 21 Rada elections will give Zelenskiy enough seats for a working majority, he writes: Thats likely to mean a revolution in Ukrainian politics not seen since the country gained independence in 1991 -- for the political class, bigger even than the upheavals of 2004 and 2014. Looking at the new faces expected in parliament, he writes: The parties likely to govern Ukraine after next months election have selected people who will try to build a new system from the ground up.
    In Understanding Ukraines Jewish President, a Wall Street Journal opinion piece, Natalie Gryvnyak quotes a childhood friend of Zelenskiy, Vadik Pereverzev, saying what Volodymyr took from his family as tradition is an enormous work ethic not a religious identity. Grynnyak writes from Kyiv: The election proved that politicians with ultranationalist or explicitly ethnic agendas dont have broad support. Instead, voters care about enhancing the rule of law, turning around the economy, and protecting Ukraines territorial integrity.
    Restoration of rail traffic with the Russia-controlled parts of Donetsk and Luhansk would result in big cargo increases for Ukrzaliznytsia -- 40% for coal; 30% for iron ore; and 15% for ferrous metals. The estimates are published in the state railroads strategy for 2019-2030. Although no concrete moves have been taken, Zelenskiy has said normalized economic relations with the occupied would be a step toward peace and reconciliation.
    Ten days before the grain marketing year ends on June 30, Ukraine has exported 48.9 million tons of grain 22.5% more than during the entire 2017-2018 marketing year. Yevhen Kravtsov, CEO of Ukrzaliznytsia, tells the UBN that the railroad is ready for a repeat of last years bumper harvest with 1,750 operational freight locomotives, including 100 standing by in reserve.
    After Zelenskiy promised business leaders on Thursday to carry through big privatizations, the head of the State Property Fund immediately appealed to the new president to unblock privatizations, saying they have been frozen by dubious lawsuits since last December. Otherwise, it will be too difficult to break the oligarchic system of freezing state companies, Vitaliy Trubarov, head of the Fund, writes on Facebook.
    The US House of Representatives has approved bills appropriating $700 million in aid to Ukraine next year, including $250 million in military aid. It is now up to the US Senate to approve matching legislation and for President Trump to sign the bills into law.
    Companies from the US, China, Romania and Ukraine are finalists for a Naftogaz project to increase gas production from depleted deposits in western Ukraine, Naftogaz CEO Andriy Kobolyev writes on Facebook. The four qualifying companies are: Baker Hughes, from the US; a consortium of Xinjiang Bucking Energy Engineering and Zhongshi Shenli Petroleum Engineering, from China; Expert Petroleum Solutions SRL, from Romania; and Poltava Petroleum Company, from Ukraine. Kobolyev said he was happy to see the tender drew powerful international players. Under production sharing agreements, winning companies would provide the money and technology and would share gas production with Naftogaz, the owner of the fields.
    With the Leopolis Jazz Fest expected to draw thousands of visitors to Lviv this weekend, Lviv Airport reopens Terminal 1 today for domestic Motor Sich flights from Kyiv Zhuliany. Closed since Terminal A opened for the 2012 Euro Cup, the 1955-era Terminal 1 now finds a new life as air passenger traffic to Lviv grows this year by 50%. This growth follows a 48% y-o-y growth in air traffic last year. The goal is for all of Lvivs domestic traffic to go Terminal 1 UIA flights from Kyiv Boryspil, and, in October, SkyUp flights from Boryspil.
    Last week, this growth prompted the airport to double parking rates to 80 hryvnia day. Lvivs boom started two years ago when Wizz Air returned to Lviv. Ryanair soon followed. This year, it plans to carry 235,000 passengers on its Lviv routes, or 10% of the airports forecast 2019 total of 2.4 million. Today, Lviv has direct flights to 33 foreign airports, largely in the EU.
    Read more news on www.ubn.news

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    • UKRAINE BUSINESS NEWS
      Tomorrow Ukrzaliznytsia starts an investor roadshow in London and Europe to place dollar-denominated, three to five year Eurobonds, reports Interfax-Ukraine. JP Morgan and Dragon Capital have the mandates for the bond issuances. The international rating agency Fitch is assigning the bonds a B- rating, the same as the sovereign. Two weeks ago, investors made 6 billion in bids for Ukraines first new Eurobond since October. The Finance Ministry placed the 7-year 1 billion bond at 6.75%.
      Due to an unprecedented foreign investor in Ukraines hryvnia bonds, the government does not plan to return this year to the Eurobond market, Finance Minister Oksana Markarova tells Bloomberg in Skopje, North Macedonia. We already see that we are exceeding the budget forecasts in attracting financing from local loans, said Markarova, who was attending last weekends Constituency Meeting of the International Monetary Fund and the World Bank. Since the start of this year, foreign investment in Ukraine government hryvnia bonds has increased 8-fold, hitting the equivalent of $2 billion.
      DTEK RES has raised 90 million of foreign funding to build the second stage of the Primorsk Wind Power Plant, in Zaporizhia region. The loans goes for a 150 million, 100 MW project that is be commissioned in September. The money comes from a consortium of three German banks - Bayerische Landesbank, KFW IPEX-Bank, and ODDO BHF Aktiengesellschaft. Guarantees are given by two export credit agencies: Euler Hermes, of Germany; and CESCE, of Spain.
      Over the next decade, Ukrzaliznytsia plans to acquire 495 locomotives, renewing about one-third of its freight locomotives, Yuriy Lavrenyuk, deputy infrastructure minister wrote on Facebook after meeting Monday in Kyiv with Philippe Delleur, a senior vice president for Alstom, the French rail transport company. Pending finalization of a contract with Alstom, he wrote: The first 110 Ukrainian-French locomotives with traction [electric] motor should be on the rails of Ukrainian Railways by 2025. While Ukraine and France negotiate to finance, leading sites for joint production are Zaporizhia Electric Locomotive Repair Plant and Lviv Locomotive Repair Plant.
      Ukrzaliznytsia, possibly the nations largest real estate owner, has started placing properties up for lease on the ProZorro.Sale electronic platform. Cafes, warehouses, empty station rooms, spaces for ATM machines and rooftop antennas will all go through civilized and transparent leases, Evhen Kravtsov, the railroads CEO, writes on Facebook. In a second bid to inject private capital into the state monopoly, two rail stations Mykolaiv and Zhmerynka, in Vinnytsia region, are being prepared for lease as concessions.
      In an olive branch to President Zelenskiy, President Putin decreed Monday that trucks and trains carrying goods to and from Ukraine may cross Russia as long as they carry seals allowing tracking by Russias GLONASS satellite navigational system. Effective July 1, the liberalization is billed by Russia as a concession to Kazakhstan and other Central Asia countries. But it may be in response to pressure from China. With China-EU freight trains backing up at the rail gauge break on the Belarus-Poland border, Chinese shippers want to use an alternative rail route through Ukraine.
      The fourth oil and gas block auction in six months will take place on Sept. 16, reports Gosgeonadr, the State Geological and Subsoil Service. Through Prozorro, three lots will be auctioned in Chernivtsi, Lviv, and Zaporizhia. Foreign drillers largely have stayed away from the auctions this year, saying the lots are too small or too poorly documented. Last week, at the most recent auction, UkrGazVydobuvannya, the Naftogaz unit, won seven of the nine lots, committing to paying $90 million. Sales of the other two lots were canceled for lack of bidders.
      Tripling foreign investment into Ukraine is the mission of David Arakhamiya, the new secretary of the National Investment Council. All preliminary consultations with large investors show that Ukraine can increase the current volume of investments into the country by at least three times -- I was charged by the President to make this process as quick as possible, says Arakhamiya, who co-founded Template Monster, an IT company. With the new president starting a 5-year term, a new cycle of foreign investment is increasingly expected in Ukraine. At the core of the Investment Council is 16 multinational corporations who have major investments in Ukraine.
      About 400 raider attacks occur in Ukraine each year, most of them in Kyiv and the Kyiv region, says OpenDataBot, a company that monitors registration data of Ukrainian companies. Since 2013, 3,242 raider attacks have occurred in Ukraine. The number peaked in 2017 with 724 attacks. To counteract raider attacks, experts recommend monitoring the status, property and registration data of your company, OpenDataBot says. Collecting, combining and analyzing data from Ukraines main public registries, the Dnipro-based company sends out alerts to subscribers through instant messaging networks -- Facebook Messenger, Skype, Telegram and Viber.
      Starting next month, Kyiv plans to install up to 3,000 containers for collecting plastic and glass, a first step toward building a plant capable of recycling 700,000 tons of garbage a year, Vitali Klitschko said Monday. Kyivs Mayor spoke at a signing ceremony with Frances Veolia Group, one of several European companies interested in building a waste management system for Kyiv. Founded as Compagnie Gnrale des Eaux, Veolia is a multinational specializing in water and waste management.
      Georgia could lose $300 million a year in Russian tourism after the July 8 start of President Putins ban on flights between the two countries. The estimate comes from Georgy Kepuladze, chairman of Banks and Society, a Georgian NGO. Last month, Russian tourism to Georgia was up 53% y-o-y to 172,000 visitors, making Russia top source of tourists for Georgia. Last year, Russian tourists spent $720 million in Georgia more than double the $318 million spent by tourists from the EU. Kommersant reports that Russian airlines and tour operators will have to refund $50 million in tickets and package tours.
      Kyiv Sikorsky International Airport will close for runway repairs from Monday, Sept. 2 to Thursday, Sept. 12. Kyiv Boryspil, which already handles one million passengers a month, is preparing to cope with an additional 150,000 passengers during the 10-day closure of Sikorsky. Passengers probably will go to Terminal F, which reopened in April to handle Ryanair and other discount airlines. At Sikorsky, a hub for Wizz Air, traffic during the first five months of this year increased by 26.5% y-o-y, to 1.8 million passengers.
      Read more news on www.ubn.news

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      • UKRAINE BUSINESS NEWS
        Poland is ready to build a 2 billion cubic meter pipeline to link the Polish gas transportation system with Ukraines network at Hermanowice, a Polish town bordering southern Lviv region. This is not much, but when Ukrainians need urgent assistance, we are ready to provide it," Piotr Naimski, Polands minister for strategic energy infrastructure, tells Ukraines ZN.UA website.
        Racing possible US sanctions, about 60% of Nord Stream 2 or 1,450 km has been laid along the bottom of the Baltic Sea, reports Gazprom. In addition to US bills sanctioning the European contractors, the Russia to Germany pipeline has yet to win permission from Denmark to pass through its waters.
        The EBRD may loan 60 million to Naftogaz to increase gas stocks for the next heating season, the development bank reports on its website. In addition, the gas company is expected to launch a Eurobond this summer to raise as much as $1 billion to fill gas reservoirs. As of Sunday, the reservoirs hold 13 billion cubic meters, 65% of the 20 bcm goal.
        Donetsksteel is investing $100 million this year to develop its coal mines and coking coal production plant in Pokrovka, government-controlled Donetsk. By 2024, the company plans to increase production by 50%, Ildar Saleyev, the companys general director, writes on Facebook. The company, 25% owned by Metinvest, is joining the European Association for Coal and Lignite, or EURACOAL.
        Ukraines central bank may ease restrictions on how much money in dividends foreign investors can take out of the country, Governor Yakiv Smoliy told reporters on Tuesday. Smoliy did not say whether the central bank would raise or end the limit, which is now 12 million a month.
        Ukrainian corporate and municipal bonds should be made available through Clearstream, the international depository, recommends Andr Ksvek, director of the EBRDs local currency and capital markets development initiative. He spoke Monday at Connect Ukraine to Clearstream, an ICU-EBRD conference in London. Investments in hryvnia government bonds have increased 8-fold since the start of the year, to the equivalent of $2 billion, Finance Minister Oksana Markarova said at the conference.
        ICU managing partner Konstantin Stetsenko predicts Ukraines new currency liberalization and cooperation with Clearstream will further boost investments in hryvnia bonds. He said: Infrastructure changes, along with the favorable situation in global markets, allow us to look at the government bonds with optimism and expect an influx of new investors.
        On Tuesday, at the Finance Ministrys weekly T-bill auction, investors bought the $284 million equivalent of Ukraine government bonds. This was 6% less than one week earlier. With this strong demand for hryvnia bonds, Minister Markarova predicts that Ukraine will not need to return this year to the Eurobond market.
        Ukraines first electricity auctions are to take place tomorrow through the website of the Ukrainian Energy Exchange -- www.ueex.com.ua/eng/ueex/. About 200 bidders were trained, including representatives of state-owned manufacturers: Energoatom, Ukrhydroenergo, Centrenergo, Alexander Kovalenko, director general of the commodity exchange, or UEEX, tells Ukrinform. Auctions are a prerequisite for the new electricity market that is to start Monday.
        No longer the preserve of big cities, the ProZorro electronic tender and auction system now operates in all 24 regions and in 238 cities and towns, reports Stepan Kubiv, Economic Development and Trade Minister. Referring to 3,500 auctions in the last 18 months, he says: At these auctions, local governments sell and lease communal property, conduct small privatizations, provide the right to advertise, hold fairs, provide parking and entertainment services. The vast majority are small privatization auctions.
        Lviv IT Cluster will present a regional investment fund, Lviv Tech Angels on Friday, the first day of the Leopolis Jazz Fest, an event that draws business leaders from across Ukraine and Central Europe. Top managers of Lviv IT companies will select the best Ukrainian start-ups for investment, mentoring, and consulting, reads the launch release. Initiators of the fund are: Mykhailo Puzrakov, co-founder and COO of Intellias; Volodymyr Chyrva, co-founder of Sigma Software; and Andriy Pavlov, CEO of N-iX.
        The government is preparing to test technology for conducting the 2020 national census by smartphone, Kubiv, the economic development minister, writes in his column on LIA.net. Although Kubiv is not expected to be in his post at the time of next years census, President Zelenskiy advocates the goal of a state in a smartphone. The last census, conducted on Dec. 5, 2021, counted 48,457,100 people living in Ukraine. In the intervening two decades, the population is believed to have fallen to 40 million due to: emigration; the birth rate lower than the death rate; and the loss of Crimea and the most heavily portions of Donetsk and Luhansk regions.
        President Zelenskiy wants Ukraine to join the EUs Digital Single Market during his five-year term in office. Instituted in 2015, this EU policy is credited with freeing EU residents of cellphone roaming charges two years ago. The EU policy seeks to promote e-commerce, to protect personal data, and to build a data-driven economy. After calling for the state in a smartphone, Zelenskiy told business leaders in Kyiv last week: Joining the European Digital Single Market is another task of ours over five years.
        This fall, Ukraine will come out with a 1,000 hryvnia banknote, worth $38 at current rates. The bill will end the 500 hryvnia bills 13-year run as the highest denomination in the land. Designed for convenience, the new big bill could trigger inflation, some economists tell UNIAN. Price rises are trending downward, expected to reach 6% y-o-y in December.
        Austrias Supreme Court authorized on Tuesday the extradition of Ukrainian oligarch Dmitry Firtash to the United States for trial. He is accused of paying $18.5 million in bribes to officials in India to open a titanium mine. A US federal judge in Chicago ruled the case could be tried in Chicago because Firtash planned to sell the titanium to Chicago-based Boeing. The decision to sign the extradition order rests with Austrias new Justice Minister Clemens Jabloner.
        BlaBlaBus, Frances low cost bus line, plans to expand from Germany to Ukraine, Nicolas Brusson, BlaBlaCar co-founder and CEO, tells Oktobus.Zhurnal website. The announcement comes two weeks after Flixbus, Germanys largest intercity bus company, unveiled a major Ukraine network expansion, starting bus routes from nine Ukrainian cities to EU destinations.
        Read more news on www.ubn.news

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        • UKRAINE BUSINESS NEWS

          Maxim Nefyodov, Ukraines energetic 35-year-old deputy economy minister, has won a competition to head the new Customs Service, the Finance Ministry announced Wednesday. To cut corruption, the Cabinet of Ministers decided in March to cut the State Fiscal Service into two agencies: the Customs Service and the Tax Service. Creating an efficient, transparent and corruption-free Customs Service is the top requirement that comes from honest businesses and a key condition for accelerating economic growth, the Finance Ministry says. The Finance Ministry entrusts the new head of customs with an ambitious task to create a European-style customs office in Ukraine.

          The new Customs Service will be up and running by September, Nefydov tells Interfax-Ukraine. A former investment banking director at Dragon Capital, Nefydov helped to launch in 2016 the ProZorro electronic system of state procurements, a system that has won anti-corruption awards. Looking at the challenge of cleaning up Customs, he writes on Facebook:I cant say I feel joy in my heart, but who, if not us, will break through this mountain?

          Concorde Capitals Alexander Paraschiy writes: Ukrainian customs has the image as one of the most corrupted state bodies, with annual damages to the state from inefficient clearance estimated at several billions of dollars...Based on Nefyodov's performance in the economy ministry however, we see a new chance for positive changes in customs that could enormously benefit the Ukrainian economy.

          Cleaning up customs was one of several complaints voiced by business leaders to William B. Taylor, the new acting US ambassador, at a discussion sponsored Wednesday by the US-Ukraine Business Council. Peter Kerekgyarto, Royal Dutch Shell Ukraine director, complained of shakedown attempts by inspectors looking for bribes fire safety, labor safety always ending up in the courts. Michael Bleyzer, president of SigmaBleyzer, called for a decentralized, merit-based, market economy [ending] the systemic corruption where civil servants milk this country for their own benefit.

          Michalis Alexandrakis, Philip Morris Ukraine managing director, complained: They are coming to us, asking for 34 million for this, 70 million for that, 100 million for this. John Hynansky, CEO and owner of Winner Group Ukraine, concluded: All we need is rule of law.

          Hiroshi Mikitani, founder and CEO of Japans Rakuten e-commerce company, met with President Zelenskiy on Tuesday in Kyiv. Mikitani, owner of the Viber messaging service, discussed his plans to expand Rakutens office in Odesa and to open an office in Kyiv. Often referred to as the Amazon of Japan, Rakuten owns Japans largest e-commerce site, largest Internet bank and largest credit card company. After the meeting in Kyiv, Mikitani said of Zelenskiys IT plan: All government services in the smartphone are a very real prospect for Ukraine. Zelenskiy invited Mikitani, to join the National Investment Council, a group of 16 major multinational companies with investments in Ukraine.

          President Zelenskiy will be in Toronto Monday through Wednesday, meeting with Prime Minister Justin Trudeau and participating in the annual Ukraine Reform Conference. The conference is to gather 300 international bank executives, foreign ministers civil society activists, and diaspora leaders, giving North Americans the first opportunity to size up the man who is to run Ukraine through May 2024. About 1.3 million Canadians and a similar number of Americans -- trace their ancestry to Ukraine.

          As of Monday, Ukraines bans imports from Russia of cars, fertilizer, cement and metal pipes. Covering $510 million worth of 2018 imports, the list constitutes the biggest expansion in three years of Ukraines bans on imports from Russia. Ukraine drew up the new list of banned products on May 15 in response to trade bans announced in Russia in April. As of March 1, Ukraine will ban the import of used rail freight cars. With record grain harvests, Ukraine has a shortage of Soviet gauge rail cars.

          Commodity trader ED&F Man Holdings Ltd. plans to sell underperforming sugar assets, a list expected to include a sugar beet-processing plant in Ukraine, reports Bloomberg. Sugar traders have struggled to make money after bumper crops in India and Thailand depressed prices and curbed volatility. After world sugar prices hit a 10-year low last August, many Ukraianian farmers cut their sugar beet plantings this spring. Ukraine is the worlds 10th largest sugar producer.

          Naftogaz will hold an investor roadshow in July to market a EUR-denominated bond of at least 500 million, Bloomberg reports. Dragon Capital calculates the potential yield of the bond at 8%, far better than the expected 11% yield of an aborted Eurobond launch last November. Naftogaz needs to increase stocks in its underground reservoirs to at least 20 bcm from current 13 bcm to maintain sufficient pressure in the gas transit system if Russian flows are halted, Dragon writes. Given the recent drop in gas prices in Europe, raising $1 billion would sufficiently cover Naftogazs import needs.

          The Finance Ministry continues to lower yields on hryvnia bonds and to sell longer maturities, analysts write of Tuesdays weekly auction.

          Dragon Capital writes: Demand for UAH bonds was expectedly strong yesterday (at UAH 8.5billion)...Strong demand for medium-term bonds points to significant foreign participation, but not necessarily inflows of fresh money, as some non-residents likely reinvested the proceeds from 3-month bonds maturing today.... With yesterdays auction, the 1H19 rollover rate on UAH bonds reached a solid 163% (vs. 93% in 1H18), for a net placement of UAH 50bn ($1.9bn), which owed almost entirely to foreign inflows.

          Concorde Capital notes that UAH 4.4 billion or almost 60% of the hryvnia auction receipts were for six year bonds, with a weighted average interest rate of 15.85%. Eager for returns and confident in Ukraines near term financial administration, investors accepted the Finance Ministry lowering interest rates on dollar bonds from one week to the next. The interest rate for one-year dollar-denominated bonds dropped to 7%, from 7.25% last week. Th yield on two year bonds dropped to 7.5%, from 7.75% last week.

          Concordes Evgeniya Akhtyrko writes: Apparently, the relatively easy placement of seven-year international Eurobonds for 1 billion at 6.75% last week gave the government enough confidence to go further by lowering interest rates at the local debt market. Seeing that the government now has alternative sources of attracting debt, market participants had to accept the lower interest rates.

          With Ukraines new Road Fund filling up at the rate of $2 billion a year, managers of waterways and railways want a liberal interpretation of its mandate. In addition to building roads, the Road Fund could help repair shipping locks on the dams of the Dnipro cascade, argues the State Enterprise of Waterways. Similarly, Andriy Ryazantsev, Ukrzaliznytsias business development director, says the Road Fund could pay for 15 new 10-car trains for the state railroad. In response, Ukravtodor, the state highway agency, says the purpose of the Road Fund is to build roads.

          Our mailing address is EDITOR@UBN.NEWS

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          • UKRAINE BUSINESS NEWS
            In a replay of Russias trade war against Georgia of a decade ago, Russian authorities are moving to ban imports of Georgian wines, Kommersant business daily reports from Moscow. Russias state consumer watchdog Rospotrebnadzor says it is introducing tougher checks on wine imports over quality concerns and Agriculture Ministry officials are calling wine retailers in a survey on Georgian wine imports. From 2006-2013, Russia banned imports of Georgian wine. After the ban was lifted, Russia bounced back to its historic position as top importer. Last year, Russia took 62% of Georgias exports of 82.6 million bottles, five times the level of the number two country, Ukraine. With $130 million in exports under threat, Georgias currency, the lari, fell this week to record lows.
            With Kremlins ban on flights between Russia and Georgia to start July 8, the low lari and special rates for Ukrainians could double Ukrainian tourism to Georgia this year, to 400,000, Gela Dumbadze, Georgias ambassador to Ukraine, tells Interfax-Ukraine. To boost Georgias reputation for hospitality, the country resumes next month the practice of handing small bottles of Saperavi red wine to visitors arriving at the nations three international airports Tbilisi, Kutaisi and Batumi.
            Tour package pricing is key, Anna Romanova, head of the Rada subcommittee on tourism, tells Interfax-Ukraine. "I looked at the cost of tour packages and flights to Georgia -- today they are more expensive than holidays in Turkey, she says. I urge you to reconsider price offers and offer Georgia at prices like in Turkey. Then Ukrainians will go with pleasure."
            Facing the loss of as many as 1 million Russian tourists during the second half of this year, Georgia received a Western boost Wednesday when Wizz Air signed a deal with Kutaisi, Georgias fastest growing airport, to add flights from 12 new EU cities. With most flights starting in August-September, Kutaisi, Georgias second busiest airport wins Georgias first flights from Finland and Sweden. Wizz Air says it is buying two Airbus A 320s to handle the Kutaisi routes.
            Kyivstar, Ukraines largest cellphone company, reports that the number of its subscribers using international roaming in May and June is up 25% over the same period last year. Poland was the most popular country, accounting for 18% of all Kyivstar subscribers outside the country. Tied for second place with 8% each were: Germany, Russia, and Turkey. The next group of countries visited by 5% of Kyivstar subscribers overseas were: Egypt, Italy, Hungary, and the Czech Republic. The next countries were Romania and Belarus, with 3% each. Kyivstar has 26.4 million subscribers in Ukraine.
            Next Mondays ban on imports of potash and phosphate fertilizers from Russia will lead to shortages and could affect next years crop, Dmitriy Kokhan, advisor to the Ukraine Agrarian Council, tells Interfax-Ukraine. The government condemns domestic agriculture to a deficit with such a step, Kokhan said of the ban, part of a wider package announced Wednesday by the Cabinet of Ministers.
            Ukraines new customs warehouse regime for storing EU gas in western Ukraine has drawn 30 companies, pushing gas injection rate up to 60% above one year ago, Ukrtransgaz tells Bloomberg. Pushing this growth in gas storage is fear that Russia could off gas shipments across Ukraine next winter and amazing seasonal price spreads, says Klaus Reinisch, sales director at DTEKs D.Trading. In the widest spread in five years, traders can buy gas in Germany for 10.50 per megawatt-hour and arrange to sell it this winter at about 19. Ukrtransgaz invites EU companies to store up 4 billion cubic meters in Ukraines underground reservoirs, paying only rent, and no duties.
            President Zelenskiy submitted to the Rada on Wednesday an urgent bill to reduce the price of electricity. Last week, Andriy Gerus, the presidential envoy to the Cabinet of Ministers, said Zelenskiy is submitting a bill to delay Mondays planned start of an electricity market by one year, to July 1, 2020. The Rada resumes sessions on Tuesday. Ukraines Western partners including the EU, the EIB, and the EBRD recommend postponing the launch of the new market until Oct. 1, citing a lack of regulatory and infrastructure readiness.
            Concorde Capitals Alexander Paraschiy writes: It looks like the new market will start functioning on July 1: the presidents draft bill that possibly calls for a 12-month delay of the market certainly wont be approved by July 1. The risk remains that the presidents bill will be approved later.
            The Cabinet of Ministers has authorized Ukrenergo to receive a 149 million loan from the EBRD to rebuild 12 electricity substations with new transformers and automatic control systems. The work is seen as a key step toward synchronizing Ukraines power system with the EU power network, or ENTSO-E.
            Ukraines government is capping home heating rates, despite opposition from its finance minister who says it violates last Decembers agreement with the International Monetary Fund. Last November, Ukraine raised rates by almost 25%. The rates approached market levels, but contributed to President Poroshenkos election defeat in the spring. While the government has not made public the new prices, European gas prices have dropped in half since their five year highs last fall. Although Ukraines prices probably now are IMF compliant, Finance Minister Oksana Markarova said: The Ministry of Finance cannot support a ruling which sets a tariff limit and contradicts ... our international obligations.
            The central bank has simplified the procedure for a business to open a bank account by abolishing the requirement to issue a sample signature card. The bank says this abolition will save businesses time and money.
            Alexander Dubinsky, a high ranking Rada candidate with President Zelenskiys Servant of the People Party, is behind a Facebook campaign against Valeria Gontareva, the former head of Ukraine's central bank who worked to nationalize Igor Kolomoiskys PrivatBank in 2016, Reuters reports. Separately, the Kyiv Post reportsthat Dubinsky recorded an obscenity-laden video attacking SkyUp a new discount airline that competes with Kolomoiskys Ukraine International Airlines. Dubinsky is a commentator on 1+1 TV, a channel owned by Kolomoisky.
            With air traffic growing at Lviv airport by 50% this year, a local developer, Galmodern, is negotiating with Hilton Hotels & Resorts to build a Hilton standard hotel near the airport, reports the Lviv City Council. The hotel and office center, with underground parking, would be built at 191 Liublinska St., on a lot facing the airport, adjacent to Sknylivskiy Park.
            With Zelenskiy signaling a laissez-faire attitude toward marijuana, the Rada is expected to take a baby step this month: approving on first reading a bill that would allow each household to grow five plants of a variety of hemp that contains cannabis. This will break the cannabis taboo, predicts Aleksey Klempner, co-founder of WAYV, a Ukrainebased company he calls the Amazon of cannabis. Klempner says full legalization of marijuana for medical and recreational use could create $1-2 billion industry in Ukraine. Zelenskiy will be able to see for himself on Monday when he arrives in Canada for a 3-day visit. Last October, Canada became the second country after Uruguay to legalize cannabis. This year, provinces are passing local laws on retail sales and taxes.

            Read more news on www.ubn.news

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            • UKRAINE BUSINESS NEWS

              Nord Stream-2 will be built around the territorial waters of Denmark, allowing for the Russia-Germany pipeline to completed by the end of this year, the operating company reports. On Friday, Nord Stream AG informed the Danish Energy Agency that it is withdrawing its request to lay the Baltic pipeline near Denmarks Bornholm island. Instead, the company says it will either route the pipeline north or south of the island. The Swiss-based company did not say how much cost this would add to the $12 billion, 1,220 km gas line.

              Brushing off the threat of American sanctions, Gazprom chairman Alexei Miller told shareholders in St. Petersburg that the project is "past the point of no return." Predicting commissioning early next year, he said: "We are working from the idea that Nord Stream 2 will be realized strictly in accordance with the planned timetable." With an annual capacity of 55 billion cubic meters, the pipeline is designed to double Russias ability to ship gas directly to Germany, relegating Ukraines gas transit system to the role of backup.

              Miller predicts difficult talks with Ukraine and the EU this fall over renewing the 10-year gas transit contract with Ukraines Naftogaz. Alleging the need for a new government to take shape in Kyiv, Russia is waiting until mid-September to start serious talks. By the end of the year, by the end of the current transit contract, Ukraine will not be able to sign a new EU-contracted transit contract, Miller predicted Friday. This train has already left the station.

              With the contract expiring Jan. 1, Gazprom says the simplest solution is to renew the existing 10-year contract. Remembering that Gazprom cut off the gas to Ukraine in the winter of 2006 and repeatedly threatened to cut off gas since then, Naftogaz is stockpiling 20 billion cubic meters of gas, enough to get through next winter.

              Naftogaz CEO Andriy Kobolyev earned $11 million in pay and bonuses last year, according to DT.UA. Of the total, 91% was his share of a board bonus of 1% of winnings last year from the Stockholm Arbitration against Gazprom. Since Gazprom is appealing that decision, it is not clear if the bonuses have been paid in Kyiv.

              Ukraines renewable energy boom will slow in 2020 to 540 MW of new capacity, about one quarter of the 2 gigawatts planned for this year, Mykhaylo Blyznyuk, deputy minister of Energy and Coal Industry, told a Ukraine renewables forum last week in London. These volumes 300 MW for solar, 160 MW for wind and most of the rest for biogas will have their electricity feed in tariffs set two times a year at ProZorro auctions. This year, investors are racing to get projects completed in time to get Power Purchase Agreements with the current Green Tariffs -- some of the highest rates in Europe. Because of these tariffs, renewables are a hot sector for foreign investment in Ukraine. Bloomberg New Energy Finance Ltd calculates that foreigners account for 47% of the renewables investment this year.

              Ukraine has risen to become the third largest supplier of food to the EU, after the US and Brazil, the European Commission reports. In the year, ending in April, Ukraines food exports to the EU rose 14%, an 800 million increase. For the period, the top four suppliers of food to the EU were billions of euros: US -- 12.9; Brazil -- 11.7; Ukraine -- 6.3; and China -- 5.9.

              PrivatBank, Ukraines largest bank, had no assets at the time of its Dec. 2016 nationalization, but was a hole, Valeria Gontareva, governor of the National Bank of Ukraine, tells BBC-Ukraine. In 2015, this hole was 113 billion hryvnia, according to an Ernst & Young audit. One year later, the hole was 146 billion hryvnia. Interviewed in London, Gontareva said: So, by the end of 2016 the hole is only growing. To save the bank, which had 20 million depositors, the Poroshenko government injected 155 million hryvnia, todays equivalent of $6 billion.

              If a court rules the nationalization of PrivatBank invalid, the government would repossess its capital and the central bank would declare the bank insolvent. In the BBC interview aired Thursday, Gontareva said: I am sure the National Bank will appeal to the Ministry of Finance for re-nationalization. Noting that a new cabinet will be formed in August-September, she said: The question is: who will be in the Ministry of Finance?

              Gontareva, who now works at the London School of Economics, said she will not return to Ukraine because Igor Kolomoisky, the former majority owner of PrivatBank, personally threatens me. Citing a May interview with Bihus.Info, she said: In an interview, Kolomoisky said that if I do not return to Ukraine, he will bring me out of here on personal order. In English, this is called kidnapping...If something happens to me so that you all know why. In the interview, Kolomoisky said that if Gontareva is not extradited to Ukraine, her return could take place through a private procedure. Kolomoisky allies in the new Zelenskiy government reportedly are pressuring central bank governor Yakiv Smoliy to dismiss his first deputy, Katerina Rozhkova, a Gontareva holdover.

              An Italian business group comes to Odesa this month to negotiate to open a ferry line between Bari, Italy and Chornmorsk, Victor Dovhan, deputy minister of infrastructure, writes after participating in an Italy-Ukraine forum in Rome. Southern Italys main port on the Adriatic, Bari is a major transportation and industrial center. Chornomorsk is Ukraines main ferry port for cargo and passengers, with ferries going to Batumi, Georgia, Varna, Bulgaria and Hardarpasa, Turkey. Two months ago, Euro Marine Logistics NV started a twice a month roll on roll off cargo service between Chornomorks and Piraeus, Greece.

              Odesa region will gain its first border crossing with the EU when the Orlivka-Isaccea, Romania ferry opens on Sept. 1. Crossing at a narrow, 900-meter wide point of the Danube, the new ferry will replace the current 2-hour, 100 km detour through Moldovas southern tip. This will be a round-the-clock, modern, technological, international border crossing point for ferry, sea and river freight and passenger traffic, Alexander Vlasov, head of Ukraines Fiscal Service, tells Interfax-Ukraine. He predicts the new international crossing will handle 200 trucks and 500 passenger cars a day.

              Ukrainians top the list of the worlds sexiest people, according to 8,500 respondents to a survey by Big 7 Travel. In a survey that caught the eye of the British tabloid press, Ukrainians topped English (9th place), Canadians (10th place) and Scots (38th place) and Americans (45th place). The beauty of Ukrainian women is often given credit for raising the tolerance of Western businessmen for the challenges of investing in Ukraine.

              jbrooke@ubn.news

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              • UKRAINE BUSINESS NEWS

                Ending a 23-year monopoly on power sales to state-owned Energorynok, Ukraines new electricity market launched Monday, with 192 buyers and sellers taking part in an electronic auction. The market debut marks the end of the controversial, 3-year-old Rotterdam + formula for pricing coal. After the first trading session on the Day Ahead Market, DTEK, the thermal power plant owner, reports the price for its electricity fell to UAH 1.569 per kWh, 12% below the average for the first half of this year.

                The electricity market is part of a wider free market package designed to bring $30 billion in investment through 2030 -- 11.5 times more than without the changes, writes Andrian Prokip, an energy analyst for the Ukrainian Institute for the Future. Since 1991, Ukraine has largely coasted on its Soviet energy inheritance, Prokip writes in an essay first published by the Wilson Center. He writes: 90% of electricity transmission lines are outdated. The distribution lines have depreciated by 60%, and thermal electrical power stations have depreciated by 80%.

                The rub will be higher household electricity bills. By ending Energorynoks monopoly on buying and selling electricity on the wholesale market, the new system ends cross-subsidization -- where high industry rates kept household rates low. The Ukrainian Institute for the Future estimates household rates will increase by 28% this year and by another 84% in 2020. For industrial consumers, tariffs will increase by 45% this year, followed by a slight decrease of 5% in 2020. According to Eurostat, Ukraine has lowest electricity prices in Europe. In the second half of 2018 Ukrainians paid 4 euro cents the kilowatt hour, compared to 10 in Moldova, 13 in Romania, 14 in Poland, and an average of 21 across the EU-28.

                One goal is full integration between Ukraine and ENTSO-E, the EUs power system. Prokip writes: Synchronization with ENTSO-E is expected to increase the export of electricity by almost five times, from 5.6 billion kWh in 2017 to 25.0 billion kWh in 2030, resulting in an estimated $6.7 billion in surplus export earnings in 20192030. Without integration and investment, Ukraine will have brownouts in the 2020s and will have to turn to Belarus and Russia to buy electricity.

                Ukraine will come out of the process stronger, Ariel Cohen predicts in Forbes. Synchronization with ENTSO-E will intensify competition in the domestic electricity market as well, forcing monopolists to compete for domestic consumers by offering better prices and service quality, writes Cohen, an Atlantic Council senior fellow. Kyiv is moving forward with deep energy sector reforms that will make it more investor-friendly, competitive, and resilient.

                Over the next three years, Ukrenergo is to invest 357 million to synchronize Ukraines electricity supply system with ENTSO-E, the European Network of System Operators of Transmission of Electricity. Ivanna Klimpush-Tsintsadze, deputy prime minister for European integration, told a conference last month that 40% of this money is to come from foreign sources: the EU, the US, the World Bank, the European Investment Bank, and KfW, Germanys development bank. Compliant with the EUs Third Energy Package, the new energy laws were required by the EU and the IMF for continued soft loans.

                In one step toward energy free travel, Ukraine, an electricity exporter to the EU, is importing electricity for the first time from Slovakia and Hungary. Energy Resources of Ukraine, an American-run, Kyiv-based company, reports the maximum capacity of ERUs electricity import is 130 MW, destined for Ukraines Burshtyn energy island. Located in western Ivano Frankivsk, about 100 km from Slovakia, Burshtyn is fully synchronized with the EU power system and exports electricity to Hungary, Slovakia, and Poland.

                Ukraine essentially hit its goal of exporting 50 million tons of grain in this marketing year, exporting 49.7 million tons by Sunday, the end of the sales year, reports the Ministry of Agrarian Policy and Food. Powered by a record-breaking 70-million ton crop, Ukraines grain exports grew by 26%, surpassing those of Russia. Ukraines corn exports shot up by 62%, hitting 29.8 million tons. Wheat fell by 9%, to 15.6 million tons. Barley fell by 18.6%, to 3.6 million tons.

                Ukraines food exports increased by 21.4% during the first five months of this year, hitting $9 billion, Olga Trofimtseva, acting agriculture minister, writes on Facebook. Food is Ukraines top export, accounting for 43% of sales, she writes. Top buyers were: China -- $795 million; India - $741 million; Egypt -- $737 million dollars; Turkey -- $684 million; and the Netherlands -- $641 million.

                Ukraines hryvnia appreciated 5.5% against the dollar during the first half of this year, according to data from the National Bank of Ukraine. During the same time, the hryvnia appreciated 1.1% against the euro. In June, the hryvnia strengthened against the US dollar by 2.5%.

                In the five weeks since Clearstream started handling trades of hryvnia government bonds, foreign investors have pumped an additional $560 million into Ukraines treasuries, reports the Finance Ministry. Since May 27, foreign investment in the bonds has risen by 36%, hitting $2.1 billion today.

                Effective today, the central bank abolishes several more foreign currency restrictions. The regulator simplifies reinvestment of foreign investor incomes from operations with Ukrainian securities. It also generally expands the list of transactions allowed with foreign currencies in Ukraine. Since February, the central bank has been easing foreign currency rules.

                Seven oil and gas companies, including one American and one Canadian, have won production sharing agreements. They will be required to invest a total of $430 million over the next five years in nine blocks, conducting seismic surveys and drilling 39 exploration wells. Roman Opimach, executive director of Ukraines Gas Producers Association, writes on Facebook that the winners are: state-owned UkrGazVydobuvannya 2 blocks; UkrGazVydobuvannya with Canadas Vermilion Energy 2 blocks; US Aspect Energy 1 block. Four private Ukrainian producers -- Geo Alliance, Ukrnaftobrureniya, DTEK, and Zakhidnadarservis each won one block.

                During the first half of this year, Ukrainians bought 39,500 new cars -- 13 more than during the same period last year, reports Ukravtoprom, the car dealers association. But first-time registrations of used imports put an additional quarter million Ukrainians behind the wheel during the first half of this year. Through May, 231,000 of these cars were sold seven times new car sales for the same last year.


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                • UKRAINE BUSINESS NEWS
                  Ukrzaliznytsia has placed a 5-year $500 million Eurobond at 8.25% per annum, the lowest level in the companys history. By comparison, in 2013 the company issued its first Eurobond at 9.5% and then restructured it into a 2021 amortizing issue at 9.875%. Two weeks ago, Ukraine settled its new 7-year 1 billion Eurobond at 6.75%.
                  Reflecting strong international demand, the issuance was oversubscribed five times, with bids totaling $2.5 billion. Evhen Kravtsov, CEO of the state railroad, writes on Facebook: Note that more than 175 investors from the UK, Continental Europe, the United States and Asia have submitted their proposals. He adds: The bond coupon is the lowest since 2011 among quasi-sovereign borrowers from Ukraine.Thus, we open the way to other state companies to international markets - Naftogaz of Ukraine.
                  Only last November, Naftogaz aborted a road show for a Eurobond with a benchmark of 10.9%. Today, analysts were positive on the Ukraines latest Eurobond launch.
                  Timothy Ash writes from London: Mid-May, Ukraine 10Y [Eurobond] in dollars was trading at 9.5%, and it's now down at 7.7% -- a massive reduction in Ukraine's cost of borrowing overseas...appreciation finally of the Ukraine story...optimism over the Zelenskiy presidency, et al.
                  Concorde Capitals Alexander Paraschiy writes: The placement looks successful, as the rate is closer to the lower end of the range we expected (8% to 9%). Additionally, the bonds spread to the sovereign is just 155 bps. With $500 million raised by Ukrainian Railway, the company has no more liquidity risk and is set to smoothly repay all its foreign currency obligations due in 2019.
                  Volodymyr Kuzyo, the railroads former investment director, now at the Center for Economic Strategy, writes on Facebook: Now the financial burden will not pressure the company and the focus will shift to the key task - preparation for the opening of the traction [locomotive] and competition market, financing of investment projects of development.
                  Locomotives top the railroads shopping list. General Electric would like to sell Ukrzaliznytsia 40 new Evolution series diesel locomotives for $150 million. In April, GE completed the delivery of 30 locomotives, the first phase of a $1 billion, 15-year contract signed last fall. Frances Alstom, Canadas Bombardier, and Chinas CRRC are competing for a similarly sized contract to deliver electric locomotives.
                  In hryvnia bonds, the Finance Ministry again squeezed yields at Tuesdays weekly auction. Filling only 55% of bids, the Ministry pushed cutoff rates down from one week earlier: for four-month hryvnia securities, from 17.75% to 17.44%; for seven-month securities, from 18.25% to 17.94%; and for 1-year securities, from 18.4% to 18.3%. The government sold 3 billion hryvnia worth of bonds, the dollar equivalent of $115 million. No dollar bonds were sold.
                  To ease foreign investor access hrvynia bonds, the Finance Ministry has come out with an illustrated 12-page booklet, How to Access UAH Domestic Bonds Market. Last week, Finance Minister Oksana Markarova predicted that strong investor demand for hryvnia treasuries means that the government will not go back to the Eurobond market this year.
                  As the electric car boom spreads east, Tesla will set up supercharging stations across Ukraine over the next year, tweets Elon Musk, CEO of Tesla Inc. DTEK has installed four STRUM chargers on the Kyiv-Lviv highway and four more on the Kyiv-Odesa highway, part of a growing nationwide network.
                  During the first quarter of this year, electric car sales in Ukraine grew 71% q-o-q, to 1,276. This matches a similar 70% electric vehicle sales growth in the EU, hitting 24,000 for April alone. Looking east, Hungarys oil company MOL is building 700 charging stations across Hungary, Romania, Croatia, Slovenia, Slovakia, and the Czech Republic. Similarly, Germanys E.ON, Croatias HEP, Slovenias Petrol, BMW and Nissans Hungarian unit are jointly building 252 charging stations in Hungary, Romania, Croatia, Slovenia, and the Czech Republic.
                  Fighting for regional air travelers, Ukraine International Airlines launched yesterday its first SkyBus -- from Vinnytsia Airport to Kyiv Boryspil. Painted in the airlines blue and gold livery colors, the bus takes four hours tomake the 250 km route, replacing what had been UIAs shortest flight, a 35-minute hop. If this multimodal experiment proves popular, UIA plans bus routes from other regional capitals within 200 km of Ukraines busiest airport: Chernihiv and Zhytomyr. To prevent giving bus rides to passengers on Ryanair and SkyUp, UIA bus tickets sales are tied to purchase of a UIA air ticket. Ryanair plans to carry 1 million passengers in and out of Boryspil this year.
                  Similarly, Lviv airport is strengthening its position as western Ukraines main airport by offering hourly 20 UAH, Lvivs rail station, and the airport. In the first half of this year, Lvivs traffic hit 950,000 passengers, a 46% increase compared to the same period last year.
                  JoinUp, the travel agency parent of SkyUp airlines, runs free buses from 14 cities to its Lviv airport flights. Riding first on buses to Lviv or Kyiv Boryspil, 100,000 Belarussians flew last year from Ukraine last year on package tours to Egypt and Turkey. Referring to buses-to-planes, Oleksandr Alba, sales director of JoinUp and owner of SkyUp, tells UBN: We have been doing this for six years.
                  Legal harassment of SkyUp has prompted Hungarys Wizz Air to drop plans to open a Ukrainian unit, SkyUp owner Alba tells UBN. Drawing the attention of foreign investors, the month-long, well publicized harassment of SkyUp has not drawn condemnation from President Zelenskiy. Two weeks ago, the new president addressed 500 members of foreign business chambers and promised to end raider attacks on businesses.
                  While he spoke, SkyUp was undergoing six government agency inspections, apparently ordered by Anna Romanova, an outgoing Rada member. At the same time, SkyUp was fighting shut down order made by a small city Kyiv region judge. That order, made in Baryshivka, was immediately suspended for jurisdictional reasons.RFE/RLs Schemes program tracked down Oksana Pasenko, the complainant. She said she does not have a passport and never bought a ticket on the airline. The complaint referred to a SkyUp flight from Kyiv Sikorsky in May. SkyUp moved all its Kyiv flights from Sikorsky to Boryspil on March 31.
                  Countering negative news through emails and an expanded call-in center, SkyUps revenue has fully recovered and sales are up 20% over pre-attack levels, says Alba. He adds: After all, black PR is still PR.
                  For SkyUp, harassment is the price of success. The one-year-old airline plans to carry 2.8 million Ukrainian passengers this year, triple the level of last year. By next spring, it plans to increase its all-Boeing fleet by 50%, to 12 jets. By the end of next year, SkyUp plans to fly from 12 airports across Ukraine. The only regional airports closed to SkyUp are Dnipro and Ivano-Frankivsk. Both are owned by Igor Kolomoisky, the oligarch TV backer of Zelenskiy. Kolomoisky also owns Ukraine International Airline, the nations largest airline.


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                  • UKRAINE BUSINESS NEWS
                    With a new President, and soon a new Rada, Ukraine has a unique chance to shift gears and to join the economic growth big leagues, David Lipton, IMF acting managing director, told a Toronto reform conference panel, Ukraine: Sovereign, Safe and Prosperous." If Ukraine wants to grow -- not by 3%, but by 5-6% every year and catch up with the world -- that's what it takes: Ukraine needs a new business model, said Lipton who first worked with Eastern Europe during the early 1990s transition from communism. Recalling his experience in Poland, he said: "There is no reason in the world why Ukraine cannot do it. The business model of Ukraine should be to supply goods, not people, to Europe. This can be achieved by working on creating such an environment in Ukraine where there would be investments, productive workplaces."
                    The near doubling of iron ore prices this year is attracting Asian investor interest in Black Iron, a $1 billion mining project billed by the Toronto company as the Largest Ukraine-Canada Investment. While talks are underway for big funding for the Shymanivske project, Black Iron reports that two Asian engineerings, procurement, and construction companies might make a US$45 million equity investment -- 10% of the total [phase one] project construction cost -- in exchange for being awarded the construction contract.
                    Located in President Zelenskiys hometown, Kryvyi Rih, the project has been slowed by neighboring mining companies who are not eager to have a massive new competitor. Believing in the future, Black Iron recently renewed its letter of intent with Ukzaliznytsia for a 3 billion tons km contract moving 10 million tons of iron ore a year, 300 km from Kryvyi Rih to Pivdenii (Yuzhne) port on the Black Sea.
                    Concorde Capitals Dmytro Khoroshun warns about todays $123 a ton iron ore price: The currently-high iron ore prices, which Black Iron mentioned in its release as a factor that is attracting potential investors to its project, should also incentivize iron ore development projects worldwide, potentially resulting in overinvestment and supply surplus in a few years.
                    Work and study for young Ukrainians in Canada is to be eased by a new, simplified 1-year visa system to be put in place by next spring, President Zelenskiy said Wednesday at a joint press conference in Toronto with Prime Minister Justin Trudeau. Canada also invited Ukraine to join its Trusted Traveler program, a system to speed repeat visitors, largely business executives, through passport controls. During Zelenskiys three-day visit to Canada, both leaders agreed to expand the two-year-old Canada-Ukraine Free Trade Agreement to cover services and investment. Zelenskiy said: This means that Ukrainian IT specialists and entrepreneurs from different industries will be able to better cooperate with Canada without leaving Ukraine. This means more jobs.
                    Next year, the government plans to increase spending on road works by one third, to almost $3 billion, Prime Minister Groysman said Wednesday while inspecting a Chinese companys work on the 22 km highway bypass around Zhytomyr. In 2018, Ukraine established the Road Fund, funded by gas and diesel taxes paid at the pump. In 2018, funding was $1.5 billion. This year, it is $2 billion.
                    Whittling away at Ukraines state property mountain, 197 small privatization auctions have earned the national treasury $10 million since the start of the year.With online sales now routine, another 104 properties nationwide are to go up for auction on the ProZorro site in coming months. Started one year ago, the program moves economically dead state-owned properties generally real estate into private hands.
                    Top Emerging Bond Manager Sees Payoff in Frontier Markets headlines a Bloomberg story about Claudia Calich, a Singapore-based bond manager who says local realities make good investments of Ukrainian hryvnia bonds and Nigerian naira bonds. [Zelenskiy] is appointing the right people to do the job and is committed to IMF reforms, says Calich who has beaten 93% of her peers in the past three years based on the performance of the $1 billion M&G (Lux) Emerging Markets Bond Fund. Calichs bet on hryvnia bonds earlier this year is paying off, Bloomberg reports. In the dollar-bond segment, frontier-market debt are headed for their best performance in two years. Theyve handed investors a return of almost 14% this year, compared with a loss in 2018...The Ukrainian hryvnia is the fourth-best performing currency in the world against the dollar this year.
                    Demand for government hryvnia bonds remains strong. UAH10 billion in bids were placed Tuesday for UAH 8 billion in borrowings. Both were the highest levels in two months. Of sales, 44% were for longer-term bonds: UAH 2.4 billion of 2-year bonds at 17.94% per annum, and UAH 1.1billion of 3-year bonds at 16.93% per annum. The Finance Ministry auction was the first this year that did not offer foreign currency denominated bonds. Flush with cash, the Ministry says it will offer only one foreign currency local bond in July. For oreign investors -- about 7% of the market -- the year to date rollover rate on hryvnia bonds is 160%, for a net placement of UAH 51 billion, or $1.9 billion.
                    To double GDP growth rates to 5% and above, Ukraine needs relentless improvement of the investment climate, Matteo Patrone, the EBRDs regional managing director, writes in the Kyiv Post. The basic preconditions for this to happen are a stable macroeconomic environment, sound institutions that guarantee property rights and provide rule of law and an open competitive economy. He writes: Only sound public institutions and professional public administration with high integrity, providing high-quality public services can guarantee private property rights and rule of law. That is why the EU and the EBRD have created the Ukrainian Reform Architecture, a holistic approach to public administration reform. But, he adds: The anticorruption legislation is not enforced, anti-corruption institutions are still weak, lack capacity and there are significant efforts to undermine their independence and efficiency.
                    First time registrations of imported used cars, hit 250,100 during the first half of this year, six times the number of the first half of last year. Lower import duties and a tax amnesty deadline boosted used car import numbers. But by June, when there was no tax amnesty, 19,200 used imported cars were registered, almost three times the 7,300 new imported cars registered. In June, cars over 10 years old accounted for 35% of the used imports, according toUkravtoprom, the national car dealer association.
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                    • UKRAINE BUSINESS NEWS
                      The early grain harvest has started across Ukraine, with farmers bringing in 6.1 million tons from almost 2 million hectares spread across 20 regions, reports the Agrarian Policy and Food Ministry. Last year, Ukrainian farmers harvested 70 million tons and exported 50 million tons both records. With a new bumper crop expected this year, World-Grain.com headlines from Kansas City: Ukraine grain harvest in full swing.
                      Facing competition from Poland, Ukrainian farmers will be paying their workers about 25% more in hryvnia this summer than last. Through May, the average monthly salary was UAH 8,000, currently, $307, reports the Agrarian Policy Food Ministry. Inflation over the last year has been 10%. Wages usually rise during the long work days of the harvest season.
                      Crop receipts posting future harvests as collateral for bank loans are catching on in Ukraine, reports the International Finance Corporation, a backer of the financing mechanism. From a pilot in 2015, the project went nationwide last year. To date, 1,600 crop receipts have been issued, raising $452 million in loans for farmers. Sponsored by the IFC, a World Bank unit and Switzerlands State Secretariat for Economic Affairs, the project attempts to compensate for the inability of farmers to post their land as collateral for loans. President Zelenskiy promises to win Rada approval to start a farm land market in Ukraine next year.
                      With the opening of a 120,000-ton modern grain elevator in Poltava this week, Astarta completes its five-year, $83 million programs to increase its storage capacity by 50%, to 600,000 tons. Using Astartas record 1.1 million-ton grain and oilseed harvest last year, Dragon Capital calculates that the Warsaw-listed company has now reached 55% self-sufficiency in storage facilities. With the state railroad struggling to keep up with booming farm production, storage can mean the difference between selling grain or letting it rot in the fields.
                      In time for the harvest, Nibulon opened this week its latest river port, a $23 million silo and pier complex capable of handling 300,000 tons of grain a year. Located on a right bank tributary of the Dnipro, on the border of Zaporizhia and Dnipropetrovsk regions, the port is expected to cut truck traffic to Black Sea ports and to save farmers money. To guarantee safe access for river ships, Nibulon dredged two kilometers of the tributary, the Ploska Osokorivka River, and installed navigational equipment on the 12 km from the Dnipro to the port town, Ternivka.
                      Ukraines newest Black Sea terminal, EuroVneshTorg, is already expanding its grain handling capacity by 50%. From 2 million tons today, it is to reach 3 million tons in September. Located in Olvia, Mykolaiv region, the company, which means Euro Foreign Trade, handles grain exports for Dutch Louis Dreyfus, French Soufflet Negoce and American Cargill. Company director Sergei Hunko says: Today, the terminal is able to handle about 3% of all grain exports in Ukraine. In the future, we plan to increase the capacity to 8% annually.
                      Powered by Ukraines food sales, Dubais non-oil trade with Ukraine nearly doubled since 2016, hitting $571 million last year, a Dubai Chamber of Commerce and Industry representative told an export forum in Kyiv this week, reports WAM, the Emirates News Agency. He invited Ukrainian companies to participate in Arab Health, Gulfood and Gitex Technology Week, three of the Middle Easts largest trade fairs, all held in Dubai.
                      Beating the Black Sea to Baltic Sea highway project, Ukrazaliznytsia plans to launch in the future, an Odesa-Gdansk container train, says Vyacheslav Eremin, the railroads operational director. The train would be UZs 20th regular container route, one of the fastest growing businesses for the state railroad. This month, an Odesa-Chisinau, Moldova container route is to start. Planned for later this year are Odesa-Belarus-Klaipeda, Lithuania; and Kyiv-Leipzig, eastern Germany.
                      Ukrzaliznytsia needs to spend almost $3 billion through 2025 to buy new locomotives and modernize existing ones, Anton Sabolevsky, the railroads director of strategic development and investment, says on the UZ website. There is also a massive need for new cargo wagons. About one third of this rolling stock, or 64,000 wagons, are over 25 years old. With EBRD loans, UZ is buying 5,000 new gondola cars this year.
                      Ukrzaliznytsia needs to spend almost $3 billion through 2025 to buy new locomotives and modernize existing ones, Anton Sabolevsky, the railroads director of strategic development and investment, says on the UZ website. There is also a massive need for new cargo wagons. About one-third of this rolling stock, or 64,000 wagons, are over 25 years old. With EBRD loans, UZ is buying 5,000 new gondola cars this year.
                      Racing to complete Nord Stream 2 before US sanctions can be adopted, Russia has put 23 additional ships on the gas pipeline project, reports RBC-Ukraine, citing Russian media. Bills moving thrugh the US Congress would impose sanctions on European companies working on the Russia-Germany project. Of the ships, 2 are from Russia the rest are from five EU countries, including 12 registered in the Netherlands. Last week, the pipeline operating company said the 1,220 km line was 59% completed and vowed to meet Gazproms Dec. 31 deadline.
                      Ukraine should prepare for the end of Russian gas transit in 2020, but preparation is being undermined by a drop in state company production, warns Yuriy Vitrenko, Naftogas executive director. He writes on Facebook: If we compare the average daily production, which was achieved in December 2018, with the data for June 2019, the decline in daily gas production at UkrGazVydobuvannya is already 9.2%. The first days of July show even more threatening trends. UGV, a Naftogaz unit, produced 74% of the gas produced in Ukraine last year. Foreign investors accuse UGV of fighting to keep them out.
                      With long-delayed EU-Gazprom-Naftogaz talks to resume in September, the lead European negotiator assured the new European Parliament on Thursday that he will do all he can to keep Russian gas flowing across Ukraine to the EU. Maro efovi, vice president of the European Commission for energy, said: I personally will do everything possible to ensure the continuation of long-term gas transit through Ukraine for the next long period. Last year, Russia supplied the EU with 38% of its gas. About half of that flowed across Ukraine.
                      Dutch gas futures spike in December, reflecting worry that Russia will not renew its gas transit contract with Ukraine, reports Fortune magazine. For now, European natural gas prices [have] reached their lowest in at least a decade, Fortune reports in a story headlined: Race to the Bottom: The U.S.-Russia Gas War Has Sent Prices Plummeting in Europe.
                      Igor Kolomoisky tells Novoe Vremja that he was misunderstood when he told an earlier interview that he could bring his arch nemesis, Valeriya Gontareva, back to Kyiv from London by private order to answer a prosecutors questions about the 2016 nationalization of his bank, PrivatBank. It was taken out of context, he says. Instead, he meant to communicate that he could send his private jet to pick her up in London. Referring to the former governor of Ukraines central bank, he asked: Why should I kidnap her? Why? To marry her secretly?
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                      • UKRAINE BUSINESS NEWS
                        Aid to the Azov is to be the focal point of todays EU-Ukraine summit in Kyiv.The leaders will announce the first concrete support measures...to resolve infrastructure problems with roads, railways, what could be the future of the port of Berdyansk, an EU diplomat briefed reporters in Brussels Friday ahead of the annual meeting. The EU will open a project office in Mariupol and provide more funds for demining. In what is to be one of their last high-level political events, Donald Tusk, outgoing European Council President, and Jean-Claude Juncker, outgoing European Commission President, represent the EU.
                        Naftogaz is ready to go to capital markets with a new Eurobond this week, says Andriy Kobolyev, CEO of the state oil and gas company. We have everything ready to tap the market next week, Kobolyev told reporters on Friday. We have large international banks, which are ready to invest substantial money in this issue - more than $ 100 million dollars, but we need permission.
                        Naftogaz needs authorization from the Cabinet of Ministers. Last November, the government authorized Naftogaz to borrow at rates up to 10.9%. That launch was pulled after Russias seized three Ukrainian Navy boats near the entrance to the Sea of Azov. Last week, Ukraines railways, Ukrzaliznytsia, borrowed $500 million via a five-year Eurobond placement at 8.25%
                        Greater foreign investor demand for Ukraines bonds saves the country money.Adamant Capital reports on the first five months of this year: Debt servicing expenditures were up only 8% y-o-y compared to an expected 25% rise.
                        Foreigners bought 34% of the 8 billion hryvnia treasuries sold at auction last week, reports the National Bank of Ukraine. With this $100 million injection, foreign holders of bonds rose to UAH 60.12 billion, the equivalent of $2.34 billion. Since Jan. 1, foreign investment has increased in the treasuries, which carry interest rates of 17-18%. Partly due to this influx, the hryvnia has appreciated by 6.5% against the dollar this year. In Kyiv, some bank clients encounter a shortage of hryvnia when they try to sell dollars.
                        For the first time since 2014, Ukraines net foreign exchange reserves have topped $10 billion. Alfa-Bank reports: Net FX reserves (gross reserves excluding debt to the IMF) surpassed USD 10 bln for the first time since 2014, with their end-June amount estimated at USD 10.6 bln.
                        With Ukraines GDP expected to hit $150 billion this year, the nation is on track to record 60% cumulative GDP growth since 2016, when it was $93.4 billion. Over the last four years, the hryvnia dollar exchange rate has varied little, staying largely within a 25-26 band. In 2013, Ukraines GDP peaked in dollar terms at $183 billion. But, from 2009 to 2013, the exchange was fixed at 8 hryvnia to the dollar, an artificially high rate.
                        Russias Bid to Win a Firmer Foothold in Ukraine Is Falling Flat headlines Bloomberg in an article about how Ukraines pro-Western parties are to win a comfortable majority in the July 21 Rada elections. In recent weeks, the Kremlin has dangled cheaper gas prices, brokered a small prisoner exchange, and has seen pro-Russian investors buy a Ukrainian TV station. The push, however, has fallen flat, Bloomberg concludes. Polls 12% support for pro-Russian parties, down from the 30-33% pro-Russian party votes in elections from 2006 to 2012.
                        In the latest hit to Russias image as a reliable energy supplier, Shell Deutschland said Friday that oil supplies on the Druzhba pipeline again were halted due to chloride contamination. As Handelsblatt newspaper first reported, the contamination was detected at the PCK refinery at Schwedt, on the Oder River border with Poland. PCK shareholders include Rosneft Deutschland, Shell Deutschland and AET. Igor Demin, an adviser to the president of Russias Transneft, told RIA Novosti news agency on Friday, July 5, that Polish and German operators of the Druzhba pipeline system are accepting Russian oil according to plan. In April and May, Transnefts silence and misleading statements cost Western oil companies millions of dollars.
                        From Odesa, Texas to Odesa, Ukraine? The first delivery of US oil to Ukraine took place over the weekend with docking on Saturday of the Wisdom Venture from the US Gulf Coast. The load of 75,000 tons slightly more half a million barrels is to be shipped 400 km northeast, on the Odesa-Kremenchuk pipeline, for refining at Ukraines sole working refinery. The second load of American oil is expected next month. Last month, Russia imposed a permit system on oil exports to Ukraine.
                        With iron ore prices almost doubling this year, it is more profitable to sell iron pellets than to make steel, writes Oleksiy Blinov, research head for Alfa-Bank Ukraine. Ukraines average daily steel output in June was down 8% ove May, to 54,200 tons. Referring to Ukraines mine-to-blast furnace companies, he writes: This motivates vertically integrated companies to sell a raw product, instead of loading steelworks.
                        An electronic customs designed to minimize opportunities for corruption can be launched by next summer, says Maxim Nefyodov, the new head of the State Customs Service. In his previous post, as deputy minister of Economic Development and Trade, Nefyodov implemented the ProZorro electronic procurement system and ProZorro.sale for privatization auctions. Today, Ukraine has enough funding from Western nations and enough Ukrainian IT experts to set up e-customs within a year, Nefyodov said in Lviv Friday, hours after the Cabinet of Ministers confirmed him in the job.
                        Nefyodovs five priorities for customs are: making data electronic, changing personnel, improving customs equipment, integrating into the European customs union, and drafting a customs legal code. Customs officials will be hired on short- and mid-term contracts that will be renewed based on performance, he says in a lengthy interview with Ekonomichna Pravda.
                        Concorde Capitals Zenon Zawada writes: We are confident that Nefyodov is serious about reforming customs and has both the will and the skill to do so. Nefyodov will have accomplished a revolution in Ukraines notoriously corrupt and ineffective customs service even if he accomplishes just a third of his proposals.
                        Ukraine has become a world hub of smuggling cigarettes into Europe,Aleksey Goncharuk, deputy chief of staff for President Zelenskiy said Friday at a meeting in Uzhgorod with customs officials. With Zelenskiy and Nefyodov in attendance, Goncharuk said: From China, from the Emirates through Odessa, from Belarus, from Moldova, from uncontrolled territories through Ukraine, through wilderness areas, illegal cigarettes go to Europe.
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                        • UKRAINE BUSINESS NEWS
                          Dovetailing with President Zelenskiys plan to rebuild the government-controlled half of the Donbas, the EU provided 119 million in new aid to Ukraine on Monday. It is largely focused on the nations war-affected southeast and Azov seaports. Much of the concrete assistance will be funneled through the European Investment Bank or EIB:
                          5 million for demining
                          11 million to promote small and medium enterprises
                          20 million to rebuild trolley services in Mariupol, Melitopol, and Berdyansk
                          27.7 million for humanitarian and educational aid
                          45 million to rebuild Mariupols sewage and lighting systems
                          To reduce the geographical isolation of the Sea of Azov, the EU is funding feasibility studies that could unlock 470 billion in loans from the EIB and other sources to upgrade the railroad line between Zaporizhia and Mariupol and to upgrade the 420 km east-west road between Mariupol and Kherson. Johannes Hahn, the EUs Commissioner for eastern Neighborhood Policy, said: The additional support to the Sea of Azov region is a strong sign of EU solidarity aimed at both alleviating the humanitarian situation and promoting economic opportunities for the people living in the region.
                          In a farewell visit to Ukraine, outgoing European Council President Donald Tusk accompanied Zelenskiy Sunday on a trip to Stanytsiya Luhansk, a town where crossing the line of control is blocked by a blown bridge over the Severski Donetsk river. "We want to rebuild this bridge, Zelenskiy said. We will find the money and promptly build it.
                          Separately, the US government is reviewing engineering bids to build piers, dry docks, and warehouses at the two main Azov ports Berdyansk and Mariupol.Last week, the Azimut company started dredging Mariupol ports approach channel and berth area. In the first dredging in a decade, 2 million cubic meters of silt are to be removed by the end of this year.
                          From Reni on the Danube to Mariupol on the Azov, Ukraines Sea Ports Authority is preparing to lease to private businesses 180 real estate properties in 12 ports. Aiming for transparent procedures through ProZorro, the Authority is dividing the properties into two groups: berths, warehouses and loading complexes used to operate the ports; and ancillary properties empty buildings or vacant lots that can be put to productive use. Details will be on the Ports Authority website.
                          The EU also reaffirmed on Monday its willingness to disburse the second tranche of 500 million in macro-financial aid pending Ukraine meeting a checklist of reforms. Last April, Finance Minister Oksana Markarova said that half of the reforms have been accomplished. This summer, three more are underway: a competitive electricity market, an independent, modernized customs service, and a High Anti-Corruption Court.
                          Ukraines new High Anti-Corruption Court starts work Sept. 5, President Zelenskiy told visiting EU leaders Monday. The court will begin considering cases of top corruption, in a building, by the way, on Peremoha Avenue, he referring to Kyivs Victory Avenue. That is very symbolic because we are not just interested in fighting against corruption, but in the victory over it. On May 7, the judges elected Olena Tanasevych as head of the Court.
                          Naftogaz starts meeting today with investors in London and Frankfurt, preparing to place 5-year euro-denominated Eurobonds, reports Interfax-Ukraine. Bookrunners are Citibank and Deutsche Bank. Naftogaz of Ukraine expects early cabinet resolution to enter the Eurobond market, Interfax, referring to Cabinet of Minister's authorization needed to place the bonds.
                          Aggressively pumping natural gas into Ukraines underground storage facilities, Naftogaz reached the 45% mark on Saturday, with 14 billion cubic meters in storage. Naftogaz CEO Andriy Kobolyev says the company needs to borrow money to top off the tanks -- 20 bcm total. At that level, Ukraine will have enough gas for next winter and will approach the September gas transit talks with Gazprom from a stronger bargaining hand. Last year, Ukraine consumed 32.3 bcm of gas, of which 10.6 bcm was imported.
                          With demand hot for government hryvnia bonds, ICU has opened its first personal service office in Kyiv dedicated to helping walk-in customers buy hyrvnia treasuries. Located on the ground floor of Leonardo Business Center, the office will make minimum sales of UAH 100,000 (currently $3,906) and will charge a service fee of $25, ICU managing partner Konstantin Stetsenko tells Interfax-Ukraine. According to Stetsenko, the tax-free bonds pay annual interest rates of 1718% in hryvnia and 57% in dollars. Comparable bank deposit interest rates are 15% and 2-3%. Bank deposit interest earnings are taxed.
                          To catch the eyes of foreign investors, the Finance Ministry plans to increase 3-5 fold its issuance of 5.5-year domestic bonds, to the equivalent of $1-1.5 billion, reports Interfax-Ukraine. At this volume, the bonds would be indexed and more readily traded on the secondary market. Tatyana Popovich, Alfas director of capital markets, says inclusion on an index draws more foreign investors.
                          Britains IWG plc, formerly Regus, will open next month the first phase of a nine-floor, 600-workplace, 6,100-square meter office center in Maidan Plaza, the landmark central Kyiv building originally known as the Trade Unions Building. Operating under IWGs Spaces Brand, the center will offer networking events, courses and business lectures. Spaces is a place that is designed to unite entrepreneurs and provide ideal conditions for creating new ideas, launching startups and developing a successful business, says Yulia Litvinenko, Spaces Ukraine director. Operating as Regus in Kyiv since 1998, IWG has eight business centers seven on the right bank, and one, Silver Breeze, on the left bank.
                          With the average vacancy rate in Lvivs shopping centers at 2.9%, four new shopping centers are to open over the next 18 months, Oksana Gavrilevich, the analyst for OTG commercial real estate brokers, tells Interfax-Ukraine. The new centers will add 34,600 square meters of gross leasable space, expanding the citys total retail area by 9%. The two biggest centers are Arsen, at 60 Chervona Ave., with a leasable area of 24,800 square meters; and Kinescope, on UPA Heroes Street, with a leasable area of 8,600 square meters.
                          Sviatoslav Vakarchuk, the Ukrainian musician whose group may place third in the July 21 Rada election, shares with President Zelenskiy a desire to stick to an aid-for-reforms program with the International Monetary Fund, Reuters reports. For me, the IMF is like antibiotics. You dont like it, and you want to stop using as soon as possible, but if you have a real bacterial infection you take it because otherwise, youll get worse, said Vakarchuk, who is widely seen as a parliamentary coalition ally of Zelenskiy.
                          Medical tourism to Ukraine is increasing, with 120 clinics receiving foreign patients and the average bill hitting $2,500, Violetta Yanyshevska, head of the Ukrainian Association of Medical Tourism, told an industry round table last week, reports Interfax-Ukraine. Top areas are reproductive treatments, plastic surgery, dentistry, sanatorium treatments, physical rehabilitation, treatment of eye diseases, heart surgery and cell therapy.

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                          • UKRAINE BUSINESS NEWS
                            Oleksandr Vlasov, State Fiscal Service commissioner, fired on Tuesday the heads of the four customs offices bordering the EU - Volyn, Lviv, Zakarpattia and Chernivtsi. At the same time, President Zelenskiy ordered measures to modernize customs and to cut corruption. One step would synchronize data bases with neighboring countries. Maxim Nefyodov, the new head of the Customs Service, cites a typical case: Eurostat shows imports of 160 million in shoes from Ukraine in 2018. Ukraines Customs Service reports exports of 40 million
                            Norways Scatec Solar closed financing Monday on a 54 million, 54 MW solar station in Kyiv region, nearing Scatecs goal of investing 350 million in Ukraine this year. The new project, located in Bohuslav, two hours south of Kyiv, is funded partially by FMO, the Dutch development bank, and GIEK, Norways Export Credit Guarantee Agency. With Bohuslav, Scatec has five projects under construction in Ukraine. The 336 MW total represents one-third of Scatecs solar plant construction worldwide this year.
                            The EBRD recently signed a 19.7 million loan to partially fund another Scatec solar project a 56 million, 55.4 MW plant in Chyhyryn, a village 65 km south of Cherkasy city. Funding also comes from Swedbank Internationals Swedish Fund and the Northern Ecological Finance Corporation, or NEFCO. The EBRD funds two other Scatec solar projects totaling 77 MW one also in Cherkasy and another in Mykolaiv.
                            Cutting solar energy tariffs by 25% on Jan.1 will render many new solar projects financially unviable, Magnus Johansen, Ukraine business development manager for Scatec Ukraine, warns in an interview with Interfax-Ukraine.In Ukraine, solar developers often have to pay to build connections with the national grid. He tells the UBN that in southern Ukraine, where solar irradiation is the highest, the grid is increasingly saturated, forcing developers to migrate north to sites in central Ukraine. He predicts: With the implementation of the proposed auction scheme (with the mentioned tariff differences), you will likely see a larger shift of international investors into wind (vs solar) projects.
                            Dniprovska, a major poultry producer, signed a 20 million loan with EBRD Monday to expand and upgrade its chicken slaughterhouses to win certification to enter the EU market. With 7% of Ukraines chicken market, the Zaporizhia-based company exports to the Middle East, Asia, Africa, and Oceania.
                            Ukraines wheat harvest is to rise by 13% this year, to 28.2 million tons, according to a Reuters poll. Exports should rise by 18%, to 19.1 million tons. Russias wheat harvest should increase by 9% to 78.5 million tons. Russias exports should rise by 2%, to 36.6 million tons. In Kazakhstan, Central Asias largest grain producer, the wheat harvest is expected to drop by 2%, 13.7 million tons. Exports should drop by 12%, to 7.5 million tons. As of Monday, Ukrainian farmers threshed 7.3 million tons of winter wheat, one third of the forecast.
                            Preparing for a repeat of last years grain exports of 50 million tons, Ukrzaliznytsia says that, for the first time since 2013, the railroad has a reserve of freight cars and locomotives. Yevhen Kravtsov, CEO of UZ, says it has 130 locomotives and several thousand freight cars in reserve.
                            Freight wagons move through the national rail network at 80 km a day 40% of international norms, reports Our Car, a freight wagon monitoring project of the Center for Transportation Strategies. The main causes of delays for all types of cars are the same: the lack of locomotives and waiting to form freight trains, reports the Center, an independent transportation consultancy.
                            Big privatizations can start, following a ruling by a Supreme Court unit which upheld the process of appointing privatization advisers for five state-owned companies. Almost one year ago, one legal challenge to the State Property Fund ended up freezing the entire process last December. In what looks like the Court following the election returns, the Supreme Court decision was published June 26 -- six days after President Zelenskiy publicly promised business leaders an aggressive program to privatize large state companies.
                            It is legal for labor contracts in Ukraine to stipulate salaries in dollars or euros,the Supreme Court of Ukraine rules. While salaries can be fixed in foreign currencies, payment must be made in hryvnia. In May, the average monthly salary was UAH 10,239, currently $400. This is double the level of 2015.
                            Enjoying strong demand for hryvnia bonds at the weekly auction on Tuesday, Finance Ministry pushed down all yields on its short term bonds, by 20 to 34 basis points. The new cutoff rates for the treasuries were: 17.24% for three months; 17.6% for seven months; 18% for 12-months; and 16.75% for three years. The cutoff rate for 5 year bonds, a category the Ministry is pushing, stayed the same, at 15.85%. Overall, investors bought bonds worth UAH 6 billion UAH, the equivalent of $235 million, one quarter less than the UAH 8 billion sold last week.
                            Ukraines air travel boom continues with five of the biggest airports recording double-digit passenger growth during the first half of the year, compared to the same period last year. Growth champions are: Lviv +46% to 950,000 passengers; Zaporizhia +33.5% to 230,000; Kharkiv +26% to 553,000; Kyiv Boryspil + 20% to 6.7 million; and Kyiv Sikorsky +16% to 1.3 million. As usual, Odesa, the nations fourth busiest airport, lags on all fronts -- opening its passenger terminal, completing its new runway, and counting its passengers.
                            Bolt, the global taxi service, plans to open an R&D center in Kyiv UNIT.Citynext month. Operating in 30 countries and 50 cities, the Estonia-based digital taxi company, qualified last year as a unicorn a startup valued at $1 billion. Known until March as Taxify, the company operates in Kyiv, Kharkiv, Lviv and Odesa. Taras Potichny, the regional manager, predicts the new Kyiv office will give impetus to the launch of new projects, new promising partnerships, new initiatives.
                            On Monday, Kyiv parking inspectors started issuing the citys first parking tickets. An inspector photographs the violation and the offending cars license plate. Images and information are sent to the central parking office. A ticket is sent back to the inspector, who prints it on the spot. On Monday, inspectors wrote out fines to hundreds of violators, reports TSN. Fines range from the hyrvnia equivalent of $10-20. By the end of this year, towing is to start.
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                            • UKRAINE BUSINESS NEWS
                              The central bank canceled limits on repatriating dividends yesterday, erasing a cap of 12 million per month. The National Bank of Ukraine may have timed the liberalization to break the hryvnias rise against the dollar, a 6% increase this year. But during the first half of this year, companies only repatriated $1.27 billion in dividends, 4% of total bank customer demand for foreign currency.
                              Dragon writes: By canceling the monthly dividend repatriation limit, the NBU lifted one of the barriers that kept new foreign investors from entering Ukraine...The NBU seems determined to remove all existing restrictions and transition to the free movement of capital.
                              Dragon Capital has upgraded its GNP growth forecast for this year to 3.2% y-o-y, nearly matching last years growth rate of 3.3%. Previously, Dragon and the State Statistics Service forecast 2019 growth at 2.5%. Dragon cited favorable commodity prices. Over the last year, Europes natural gas price has almost dropped in half. Iron, a major export, has nearly doubled in price. With food exports at record levels and foreign purchases of Ukrainian bonds pushing down debt service costs, Dragon raised by 7.4% its year-end exchange rate forecast -- to 27.5 hryvnia to the dollar.
                              With inflation falling to 9% in June, Ukraine fell out of the group of 20 countries with the highest inflation, reports the National Bank of Ukraine. Ukraine now shares 22nd place with Eritrea and So Tom and Prncipe. In Europe, Ukraine is still the leader. Tomas Fiala, Dragon Capital CEO, said Wednesday: We also expect inflation to fall below 8%.
                              Riding the near doubling of iron ore prices this year, Ukraine increased iron export earnings by 24.5%, to $1.7 billion. Over the same January-June period, exports by volume rose 9%, to almost 20 million tons. In May, iron ore exports jumped 29% over April levels. Top markets were: China 25%; Poland 14%; and the Czech Republic 11%. Due to a mining disaster in Brazil in January, Chinese iron prices for September delivery recently topped $130 a ton, a six-year high.
                              Despite the iron boom, exports of all ferrous metals contracted by 11% during the first half of the year, to $4.8 billion. During the first half of this year, ferrous metals accounted for almost 20% of Ukraines total exports, down from 23% in the first six half of 2018, reports the State Fiscal Service.
                              Egg exports are up 69% y-o-y for the first half of this year. Ukraine exported 75,400 tons of eggs in the shell, reports the Fiscal Service. A fast-growing business, egg exports grew last year by 25%.
                              Poultry exports are up 38% y-o-y for the first half, to 211,200 tons. In monetary terms, exports rose 27.5%, to $307 million. Top markets are: Saudi Arabia - $76 million dollars; the Netherlands - $53 million; and Slovakia - $33 million.
                              Erratic weather may cut this years fruit and berry harvest by 25%, says Dmytro Kroshka, chairman of Ukraines Agrarian Export. Growers complain of the rainy spring, dry summer, and hail due to rapid temperature changes, he told reporters. The harvest of stone fruits, like cherries, is to fall by 15%, to 38,000 tons. Production of apples, a major export last year, may fall 30%. On the other hand, blueberry and walnut harvests may grow by 30% this year.
                              President Zelenskiy vowed Wednesday to turn Chornobyl into a growth point for Ukraine, implying that he will clear bureaucratic hurdles that hold up solar station investment and river-based tourism. Today Ive signed a decree that will be the beginning of the transformation of the exclusion zone into one of the growth points for new Ukraine, he said at the handover ceremony for the safe confinement structure for the number 4 nuclear reactor unit at Chornobyl. The 1.5 billion shelters, often called the largest movable land-based structure ever built, was constructed by NOVARKA, a French consortium that included Vinci Construction and Bouygues Travaux Publics.
                              After shipowners repeatedly complained of shakedowns for bribes by state Environmental Inspectors, Prime Minister Groysman suspended Wednesday all testing of ship ballast water and asked Wednesday for a National Police investigation. Groysman ended inspections in April, but shakedowns continued. With business chambers estimating the corruption takes a $200 million toll on the economy, the Cabinet of Ministers is to consider next week a system that protects the waters of Ukraines Black Sea ports and protects shipowners from bribe demands. Maxim Nefyodov, the new Customs head, writes on Facebook that port delays can cost a shipping company tens of thousands of dollars a day, prompting some to reroute to Constanta, Romania, or Varna, Bulgaria.
                              Poland may suspend importsof Russian pipeline oil for the third time in three months due to contamination by organic chloride, a dangerously corrosive agent. After the earlier suspensions, Poland now tests incoming Russian oil every three hours, Igor Wasilewski, CEO of PERN Przyjazn SA, Polands state pipeline operator, told reporters in Gdansk Tuesday. In May, Poland got through the crisis by importing 2.2 million tons of clean oil through Gdansks Naftoport. Now, Poland should build a 250 km pipeline south from Gdansk to Plock, PERNs other refinery, which depends on Russias Druzhba pipeline. Fully cleaning both refineries will take six to eight months, he estimated.
                              Russias Duma unanimously voted to ban imports of Georgian wine and mineral water and to ban labor remittances to Georgia. This allowed President Putin to play the peacemaker Tuesday and reject the sanctions. All flights between both countries ended Monday, cutting Georgia off from its top source of tourists. With economic damages estimated at $300 million, Georgias lari, slipped to a record low of 2.85 against the dollar on Wednesday, taking its year-to-date loss to 7.5%.
                              Facing the loss of as many as 1 million Russian tourists this year, Georgian tour operators and allies including former President Poroshenko are campaigning: #SpendSummerInGeorgia. Irakli Sakhamberidze, general director of Travel In European Union travel agency, tells Al Jazeera he wants the Georgian government to win direct flights from the US and cheap flights from Israel, and to fast-track the entrance of Irish budget airline Ryanair. He says: If we eradicate these problems, we can substitute the 1.4 million Russian tourists very easily. In Kyiv, Aleksandr Alba, owner of the discount airline SkyUp, tells the UBN that next spring he plans to double flights from Kyiv Boryspil to Batumi, to twice a day, and to increase Kyiv-Tbilisi flights, to daily. He says: Georgia is our main foreign destination.

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                              • UKRAINE BUSINESS NEWS
                                Zelenskiys election as President contributed to a dramatic upswing economic optimism, the International Republican Institute says, citing their new June 13-23 nationwide poll. Of the 2,400 respondents, 48% predicted that Ukraines economy will improve over the next year more than triple the 14% who felt that way in September. Similarly, between the two polls, Ukrainians pessimistic about the future dropped almost in half -- from 71% to 39%.
                                Ten days before parliamentary elections, President Zeleskiy watched in his office Thursday as Andriy Favorov, head of gas sales for Naftogaz, signed a decree lowering household gas prices by 10.4%. Cutting prices is possible because Europes natural gas import price has dropped by 60% since its four years high last September. Andriy Gerus, the presidents representative to the Cabinet of Ministers, estimates Ukraines total price reduction from May to July is 21%. Lower gas prices help the government in its fight to bring inflation down to 8% at the end of this year.
                                Looking beyond the July 21 Rada election, Timothy Ash writes from London in a note to investors: Much will depend on a new coalition quickly being formed in the Rada, then a reform-oriented cabinet, and an uptick in the reform agenda. He concludes: The Ukrainian macro backdrop, political landscape and opportunity on the economic policy front [has not been] this clement/hopeful for many years in my time covering Ukraine (32 years now!).
                                Diane Francis, another veteran Ukraine watcher, writes in Torontos Financial Post about the post-election political clash: Then the battle begins, as the odious oligarchy inside Ukraine wont give up any easier than the Russians.
                                Aivaras Abromaviius, the reformist former minister of economic development, was elected Thursday supervisory board chairman of UkrObronProm, the massive state-owned military-industrial complex. An advocate of transparency, Abromaviius immediately said an international audit of the conglomerate would start in September. At a Board meeting attended by representatives of the US embassy and anti-corruption groups, he said: We have many tasks that we must complete as soon as possible -- one of the highest priorities is to conduct an audit of UkrOboronProm.
                                The two tanker loads of North Dakota oil docking in Odesa this month are part of a much larger push by the US to sell oil to Europe, Reuters reports in a story headlined: U.S. oil makes it to Ukraine in another blow to Moscow. Following the 80,000 tons of US oil unloaded in Odesa last weekend, another similarly sized shipment is expected in Odesa July 24. More US deliveries to Ukraine are likely in August, Reuters reports from London and Moscow. Partly in reaction to the disruption caused by contaminated oil from Russia, Reuters says, U.S. supplies to Europe have risen steadily since May and have remained above 2.5 million tons a month.
                                A tender is to be posted for dismantling unstable parts of the Soviet-era shelter over the damaged nuclear reactor at Chornobyl. A new 1.5 billion New Safe Confinement structure covers the old shelter. Dismantling should take place in the early 2020s, Sergey Kondratenko, the deputy chief engineer of the new confinement facility, tells Ukrinform.
                                Building on the global success of HBOs Chernobyl series, President Zelenskiy signed a decree to turn the disaster site two hours north of Kyiv into a tourism magnet. Ticketing will be electronic, new checkpoints will be opened, restrictions on filming will be dropped, new walking paths and river tours will be inaugurated, and cell phone service will be expanded into the largely uninhabited Exclusion Zone. Until now, Chernobyl was a negative part of Ukraine's brand - it's time to change it, Zelenskiy said on a site visit Wednesday. We have to show this place to the world: scientists, ecologists, historians, tourists.
                                Ukrainians and Moldovans should be able to visit each others countries carrying only their internal ID cars, President Zelenskiy proposed Thursday at a meeting in Kyiv with Moldovan Prime Minister Maia Sandu. After Ukraine started similar no-visa, no-passport reciprocal deals with Turkey and Georgia, tourism and trade accelerated. Ukraines trade with Moldova is expected to hit $1 billion this year.
                                Moldova and Ukraine now have six joint border control posts, compounds where officials of both countries work side by side. The newest one, at Palanca, Moldova, a one hour drive west of Odesa, cost5.6 million and is designed to process 570,000 cars and 1.2 million people a year -- double previous levels. Built largely with EU money, this border crossing has its own website, touting t as fast, comfortable and efficient.
                                Over 4500 Russians banned from entering Ukraine in 2019, trumpets TASS, the Russian news agency. Buried in the story, Andriy Demchenko, spokesman for Ukraines State Border Guard Service notes that 620,000 Russians were allowed entry in the first half of the year. From this perspective, seven-tenths of one percent of Russians were denied entry.
                                Investing $45 million in a new terminal and a recovered runway, Zaporizhia airport is on track to become southeast Ukraines leading airport for the 2020s. On Oct. 20, city officials are to inaugurate the new cement runway and the new steel and glass terminal, capable of handling 400 passengers an hour. Already, traffic is up by one third for the first half of the year, to 230,000 passengers. This year, SkyUp started summer flights from Zaporizhia to Barcelona, Egypt, Montenegro, and Turkey. Depending on passenger numbers, SkyUp may base jets in Zaporizhia next year.
                                By contrast, traffic at rival Dnipro airport is up by only 9%, to 149,000 passengers for the first half of 2019. Located 85 km north of Zaporizhia, Dnipro has nearly 1 million inhabitants, 30% more than Zaporizhia. Five years ago, Dnipro was Ukraines fifth busiest airport, with six times the passengers of Zaporizihia. But, under the control of Igor Kolomoisky, Dnipro has been starved of investment, missing out on Ukraines discount airline revolution and recording the lowest growth of Ukraines top 10 airports.
                                Located on the Donetsk Highway, Zaporizhia airport bills itself as the airport for Ukraines Southeast. On July 1, the Cabinet of Ministers decided not to reopen for civilian flights the airport in Mariupol, the largest city on the Azov. Hours earlier, 30 km east of the city, separatists shelled a Ukrainian Army ambulance killing the driver and a doctor. BiznetTsenzor reports the Cabinet decided that in the conditions of the existing Russian aggression it is not possible to guarantee the safety of passengers on a permanent basis. Eighty km west of Mariupol, the Azov resort city of Berdyansk has a Soviet-era airport. But donors and Kyiv authorities resist investing in a second airport for Zaporizhia region.
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