Oleksiy Chernyshov, Minister for Community and Territorial Development, says according the government website. The announcement came at a meeting with Dragon Capital, which is building two industrial parks. The Ministry will spend almost $3 million this year on industrial parks, 10 times the amount spent in the last five years. By definition, an industrial park can contain factories, ports, warehouses.
one in Brovary and one in Kharkiv. Last July, Grand Business Center became Kyiv’s first office building to receive a sustainability certificate under the Building Research Establishment Environmental Assessment Method, or BREEAM, an internationally recognized environmental rating system. A 15-story Class A office center, with 9,000 square meters of leasable space, Grand Business stands at Vasylkivska 98, across from the St. Nicholas Roman Catholic Cathedral. By the end of this year, Dragon intends to have eight buildings in Ukraine certified by BREEAM, Dragon reports. The two warehouses — Diana Lux Logistic in Kyiv and Terminal Kharkiv – have a combined rental area of 26,000 square meters.
With the warehouse market tightening, Dragon Capital Group sold Omega-2, a 32,731 square meter logistics complex in Brovary’s industrial zone, facing the city’s bypass road. “This is our first closing of a commercial real estate sale deal after we made a bet on this segment in 2016, and it demonstrates that there are opportunities in this market not only for profitable investments, but also for exits,” said Volodymyr Tymochko, Dragon’s managing director for Private Equity.
Dragon plans to return this year to its pre-pandemic levels of investment, Dragon Capital CEO, said last week at the Global Outlook meeting hosted by the European Business Association. “In the first half of the year, we plan to close five deals together with co-investors and Western funds for about $200 million,” said Fiala, who is also President of the EBA. “We hope to close them in the first half of the year, so we will return to the rates of investments that were before coronavirus.”
Public works construction pulled the sector ahead last year for an overall increase of 4%, to $7.1 billion, the State Statistics Service reports. Road construction was up 142% in nominal terms, making up for a 53% drop in renewable energy facilities. Overall engineering structures was up 15% in real terms. Residential work was down 18.5%. Commercial was down 3%. By contrast, construction grew by 24% in 2019 over 2018. Last year, construction in Kyiv City was down 2%. But the capital remained far and away the nation’s leader, with $1.5 billion in construction work.
Starting March 1, the State Mortgage Institution will start to offer home mortgages at 7%, Prime Minister Shmyhal announced last week. For reference, Ukraine’s prime rate has been 6% since June 2020.
Ukrgazbank, a state-owned bank, reports that since July it has made $16 million worth of low interest mortgages to 548 people. Half of the mortgages are for under 10%. For dachas, or secondary homes, the bank offers 20-year loans under these conditions: fixed for the first two years at 9.9%, then fixed for the next 18 years at 12.99%.
Despite tight border controls imposed during last spring’s coronavirus lockdown, remittances from Ukrainians working outside the country increased by 2% last year, to $12.1 billion, according to data from the National Bank of Ukraine. Transfers through banks increased by 24%, to $4.7 billion. Another $2.7 billion came in through international payment systems. Informal channels – through relatives, friends and bus drivers – decreased, probably due to difficulties crossing borders.
Worker migration remains strong to Poland, a country that suffered one of the EU’s smallest GDP drops in 2020 — an estimated 2.7%. During 2020, the number of foreigners officially working in Poland increased by 8%, to 725,000, according to Poland’s Social Insurance Institution, or ZUS. Of these, Ukrainians account for 73%. In an international appeal Monday, Poland’s Education Ministry listed the five most needed professions: roofer, locksmith, road worker, software engineer and automation specialist. An article on the appeal by TSN.ua news site got 6,882 visits within 12 hours of posting.
Ukraine’s economy will rebound sharply to 10% growth yoy in the second quarter of 2021, breaking five successive quarters of decline, according to a Reuters poll of 12 Ukrainian analysts. The median forecast of analysts has the GDP shrinking by 0.5% yoy in January-March, but then growing by 10.2% in April-June. The sharp rebound comes from a low base: in the second quarter of last year, strict coronavirus controls forced the economy to shrink by 11.4%. If the government does not impose more lockdowns, the analysts’ median forecast is 4% GDP growth for this year.
Ukraine aims to vaccinate against Covid-19 the most vulnerable half of its population over the next year, President Zelenskiy told a forum in Kyiv yesterday, “Ukraine 30. Coronavirus: Challenges and Responses.” “We have agreed to supply vaccines to Ukraine from Pfizer, Sinovac, AstraZeneca and Novavax companies,” the President said. “The first stage of vaccination will begin this month,” he said, adding that one million vaccines are to arrive from Pfizer in coming days.
The European Investment Bank is loaning €50 million to Ukraine to help pay for vaccines, refrigeration equipment and logistics, Ihor Ivaschenko, Deputy Health Minister, told reporters at the forum. Zelenskiy said the number of new infections reported daily has dropped by two thirds in recent weeks.
People who are vaccinated or who have recovered from Covid will be exempt from quarantine restrictions, Zelenskiy said, without elaborating. “Lack of faith in vaccination, refusal to vaccinate by a significant part of the population” is “very serious issue,” Zelenskiy said. He said he would lead by example by taking the jab on TV.
China-Europe freight trains were up 66% yoy in January, to 1,165, reported China State Railway Corporation. The number of containers grew 75%, to 109,000 for the month. At this pace, one 94-container Chinese train passes into the EU every 40 minutes. With the overwhelming majority of this rail traffic passing through Belarus to Poland, Ukraine seeks to get more traffic, providing a path to southern and central Europe markets through rail hubs in Slovakia and Hungary.
A second private company has won permission to run freight trains on the tracks of Ukrzaliznytsia, the state railroad. Promvagontrans LLC was won permission to run freight trains on four routes in central Ukraine. The owner of 400 grain hopper cars, Promvagontrans is a unit of Ukrainian Agrarian Holding. In December, the first agreement was signed with Ukrainian Locomotive Company, a Lviv company. It can haul freight on 10 routes largely in Western Ukraine. This pilot program is expected to run for two years.
Riding the e-commerce boom, Nova Poshta has launched a €14 million sorting center in Kyiv that can sort up to 50,000 packages an hour. Captured in a video, the sorting center is a maze of belts, chutes and conveyors. The machinery was supplied by Vanderlande, a Dutch logistics automation company.
Postal operators – Nova Poshta, Ukrposhta and Meest Express – account for almost half of the 364,000 square meters of warehouse and logistics space to be commissioned this year, according to a study by Alterra Group. In terms of geography, 55% of the new space – or 200,000 square meters — is to open in Lviv. This includes four projects of about 40,000 square meters: expansion of the Protec warehouse in Zymova Voda; Lvivsilmash; Galileo Logistic and Port Lviv Logistic Center. New supply in Kyiv will be 71,400 square meters, largely projects delayed from 2020, reported Alterra, a commercial real estate development and consulting company.
In reverse, gas transportation from Europe to Ukraine hit almost 16 bcm last year, 12% more than in 2019 and 27% more than the annual average for 2016-18. About 10 bcm went into storage as 52 Ukrainian companies and 30 foreign ones took advantage of Ukraine’s new ‘short-haul’ and ‘customs warehouse’ storage regimes. With the start of the European winter heating system, draw down from storage started in November. Today, EU gas prices are at a 2-year high. Next April, Ukraine will have 7 bcm of available storage space, forecasts Ukrtransgaz.
Serbian President Aleksandar Vučić opened Friday Serbia’s 403 km extension of the Balkan Stream natural-gas pipeline, AP reports from Belgrade. Fuel for the line comes from Anapa, Russia, and then flow 930 km across the Black Sea in TurkStream. From northern Turkey, the line supplies Bulgaria, Romania and now, Serbia. It’s opening last year caused the sharp drop in Russian gas flowing across Ukraine. A Balkan Stream extension is planned to Hungary, currently a major importer of Russian gas through Ukraine. Last July, U.S. Secretary of State Mike Pompeo denounced TurkStream and Nord Stream 2 as “Kremlin tools.”
Pumped from the Tristar Ruby, a US cargo of LNG from Cove Point, Maryland inaugurated last weekend Croatia’s first liquefied natural gas landing terminal at Krk, an island in the northern Adriatic. POWERGLOBE, a Qatar company, has booked the terminal’s full capacity through 2023, largely with gas from the US and Qatar, reports CEEnergy News. With the terminal’s capacity equal to Croatia’s current consumption of 2.9 bcm, almost all from Gazprom, Ukraine is negotiating with Croatia and Hungary to send the US and Qatar gas to Ukraine, Serhiy Makogon, head of Ukraine’s Gas Transmission System Operator, writes on his Facebook page. Krk is about 1,000 km southwest of Chop, Zakarpattia.
Separately, Azeri gas has started moving through the new Trans Adriatic Pipeline, Interfax-Azerbaijan reports from Baku, citing Azerbaijan’s Energy Ministry. This 878 km pipeline picks up Azeri gas from Turkey’s terminus of the Trans-Anatolia Pipeline and then pushes it across northern Greece, Albania, under the Adriatic and, finally to Italy, near Brindisi. Competing with Russian pipelines, the Azeri pipeline is designed to transport 10 bcm a year from the Shah Deniz field in the Caspian. The pipeline design allows for compressors to double capacity to 20 bcm. For comparison, Ukraine imported about 14 bcm for internal consumption in 2020.
Tomasz Fiala, CEO of Dragon Capital, and Ivan Svitek, former Chairman of Alfa Bank Ukraine, have signed an agreement to buy Unex Bank from Vadim Novinsky’s Smart Holding. “The Antimonopoly Committee of Ukraine has already approved the agreement,” Smart Holding said Thursday. Last year, Fiala and Svitek, both Czechs, tried to buy Idea Bank, but could not come to terms with the Polish owner over price, reports Interfax-Ukraine. The price for Unex has not been disclosed. According to the National Bank of Ukraine, Unex has $28 million in assets, making it rank 64th among the 74 banks operating in Ukraine.
To prevent a strengthening of the hryvnia, the central bank bought a net $335.5 million on the interbank market in December. By contrast, during the whole year, the bank bought a net $1.1 billion, reports the National Bank of Ukraine. The Bank intervenes to prevent exchange rate volatility. The 2021 budget is predicated on an average exchange rate this year of UAH 29.1 per dollar, a 3% devaluation from today’s rate of 28.27.
Ukraine’s minimum wage increased Friday by $35, $212 per month. On Dec. 1, it increases to $230. With the minimum wage largely used to calculate pensions, Ukraine’s average monthly wage is $480.
Real wages were up 8% yoy in November, reports the State Statistics Service. Nationally, the average nominal wage was $404. In Kyiv, the wage was 54% higher — $622. Nationwide, the biggest regional increases were: Luhansk and Chernivsti + 21%; Ternopil and Mykolaiv + 20%; Khmelnytsky and Rivne +18.5%; Ivano-Frankivsk and Kherson +18%), and Sumy and Kirovohrad +15%.
Despite the global economic recession, Ukraine’s trade deficit dropped in half last year, from $10.22 billion to $4.9 billion in 2020, Taras Kachka, Ukraine’s Trade Representative, wrote on Facebook. Helped by strong commodity prices, Ukraine’s exports were down only 1.7%, to $49.3 billion, he writes. In the month of December, exports were up 18% yoy, to $4.9 billion. Kachka writes: “The secret of December numbers is pretty simple – metal and ore prices are rising worldwide at a crazy rate.”
Despite a poor harvest, exports of the top three grains – corn, wheat and barley – were down only 2.3% yoy in dollar terms, to $9.4 billion for 2020. “Due to the reduction in the harvest, physical exports are smaller than last year,” wrote Kachka, who is also deputy minister of Economic Development, Trade and Agriculture. “But this decrease in physical exports is compensated for price increases.”
With new US sanctions on Nord Stream 2 made final by Friday’s vote in the US Senate, the Norwegian company, Det Norske Veritas (DNV) GL announced Saturday that it will not be able to certify the $11.6 billion Russia-German Baltic gas line, RBK news site reports from Moscow. “Due to the current situation, DNV GL is unable to issue a certificate upon completion of the pipeline,” DNV GL told RBK. “DNV GL will cease all inspection activities of the Nord Stream 2 pipeline system in accordance with the sanctions and as long as these sanctions remain in effect.”
“Russia Pushes Ahead on Europe Gas Link Before U.S. Sanctions,” headlines a Bloomberg story posted Thursday, the day before the US Senate vote. With 150 km of the 1,230 km pipeline left to be laid, Nord Stream 2 has planned to start work on Jan. 15, using the ‘Fortuna,’ a Russian pipe line laying vessel capable of laying one kilometer a day. “I firmly believe the pipeline will be completed,” Uniper SE Chief Executive Officer Andreas Schierenbeck told Germany’s Rheinische Post on Wednesday. But, in Warsaw, Mateusz Kubiak, an analyst at Esperis energy consultancy, predicted the US Senate vote and said: “All of the additional pipe-laying activities will now be sanctioned, including surveying, trenching and rock placement.”
“US imposes new sanctions to kill off Putin’s pet pipeline,” headlines an Atlantic Council piece by Diane Francis, posted Saturday. “It means almost certain doom for Putin’s most important energy project and prevents Russia from tightening its control over EU natural gas supplies,” she writes of the sanctions which severely penalize companies constructing, insuring and certifying Nord Stream 2. Warning of the pipeline’s geopolitical significance, she adds that the gas line “would also damage Ukraine by rendering the country’s gas transportation system largely redundant and depriving Kyiv of significant transit revenues.” Francis quotes Senator Ted Cruz, a Texas Republican, predicting last month: “This project will never deliver gas.”
Russia cut its volume of gas pumped across Ukraine by 38% in 2020, compared to the previous year. Although Gazprom pumped 55.8 billion cubic meters through Ukraine’s east-west pipeline system, Russia’s state gas export monopoly will pay for the full 65 bcm contracted for 2020, reports the Gas Transmission System Operator of Ukraine. This year through 2024, Gazprom is contracted to ship 40 bcm a year through Ukraine.
“All over the world, river transportation is the cheapest and most environmentally friendly way of delivering goods,” Artem Kovalev, Rada member and chief author of the law, wrote on Facebook. “Ukraine has a huge potential for the development of water transport, but now less than 1% of all goods are transported by the river (in the EU it is 7%). At the same time, the Danube and Dnipro are included in five largest rivers in Europe.”
Renewal of the Dnipro is expected to revive two Soviet era economic activities: shipbuilding and river cruise tourism. Due to global warming, the Dnipro’s ice-free shipping season seems to be expanding — to nine months. President Zelenskiy, a promoter of the bill, said he would sign the legislation soon.
Ukraine wants to start free trade talks next year with a host of countries, led by its largest trading partner, China, Taras Kachka, Ukraine’s Trade Representative, told Evropeiska Pravda. “Currently, the access of our products to the Chinese market is subject to higher duties than Chinese products to us,” he said, referring to a trade relationship that totalled $9.4 through August.
Ukraine would like to reopen and liberalise the UK-Ukraine agreement that was signed two months ago in London, a rushed deal designed to beat the December 31 Brexit deadline. Also on the list are countries with major trade deficits with Ukraine due to food exports: Egypt, Indonesia, Jordan, Morocco and Vietnam. The Ukraine-Israel free trade agreement enters into effect on Jan. 1.
Even without a UK-Ukraine trade pact renegotiation, Ukrainian food exporters are showing “great interest” in the expanded duty-free access to the British market, Foreign Minister Dmitry Kuleba told Interfax-Ukraine after a bilateral briefing on trade opportunities. Furniture manufacturers have gone on two trade missions to Britain recently, he said. He added: “ Even Ukrainian manufacturers of Christmas tree decorations are now interested in the British market.”
Helped by cheaper energy import prices, Ukraine’s trade deficit in goods is running at half the level of last year, reported the State Customs Service. Through November, the trade deficit was $3.93 billion, down from $8.15 billion recorded during the first 10 months of last year. Year over year, exports were down 3.5%, while imports were down 10.8%.
Dragon Capital has acquired Lviv Industrial Park located on a 23.5-hectare land plot on the M10 highway, 60 km east of the Polish border. Five years ago, CTP, the largest developer and operator of warehouses and industrial parks in Central and Eastern Europe, bought the site — the Czech company’s first foray into the former Soviet Union. For Dragon, the Lviv site complements their 49-hectare site on the Kyiv-Zhytomyr highway where an industrial park is in the planning stages. “We are ready to start construction of new Class A facilities in our industrial parks in the coming years,” says Dragon CEO Tomas Fiala.
The ban on shopping during three weekends in November cost Ukrainian shopping malls about $250 million, the Ukrainian Council of Shopping Centers told Interfax-Ukraine. The 30-40% drop in weekend sales was partially offset by 10-20% increases on Fridays, Mondays and Tuesdays. Epicenter, one of the nation’s largest retailers, lost 750,000 weekend visits and $35 million in weekend sales, says Vladimir Goncharov, Epicenter’s director of retail trade. The drop in sales will ripple through the economy effecting 5,000 suppliers, largely Ukrainian, and sales tax payments.
“Business without Barriers” is a movement promoted by First Lady Olena Zelenska to reduce the physical and psychological barriers that prevent people with disabilities from participating in the work force and society at large. A declaration of support was signed this week by representatives of: Ukrposhta, Oschadbank, Ukrzaliznytsia, Auchan, 1+1 Media, DTEK, Socar, work.ua, ATB, and Danone. Ukrzaliznytsia said it is making stations, platforms and trains easier for travellers in wheelchairs, the elderly and parents with small children.
DTEK says that almost 3,000 of its 70,000 employees have disabilities, “We are actively introducing the best services for our clients so that our services are as accessible as possible,” says DTEK CEO Maxim Timchenko. Yesterday, DTEK, the largest private investor in Ukraine’s energy sector, became Ukraine’s first company to join ‘The Valuable 500,’ an international movement dedicated to improving the integration of employees and clients with disabilities.
After 12 years of discussion, the Rada yesterday passed a river development bill designed to triple cargo carried on the Dnipro to 30 million tons by 2025. Ships will pass free through river’s six locks. To modernize the aging river gates, an ‘Inland Waterways Fund’ will be created, funded largely by excise taxes on fuel. During the late Soviet era, 60 million tons of cargo moved annually on the Dnipro.
A revitalised working river will generate an extra $500 million in economic activity, Infrastructure Minister Vladyslav Krikliy said on his Telegram account. He added that for each 1 million tons of cargo carried on the river, Ukraine can save $35 million in road repairs.