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Tuesday, January 19

Price Controls Slapped on Gas…2020 Vision: Farm Production Fell by 11.5%...UZ Moves Half of the Nation’s Cargo…Chinese Demand Pushes up Steel Prices, Production…Gangsters Try to Sabotage Sale of State Titanium Co…Flood of Square Meters Could Depress Office Rents in Kyiv…Failure to Procreate: Two Ukrainians Die for Each Baby Born
James Brooke
by James Brooke
UBN Morning News is reported and written by James Brooke, a former New York Times foreign correspondent and Bloomberg Moscow Bureau Chief

With gas prices spiking during frigid weather in Europe, Ukraine is cutting household gas prices by 30% and capping them until the end of March, according to a decision posted yesterday on the Cabinet of Minister portal. The decision came after scattered protests across the nation.

This reintroduction of price controls is expected to rule out Ukraine receiving an IMF aid tranche during the first quarter. Timothy Ash writes: “Hard to see the IMF lending while this cap remains in place.”

Corporate farms suffered a 14% yoy drop in crop harvests in 2020, the State Statistics Service reported yesterday. While this export-oriented sector was hardest hit, Ukraine’s overall agricultural production fell by 11.5% last year. This includes: crops, animals, family farms and company farms. Northern regions had the smallest declines: Rivne minus 3%; Sumy minus 4%; and Chernihiv minus 5%. Due to drought, the biggest drops were in south and central Ukraine: Cherkasy minus 24%; Kirovograd minus 32%; and Odesa minus 38%.

Ukrzaliznytsia trains carried 61% of the Ukraine’s grain for export last year, the railroad reports. Overall, UZ moved 35.2 million tons of train last year – 87% for export. Grain accounted for 11.5% of the railroad’s cargo tonnage last year.

Ukrzaliznytsia, the workhorse of Ukrainian logistics, carried 40 million tons of cargo between Ukraine and the EU last year, the state railroad reports. One quarter of that traffic was with Poland. Exports to the EU accounted for 28 million tons, imports 4 million tons, and transit 7.5 million tons. Other than to say that cargo between Romania and Ukraine increased by 21%, to 4 million tons, the railroad did not give comparative figures for 2019. The other three big destinations last year were: Slovakia, Czech Republic, and Italy.

Rail container traffic grew by 11%, to 425,000 TEUs in 2020, Ukrzaliznytsia reports. The portion of traffic carried in dedicated container trains jumped by 41%, to 230,000 TEUs. Direct container trains from China to Kyiv started June 8 and rose to the frequency of almost once a week. Next month, Chinese railway operator East Line starts sending container trains to Kyiv from two logistics centers in eastern China: Nanchang, and,1,000 km to the north, Jinan.

Chinese trains passing across Ukraine to the EU “significantly increased,” UZ said. Seeking to develop Ukraine as a transportation corridor, UZ is developing new EU routes with DHL Global Forwarding and with Ukrainian companies for a multimodal ferry-train route – Turkey-Ukraine-Poland.

Fueled partly by Chinese demand, Metinvest, Ukraine’s largest private company, rode strong steel prices to report steel output growth by 9% yoy last year, to 8.3 million tons. Its Inhulets mining and processing plant in Kryvy Rih, reported a 8% yoy growth in production of iron ore concentrate, to almost 12 million tons. Mariupol Illich Iron and Steel Works, in Donetsk region, increased production of rolled steel products, by 12.4% yoy, to 3.7 million tons.

Looking ahead, Concorde Capital’s Dmytro Khoroshun writes: “We expect Metinvest to continue producing steel at daily rates of at least 23-24 kt in January-February in order to make the most of the recently skyrocketed prices.”

Ukraine’ pig iron exports increased by 20% yoy last year to 3.1 million metric tons, reported Steelorbis news site. In value terms, exports rose 15% to $992 million. The biggest buyers were: US – 58.5%; China -22%; and Turkey – 6%.

Interpipe Steel said that it is the Ukraine’s first steel company to meet European Green Deal targets for 2050: its emissions do not exceed 250 kg of CO2 per ton of steel produced. This producer of steel pipes and railroad wheels in Dnipropetrovsk was built from scratch nine years ago involving $1 billion investments. Founded and owned by Viktor Pinchuk, the company made these announcements on the occasion of the arrival of the company’s new CEO, Artem Polyakov.

“Law enforcement agencies, former shadow owners and oligarchic groups” and attempting “to stop and roll back the privatization” of United Mining and Chemical Company, Ukraine’s state-owned titanium producer, the State Property Fund charged yesterday. If such attacks are not repelled, Ukraine could lose $430 million in budget revenues through aborted privatizations, says Dmytro Sennychenko, director of the Fund. Due to such resistance to privatization, Ukraine has about 3,000 state companies almost 30 years after the fall of communism. In the case of the mining company, 16 investors – national and foreign – have registered for a privatization auction, tentatively set for this spring.

Kyiv’s office vacancy rate grew to 12.5% in 2020, up from 9% in 2019, reports NAI Ukraine, the commercial real estate consultancy. At the same time, rents dropped by an average of 20%: to $20-30 per square meter in class A offices and to $12-23 per square meter in class B offices. In addition to the recession, the market took two hits: the addition of 80,000 new square meters and a massive shift to remote working. Largely fueled by IT companies, the volume of gross absorption – or total amount of office space leased in Kyiv — amounted to 85,000 square meters.

This year could be good for renters and tough for landlords. Plans call for developers to unleash 370,000 square meters of new space on the market – almost five times the 2020 amount. At the same time, coronavirus remains a factor. “In 2021, the remote work is likely to continue to prevail: this is fully true for the first half of the year, and from the second half of the year there is a high probability of a gradual return to work in offices,” writes NAI Ukraine. “This is a question of the speed and efficiency of vaccinations and quarantine measures. Nevertheless, experience of effective work online will bring changes to the organization of office spaces forever.”

The enhanced coronavirus quarantine – or lockdown – will not be extended after Sunday night, Prime Minister Shmygal told Interfax-Ukraine yesterday. On Monday, Ukraine returns to the milder ‘adaptive’ quarantine, a set of rules that will be in place until the end of March, he predicted. Noting high levels infection in the EU, he said: “So there is no reason to lift [Ukraine’s] quarantine. There is no need to prematurely indulge ourselves in illusions. I am sure that the quarantine will last a very long time this year.”

The government is negotiating with six vaccine manufacturers with the goal of starting vaccinations one month from now, Shmygal said. Separately, UIA has said it has prepared two Boeings to transport vaccines as cargo. Yesterday morning, 3,034 new coronavirus cases were registered, the lowest level since September. Since March, 20,869 Ukrainians have died of the virus.

In November, the pandemic’s peak in Ukraine, the number of people who died in Ukraine was up 35% yoy, to 63,440. In October, the deaths were up 17.5% reports the Civil Service. During the first 11 months of 2020, two Ukrainians died for every baby born. Deaths totaled 549,170, Births totaled 268,900.

Editor’s Note One more weekend of lockdown. Restaurants closed. Shopping centers closed. Movie theaters closed. Watched all the good movies on Netflix. What’s a young couple to do? (Fingers tap on coffee table). Why not, um, do your civic duty and procreate? With Best Regards, Jim Brooke (father of four)

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Tuesday, December 29

Foreign Debt Payments to Stay High in 2021…Chinese Freight Trains Now Come to Kyiv Weekly…UZ Wants to Lease Out Ukraine’s Busiest Rail Stations: Kyiv, Kharkiv and Dnipro…Fight Over Lithium…Bukovel Packed
James Brooke
by James Brooke
UBN Morning News is reported and written by James Brooke, a former New York Times foreign correspondent and Bloomberg Moscow Bureau Chief

Ukraine faces a second year of high foreign debt payments in 2021– $16.1 billion. This is almost double the payments expected for 2022 – $8.6 billion – and $8.9 billion in 2023, the Finance Ministry reported on Facebook. In 2020, through November, Ukraine has paid $16.9 billion for public debt principal and interest. For 2021, Ukraine will have to pay $10.9 billion domestic debt principal and interest. The country will have to pay $5.2 billion in foreign debt principal and interest

AVELLUM law firm is emerging as Ukraine’s leading advisor on Eurobond issuances, advising on $1.2 billion worth of bonds in the second half of 2020. They were: Kernel’s $300 million offering of 2027 notes at 6.75%; the Finance Ministry’s issuance of $600 million Eurobond at 6.20%, the lowest in Ukraine’s history; and Ukreximbank’s cash tender offer of $316 million.

Since freight service started in June 2020, 22 Chinese container trains have arrived at Kyiv-Liski Left Bank station, reports Ukrzaliznytsia. The trains take about two weeks to travel 9,000 km from China to here. UZ is working with Ukrainian exporters to fill trains returning to China. One month ago, UZ and DHL Global Forwarding signed an agreement to develop rail freight between China and Europe, the railroad reports.

Ukrzaliznytsia is forcing the first private freight operator on UZ tracks to charge haulage tariffs seven times those of the state railroad, reported RBK Ukraina. Earlier this month, UZ signed the first contract for private locomotives on public tracks with Lviv’s Ukrainian Locomotive Building Company. “Given the tariffs set for private traders, the pilot project could fail,” writes RBK. With private freight trains running in Poland, Slovakia, Hungary and Romania, admission of private freight trains on UZ tracks is a Ukrainian obligation under the EU Association Agreement.

To take tractor-trailer trucks off the roads, Ukrzaliznytsia plans to offer shippers the option of sending semi-trailers to the EU on flatbed wagons, Volodymyr Zhmak, the railroad’s CEO, tells Mintrans news site. A semi-trailer is a trailer without a front axle and without the tractor. By hauling semi-trailers across borders, Zhmak said the railroad would cut the wear and tear on roads, reduce lines at border posts, and ease the problem of Poland restricting permits for Ukrainian truckers.

Five or six “large domestic and foreign investors are ready to participate” in leasing some of Ukraine’s busiest rail stations, Alexander Pertsovsky, head of UZ’s ‘Passenger Company,’ tells Mintrans. After holding conference calls with investors, UZ is preparing concession agreements, with the advice of the World Bank’s International Finance Corporation. There are seven stations that are to be leased in concession: the main passenger stations of Kyiv, Kharkiv and Dnipro, and Chop, Khmelnytsky, Mykolaiv and Vinnytsia. UZ predicts it will make $2 million a year from concession payments. At smaller stations, rental spaces for ATMs, snack bars and shops are to be leased through ProZorro.Sales, he said.

Thefts of parts from private company wagons in UZ workshops has become so bad that Lemtrans has started painting its removable parts a signature lemon yellow, reported Rail.Insider. Lemtrans, the owner of the largest private fleet of freight wagons in Ukraine, also uses GPS technology to track cars. Through August, thieves hit their wagons more than 400 times. Quadro Center, another major shipper, said thieves have stolen parts from one quarter of the company’s fleet since 2019. Last month alone, UZ reported 1,156 cases of thefts of parts from freight wagons.

VR Capital, the London-based emerging markets hedge fund, is pursuing litigation against Ukrzaliznytsia over a $300 million package of defaulted loans that VR acquired two years ago at auction from Russian lender Prominvestbank, reports Reorg Research, a London financial intelligence provider. The loans had an initial principal of $153 million, but since they matured in 2015 and 2016, the accumulated fees, penalties and interest have risen to an almost equal amount. Reporter Jack Laurenson wrote that UZ has entered into talks with VR and recognizes that VR now holds the debt.

In the first quarter of 2021, DTEK Energy will launch Ukraine’s first industrial-scale energy storage system project, DTEK CEO Maksym Timchenko announced last week. US company Honeywell is building with DTEK a 1 MW energy storage system based on lithium-ion batteries, near DTEK’s Zaporizhia Power Plant. Energy storage is seen as a key to balancing the peaks and low of solar power.

With demand high for lithium for batteries, Gosgeonadr, the state Geology Service, is trying to conduct a public, online auction of two deposits – a 40-hectare site in Donetsk region and a 300-hectare site in Kirovohrad region. “However, there are attempts through the courts to disrupt open electronic bidding,” Roman Opimakh, head of Gosgeonadr, writes on Facebook. “This is in order not to pay a fair price set by open competitive bidding.” Noting that the Donetsk site may have 13.5 million tons of lithium ore, he writes: “There is a significant demand for the ‘metals of the future’ in the world market – and this includes lithium.”

The Prosecutor General’s Office yesterday charged Oleksandr Tupytsky, chairman of the Constitutional Court, with bribing a witness to make him give false testimony. The charge comes one week after Radio Svoboda posted audiotapes in which Tupytsky tried to dissuade a Donetsk businessman from testifying against another controversial judge, Viktor Tatkov.

The Cabinet of Ministers approved yesterday seven production-sharing agreements with private and state companies for the production of oil and gas. Only one foreign company is involved – Houston-based Aspect Energy, a business in partnership with Sigma Bleyzer. A Canadian company, Vermilion Energy, dropped out in November, citing low oil and gas prices. Companies have until January 7 2021 to sign their agreements.

Ukraine’s biggest ski resort Bukovel is fully booked through the New Year’s holidays, Reuters reports from the Carpathians. With EU skis closed or inaccessible to Ukrainian tourists, Bukovel is jammed. The resort, which covers five mountains, usually draws 2 million visitors in the winter. Unlike some other European countries, Ukraine has not imposed any restrictions on travel within the country.

Editor’s Note: It’s Bukovel in a nutshell. If readers wonder why retail sales are up, foreign reserves are up, foreign trade is almost balanced, and the hryvnia is strong, the answer can be seen on the crowded ski slopes of Bukovel. Cooped up because of corona, Ukrainians have a hard time traveling outside the country this winter. So, money that would be spent in the Alps or the Dolomites is rolling through the Carpathians. One legacy of Covid may be more international standard hotels, roads and airports for Ukrainians who want to vacation at home. With Best Regards, Jim Brooke

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Monday, December 7

Rada Passes Compromise Anti-Corruption Bill…Ukraine Bonds Perform Well on World Markets…Russia Restarts Nord Stream 2…China Expands Trade and Tech…Ukraine Modernizes Planes, Trains and Trucks
James Brooke
by James Brooke
UBN Morning News is reported and written by James Brooke, a former New York Times foreign correspondent and Bloomberg Moscow Bureau Chief

In a bid to unlock billions of dollars in low interest IMF loans, the Rada restored accountability for false asset declarations, albeit a watered down version. Approved Friday, the new bill raised the limit for ‘forgetting’ an asset 9-fold, essentially from a car to a house. Officials who are not caught in two years, get off free. Fines range from $1,500 to $3,000. The possibility of imprisonment is lifted.

Anti-corruption groups have protested. President Zelenskiy wrote on Facebook: “It is a pity that the responsibility is still not as tough as we would like.” But he made clear he would sign the compromise bill. There was no comment from the IMF.

Ukrainian bonds are among the best performing in emerging markets in the post-US-election rallyreports Tellimer Research. “Sovereign bonds lead the way, tightening 100-150bps in November and outperforming EM indices, despite uncertainty over IMF funding and the devastating effect of coronavirus on the Ukrainian economy,” writes analyst Kiti Pantskhava. Among the corporates, Kernel and Metinvest are the best performers.

Russia restarted construction of the Nord Stream 2 gas pipeline on Saturday, Ukraine’s Hromadske television channel reports, citing a document from the Germany’s Federal Maritime and Hydrographic Agency. Work on the Russia-Germany trans-Baltic line stopped almost one year ago due to US sanctions. To get around sanctions, the pipelines company is using Russian ships in an effort to finish the 1,222 km pipeline, which is 90% complete.

Germany’s government sees US sanctions against Nord Stream 2 as illegal and does not predict any change under a Biden administration, German Foreign Minister Heiko Maas tells Der Spiegel. “”We have no illusions. There are almost no differences between Republicans and Democrats on this issue,” he said. He attributed US opposition to the pipeline to US interest in selling liquefied natural gas to the EU. A direct Russia-Germany pipeline would render the existing pipeline across Ukraine redundant, depriving Ukraine of $2-3 billion in annual transit fees.

With Britain apparently heading toward a ‘hard Brexit’ three weeks from now, Ukraine is asking the UK to negotiate a bilateral trade deal to lower tariffs.  On Friday, Prime Minister Shmygal asked UK Ambassador Melinda Simmons to start trade talks this month, even before the new bilateral trade treaty is ratified by the Rada. Signed in October by President Zelenskiy, the new trade treaty essentially continues on a bilateral level the trade rules that already exist for the UK as part of the EU.

Representatives of over 100 Ukrainian companies took part remotely in a China-Ukraine investment fair, hosted in Beijing, reports china.org.cnnews site With almost 300 Chinese and Ukrainian business and government officials participating, the annual conference took on new importance this year with the emergence of China as Ukraine’s top trading partner. At the conference, the China-Ukraine Bilateral Entrepreneurs Council announced the establishment of a liaison office in Harbin, capital of northeast China’s Heilongjiang province. Harbin mayor Sun Zhe said his city has worked well with Ukraine in such fields as aerospace, new materials and modern agriculture.

Huawei Ukraine is helping the Digital Transformation Ministry open a center “for students and future entrepreneurs” at Kyiv’s Taras Shevchenko National University. “This initiative opens up new opportunities for the development of talent in the digital world,” said Ding Ning, Huawei’s deputy director of supply and service. Last July, Ding signed an agreement with Kyiv Polytechnic Institute to open an “Academy of Information and Web Technologies.” KPI wrote on its Facebook page: “The University will become a platform for promoting Huawei technologies and ideas on the Ukrainian market. Huawei company cooperates with more than 900 universities overseas on opening ICT academies authorised by Huawei.”

For the first time since Independence, Ukraine’s Defense Ministry is about to order new planes from Antonov, Strategic Industries Minister Oleh Urusky tells Radio Svoboda. “A contract will be signed between the Ministry of Defense and the Antonov State Enterprise for three An-178 aircraft, which will be the first time in Ukraine since independence,” he says. “We have never ordered new planes.” An-178 is a Ukrainian medium-haul transport jet with a range of 3,680 km, cargo load of 18 tons,  and capacity to carry 90 soldiers. Turkey and Antonov are negotiating joint production of the An-178. During the summer of 2014, at the height of the Ukraine-Russia air war over the Donbas, three Ukrainian Air Force transport planes were shot down — an Antonov An-26, an Antonov An-30 and an Ilyushin Il-76.

Calling  the condition of the state railroad’s freight wagons “catastrophic”, the Cabinet of Ministers has adopted a “program of radical renewal” — replacing all 63,000 in the state fleet over this decade, reports the Ministry of Economic Development, Trade and Agriculture. With some wagons dating back to the 1960s, more than 90% of the wagons are past their service life. Noting that 24,000 used wagons have been imported in recent years from Russia, the Ministry warns that Ukraine risks “becoming a place for railway scrap written off by neighboring countries where operating restrictions apply.”

A total renewal of the wagon fleet will generate “billions of Hryvnia of government orders for Ukrainian manufacturers, hundreds of thousands of jobs, additional GDP growth of 2% per year,” the ministry predicts. Separately, private logistics operators in Ukraine own another 50,000 wagons. Private companies complain that when Ukrzaliznytsia locomotives bring their wagons into UZ workshops, they are often cannibalised for parts, usually brake pads. Last week, UZ signed the first contract with a private company — Lviv-based Ukrainian Locomotive Company — to haul cargo on UZ tracks.

Cracking down on overloaded trucks, the National Police checked 75,000 trucks last month, almost four times the number of checks performed in November of last year. So far this year, police have 665,000 trucks, almost double last year. With about 2% of trucks fined for violating weight restrictions, fines this year have totalled $4.5 million. By this time next year, there are to be 150 ‘Weight-in-Motion’ devices installed on Ukraine’s highways.

Air cargo through Kyiv-Boryspil is down by only 10% through November, compared to the first 11 months of last year. Air cargo dropped to 33,400 tons, Anton Borisyuk, the airport’s strategic development director said Thursday. By contrast, through October, passenger traffic was down by two thirds, hitting 4.5 million. Transfer passengers were down by 85%, passengers on regularly scheduled flights were down by 78%, and charter passengers were down by 40%.

Editor’s Note:  “It’s time to start treating Ukraine’s corrupt judiciary as a criminal syndicate,” reads a straight talking essay that pops the balloon of any happy talk that the Zelenskiy government is cleaning up the courts. “Bribery is routine,” Mykhailo Zhernakov writes in an Atlantic Council Ukraine Alert. “The Ukrainian authorities should not pretend that the country’s judicial system is in any sense capable of cleansing itself. Instead, we should treat it as a criminal syndicate controlled by the enemy.” Hardly an outsider, Zhernakov is a former judge. Today, he chairs the DEJURE Foundation, a group dedicated to giving Ukraine EU-standard courts. Until that happens, Ukrainians will continue to park their money in Cyprus and foreign investors will continue to watch from the sidelines. With best regards, Jim Brooke

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Thursday, December 3

Weekend Shopping Ban Lifted…Ukraine to go to Eurobond Market for $1 billion…FDI Drops Sharply...Ship Cargo Holds Steady
James Brooke
by James Brooke
UBN Morning News is reported and written by James Brooke, a former New York Times foreign correspondent and Bloomberg Moscow Bureau Chief

Ukrainians can look forward to a normal shopping this weekend and, probably through Friday December 25, Catholic Christmas. Prime Minister Shmygal said November’s weekend shopping bans had cut the spread of the coronavirus.

Yesterday morning, 13,141 new cases were announced, down from a daily average of 16,500 late last week. However, in Kyiv Mayor Klitschko said yesterday that a record 1,735 new coronavirus cases had been confirmed. Eight months after the first cases were confirmed in Ukraine, “about 3% of Ukraine’s population of Ukraine have already had COVID-19,” Deputy Health Minister Iryna Mykychak tells Telegraf media outlet.

With a big budget funding gap looming, Ukraine may tap the international Eurobond market for up $1 billion in short term financing, Prime Minister Shmygal told the  Korrespondent news site. He asserts the IMF will announce the date of its review mission in coming days. This would indicate that the $5 billion Stand By Agreement signed six months ago is back on track. Shmygal also said the government could sell $2 billion worth of Hryvnia bonds in coming weeks. On Tuesday, the government sold $93 million worth of Hryvnia bonds.

Timothy Ash writes from London: “Surprised it took them so long given the strength of global beta which has seen Ukraine’s borrowing costs in the Eurobond market crash 200bps lower over the past month or so. The appetite for yield is so strong post US elections that people are willing to look beyond challenges in individual country stories – and in Ukraine’s case — challenges to the anti corruption agenda, which is stalling IMF lending…Markets may not be so forgiving in 2021, so they really need to use the window being provided by cheap global financing conditions to crack on with those much needed reforms. Not entirely sure why you would only do a six month issue – market feels open to 5Y or 10y deal, and not sure that six months down the line pricing will be much cheaper.”

Through October, Ukraine has attracted $221 million in new direct foreign investment — 5% of the $4.5 billion attracted during the first 10 months of last year, the National Bank of Ukraine reported yesterday. Similarly, reinvestment by foreigners also fell sharply during the same period: to $639 million, from $2.9 billion this time last year. The Central Bank reported that Foreign loans also plummeted to $219 million, from $640 million last year. Analysts put the blame on the coronavirus recession and on the stalling of Ukraine’s movement to clean up the judiciary and implement free market changes.

Corporate raiding — stealing companies through forgeries or force — is up slightly this year compared to last year, reports Ukrinform, citing data from Opendatabot, an  online registry. Through October, 751 corporate raids were recorded in Ukraine, almost the same number as for all of last year. Three quarters were attempted through forged documents. This year 45% of cases go to court.

Ukrzaliznytsia plans to spend almost $1 billion next year on repairing locomotives, cars, and track — almost three times the money spent this year. As posted on the state railroad’s site, financing would be: 55% from UZ’s funds; 31% from bond sales; and 14% from the state budget.  According to Vladimir Zhmak, UZ’s new CEO, the railroad will probably end this year with a $500 million loss, largely due to lost passenger ticket sales. Last year, the railroad recorded a profit of $110 million.

Despite the corona recession, cargo handled by Ukraine’s seaports is up by 1% yoy. Through November, the ports handled 146 million tons. Confirming Ukraine’s reliance on exports of raw materials, grain and ore exports accounted for 58% of all cargo moving through the ports.

Kyiv’s autumn (September-November) was the warmest since local record keeping started in 1881, reports Ukrinform. “The calendar autumn is over but the meteorological winter has not come yet,” reports the Borys Sreznevskyi from the  Central Geophysical Observatory which is  located in southern Kyiv. “It will begin when the average daily air temperature starts steadily dropping below 0 °C.” Without any sharp freeze forecast, authorities have extended the Dnipro River shipping season for an unprecedented extra month, to Dec. 31.

Editor’s Note:  Phew, that was a close call! National Anti-Corruption Bureau detectives were all set yesterday to arrest Oleg Tatarov, deputy chief of presidential staff, on bribery charges, when President Zelenskiy’s hand-picked Prosecutor General Iryna Venediktova swooped in and took four prosecutors off the case. That is the version presented last night by censor.net, the Kyiv Post and other news sites around town. Gosh, I hope that no one in the IMF office in Kyiv reads Ukrainian or English. With best regards, Jim Brooke

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Wednesday, November 11

UZ To Increase Capital Investment 5-Fold...Rail Container Terminals to Go to Private Concessions... Oil Bill Falls by 37%, Cutting Trade Deficit...China’s Purchases of Ukrainian Goods Jumps 88%...Hard to Park? 281,000 Used Car Imports Hit the Streets This Year...Chornobyl Tourism
James Brooke
by James Brooke
UBN Morning News is reported and written by James Brooke, a former New York Times foreign correspondent and Bloomberg Moscow Bureau Chief

Ukrzaliznytsia plans to increase five-fold its investments next year in wagons, locomotives and track – to almost $1 billion, Irakli Ezugbaya, the new cargo director for the state railroad, told the Center for Transportation Strategies. Capital investments will stay at that level for 2022. In 2023, investments will make another jump, this time by 50%, to $1.5 billion.

International logistics companies will be able to manage UZ’s container terminals through long term concessions, Ezugbaya said in the same interview. “International logistics operators will be interested in these terminals, and they will help us to containerize cargo much better than Ukrzaliznytsia is doing now,” said Ezugbaya, who ran Georgian Railway LLC before joining UZ in September. “Ukrzaliznytsia, for its part, will provide appropriate platforms and route dispatches for organizing the movement of these containers.” The World Bank’s International Finance Corporation is advising UZ on preparing these public-private partnerships.

German logistics company Hamburger Hafen und Logistik AG, or HHLA, has set up a Ukraine unit to send containers by rail to major cities from Odesa’s Container Terminal. Although container traffic was up by 8.5% last year, to 650,000 units, only 22% of the containers leave the port by rail, less than half the market share of HHLA’s home port, Hamburg. This fall is starting to work with container trains from Odesa to Kharkiv, Ternopil and Zaporizhia. Philip Sweens, managing director of HHLA International, told Container Management news site: “With an efficient train system based on customer-friendly services, transparent prices, simple booking processes and reliable timetables, we want to tap the considerable potential of the Ukrainian intermodal market.”

Through October, Ukraine’s foreign trade was down 9% yoy, to $82.7 billion, reported the State Customs Service. Imports were down 12%, to $43 billion. Exports were down 5%, to $39.6 billion. The trade deficit is down, to $3.4 billion.

Low oil prices have cut 37% off Ukraine’s oil import bill through October, compared to the first 10 months of last year, reported the State Customs Service. Ukraine paid $2.8 billion for oil imports. The top three sources were: Russia – 36%; Belarus – 35%; and Lithuania -12%. Reflecting the current corona recession, the volume of oil imports is down by 7% this year, to 6.5 million tons. Since June, Brent oil has priced around $40 a barrel, down from the low $60 range in last year.

Food exports are down 1.7% through October yoy, to $17.6 billion, reports the Ukrainian Club of Agrarian Business. Trends of major export commodities were: sunflower oil +21%; corn -12%; wheat +6%; soybeans – 48%; canola – 29%; barley + 37%.

Ukraine’s seaports handled 132 million tons of cargo through October, 2% more than during the first 10 months of last year, reports the Ukrainian Sea Ports Authority. Exports were up 4%, to 101 million tons. The top two exports were: grain, 39 million tons; and ore, 37 million tons. Ore exports, largely to China, were up 22% yoy. Imports were down 6%, to 20 million tons. Containers were up 7%, to 870,000 units.

 

China was the fastest growing buyer of Ukraine’s exports, Prime Minister Shmyhal told the Rada Friday. In October, he said that Ukraine’s exports to China were up by 88%, or by $2.6 billion. To attract Chinese investors and shippers, the Ukrainian Sea Ports Authority has launched a version of its website in Mandarin.

 

Odesa region’s Pivdenniy (Yuzhny) handled 18% more cargo through October, growing at the expense of the three other big Black Sea Ports, according to new figures from the Sea Ports Authority. Almost 40% of all of Ukraine’s sea borne trade went through Pivdenniy, Ukraine’s biggest, deepest, and most modern Black Sea port.

 

In contrast, cargo handled by Mykolaiv was down by 8%, to 25 million tons. Odesa region’s other two big ports saw similar drops: Odesa down by 6%, to 19.4 million tons and Chornomorsk down by 8%, to 19.4 million tons. On the Azov, Mariupol saw a rebound with cargo increasing by 11%, to almost 6 million tons.

 

First time registrations of used imported cars were up 50% yoy in October, to 38,800 cars, reports UkrAutoprom, the vehicle industry association. Registrations of new imported cars totaled 8,400 – or 22% of the used car number. So far this year, 281,100 used imports have been registered. With Germany and other EU countries restricting diesel cars, the portion of diesel imports to Ukraine rose to 29% last month. Gasoline accounted for 58%. Electric and hybrids were 3%.

 

The Digital Transformation ministry is launching an English-language version of Diya.Biznes, its online platform for entrepreneurs doing business in Ukraine. Currently in test mode, the platform features a map of the business support infrastructure, including incubators, accelerators, business support centers, foundations and business associations in each region of Ukraine. The platform is currently in test mode, the Ministry reported on Telegram.

 

Qatar Airways intends to resume flights Dec. 18 between Doha and Kyiv Boryspil. For the first two weeks, flights will be three times a week. Last spring, flights were suspended due to the coronavirus pandemic.

 

Chornobyl Exclusion Zone, a major attraction for foreign tourists, received 31,720 tourists through October, down 71% yoy. Due to the fires and the coronavirus lockdown, the area around the ruined nuclear power plant was closed to tourist for almost three months last spring. Last year, foreigners accounted for 80% of visitors.

 

To draw Chornobyl tourists for longer stays, Kyiv-based tour operators plan to offer next summer kayak tours on the Pripyat River and bicycle tours on a new, 45 km trail. The trail follows a loop, passing through four semi-abandoned villages, stretches of deep forest and clearings that offer unexpected views of the abandoned city of Pripyat and the sarcophagus covering the remains of the power plant. The trail takes 4 to 6 hours and guides scheduled breaks every half hour so cyclists do not get winded. The Kyiv Post reports: “The faster a person inhales and exhales, the higher the radiation dose they can receive.”

 

Building on the internationally acclaimed “Chernobyl” HBO series, Ukraine’s Culture Minister Oleksandr Tkachenko seeks UNESCO World Heritage Site status for the Chernobyl Exclusion Zone, reports the New York Post. “This is not only a tourist attraction, but also a place of memory where it is worth coming to understand the truth about the disaster and its ‘final effect,’” Tkachenko told East2West News. In 2019, an average of 2 million Americans watched each of the five episodes of “Chernobyl.” Ukraine currently has seven World Heritage Sites.

 

Editor’s Note: Over lunch last week at the new tapas restaurant on Kyiv’s Yaroslaviv Val, an Argentine friend was so moved by his recent trip to Chornobyl that he recited all of Ozymandias. Percy Shelley’s 1818 sonnet on the impermanence of emperors and empires warns: “My name is Ozymandias, king of kings: Look on my works, ye Mighty, and despair!” While my friend was ruminating on the ruins of a Soviet city frozen in 1986, the poem’s critique could apply to Ukraine today. If the country’s population continues to shrink by 28% once a generation, it does not take a mathematical genius to figure out where the population will be in 2120. Business as usual by the nation’s elites threatens to put Ukraine on the path to demographic extinction. Maybe the Scythians will return to the empty steppe – and find new archeological ruins. “I met a traveler from an antique land, Who said – “Two vast and trunkless legs of stone Stand in the desert…” With Best Regards, Jim Brooke