Aware of the IMF’s core attachment to market prices for gas, acting Energy Minister Yuriy Vitrenko and Finance Minister Serhiy Marchenko also explained the government’s position to IMF representatives. “They are concerned that we are revising some of our earlier commitments,” Marchenko told NV Radio yesterday, referring to the IMF. There are no grounds, he added, “to say that we have already done something very bad.”
Ukraine’s coal production fell by 7% last year, hitting 29 million tons, near the level of 1916, reports the Energy Ministry. Employment in coal mines is about 30,000 today – 6% the level of the end of the Soviet period. In the last 15 years, government subsidies to coal mines have been cut from $8 billion a year to less than $500 million a year today.
The government’s plan to cut gas prices by one third is sparking a flurry of meetings between the IMF representative and government ministers. “We had a constructive meeting with the IMF on gas prices,” Prime Minister Shmygal wrote yesterday evening on Telegram. “Our Government’s position: the gas market in Ukraine must work. Unfortunately, some market players continue to abuse the position that Ukrainians suffer from.”
From London, Timothy Ash stressed the importance of market prices for a major source of Ukraine’s heat and electricity: “The move to market-based gas pricing in Ukraine has produced huge wins in recent years – it’s helped slash gas consumption from plus 70 bcm to less than 30 bcm, cutting the energy import bill from $12bn per annum, to perhaps $2-3bn, and also cut the quasi-fiscal deficit by 4-5% of GDP, given the huge subsidies previously given to Naftogaz. That
Spawning street protests in at least eight regional capitals, the spike in Ukraine’s gas prices stems from: cold weather, high prices in Europe, and a poorly implemented market opening that allows price gouging by suppliers. Ash again: “The Zelenskiy team will argue that this is not aimed as a major reversal in market-based energy pricing, but is a reaction to oligopoly pricing by a few bad actors in the industry. Essentially Naftogaz seems to be selling gas to consumers at
At stake is $2.9 billion of low interest loans remaining to be disbursed from the IMF’s $5 billion Stand-By Arrangement of last summer. The agreement is widely seen as a seal of approval for Ukraine’s economic policies, an approval that lowers Eurobond rates for Ukrainian borrowers and, ideally, gives a green light to foreign brick and mortar investors. While discussions behind closed doors in Kyiv have been heated, in Washington, IMF Spokesman Jerry Rice merely told reporters yesterday: “The first
One year after the last-minute renegotiation of Ukraine’s gas transit deal with Gazprom, Naftogaz reports that the Russian state company paid its 2020 bill in full — $2.1 billion. Gazprom paid for shipping the total booked amount – 65 billion cubic meters. By year’s end, Gazprom had shipped only 86% of that amount — 55.8 bcm. This year through 2024, Gazprom is contracted to ship 40 bcm a year through Ukraine’s pipelines.
Today, the US State Department is expected to issue a report listing which European companies working on Nord Stream 2 will be subject to US sanctions, Reuters reports from Washington. In advance, Rambøll, Danish, a consulting engineering company, dropped out of the $11 billion Russia-Germany gas line project this week. The company had done environmental impact studies, reports Politiken, the Copenhagen newspaper. A few days earlier, Norway’s Det Norske Veritas GL, which was to certify the1,230 km pipeline upon completion, also
TIU Canada of Calgary is suing Nikopol Ferroalloy Plant for disconnecting the Canadians’ 10.5 MW solar plant last March, ostensibly because the Ferroalloy Plant did not want to pay green power rates. The trial started Wednesday in Kyiv Commercial Court with TIU charging that the shutdown has cost them €1.5 million over the last 10 months. The solar plant connects to a substation on the grounds of the Ferroalloy Plant, which is owned by Igor Kolomoisky, Gennadiy Bogolyubov, and Viktor
Western Ukraine Coal Construction, Ukraine’s last state company devoted to building coal mines, goes up for auction in 10 days, reports the State Property Fund. The company has 15,700 square meters at its headquarters in Chervonograd, Lviv region and nine hectares at a miners’ resort in Volyn’s lake region. Bids start at $400,000.
The State Property Fund plans to sell 500 state properties this year to private owners, Dmytro Sennychenko, the head of the Fund, wrote on Facebook. “Privatization grows jobs, improves the socio-economic state of the regions, and the state ceases to spend taxpayers’ funds on damages,” he wrote. Obstacles include: the need to follow 70 procedures for each property sale, “sabotage by enterprise management or its ′shadow ′ executives,” and the lack of final Rada approval to lift last year’s suspension
Regional airports are primed for a post pandemic takeoff. UkSATSE traffic numbers for 2020 confirmed the dominance of Kyiv’s two big airports – Boryspil (47,524 flights) and Sikorsky (12,805). The air traffic control agency’s graphic on Facebook shows a second layer that is catching up with Sikorsky: Lviv (9,850), Odesa (9,282), and Kharkiv (7,576). A third layer shows potential: Dnipro (4,174), Poltava (4,119) and Zaporizhia (4,087). This winter, Dnipro starts a 3-year, $100 million rebuild of its runway and terminal.
The EBRD is working with the Infrastructure Ministry to create dedicated funds to develop Ukraine’s airports and railway infrastructure, Minister Vladyslav Krykliy said yesterday on the ministry website. In an attempt to emulate the Road Fund, “the EBRD has already allocated funding and selected consultants to analyze international experience, develop a concept and write relevant legislation,” Krikliy said. The EBRD also gave the Minister a report yesterday assessing the ministry’s capacity to execute public partnerships with private companies.
With European natural gas prices rising to the highest level in two years, Ukraine will cut and cap gas prices from Feb. 1 until the end of the heating season, usually early April. With prices expected to be cut by about 30%, President Zelenskiy said on his website: “Market prices are too high today, especially given the pandemic.”
The price freeze reverses a gas market liberalization process long advocated by the IMF. Coming as the IMF is conducting a remote review of Ukraine, this measure is expected to delay any agreement on a new tranche. Timothy Ash writes from London: “[I] cannot see the IMF buying this…I think Ukraine’s old corrupt elites are once again using the gas price card to scupper the IMF program.”
In another cloud over the IMF deal, Dmytro Sologub, a 5-year veteran member of the board of the National Bank of Ukraine, tells Bloomberg that summer’s shakeup of the central bank leadership may delay the next tranche from last June’s $5 billion IMF loan to Ukraine. In an interview headlined, “Ukrainian Central Banker Warns Revamp Risks ‘Substantial’ Damage,” Sologub says: “Cracks in the bank’s collegial decision-making system and, honestly, a lack of professionalism in some positions, may lead to substantial
The Finance Ministry kept interest rates unchanged at Tuesday’s weekly auction, selling $319 million worth of bonds, almost the same amount as the prior week. Of the total $48 million of 1-year dollar bonds carried a yield of 3.8%, the Ministry reported on Facebook. Of the 7.5 billion worth of hryvnia debt, 93% were for securities with maturities one year or less.
Dragon writes: “State-owned banks likely remained the major buyers of domestic bonds…With the 2021 budget deficit target set at 5.5% of GDP, the government’s borrowing needs will remain high this year, keeping it reliant on cooperation with the IMF.”
Sixteen foreign companies have registered interest in Ukraine’s first big privatization of this year – the sale of a state company that mines and enriches titanium ore in Zhytomyr and Dnipropetrovsk regions. Scheduled to take place by the end of March, the online auction of United Mining and Chemical Company is expected to draw bids of at least $150 million, State Property Fund officials told reporters yesterday. The company produces ilmenite, the main source of titanium dioxide, which is used
Foreigners who invest over $100,000 in companies they set up in Ukraine will be able to apply for an immigration permit, according to a resolution approved yesterday at the Cabinet of Ministers. Investments will have to be documented by bank transfers.
The ‘Karta Polaka’ or ‘Polish Card’ was granted to 7,094 Ukrainians last year, Poland’s Foreign Ministry told Ukrinform. Started in 2008 for people of Polish heritage who are not allowed to have two passports, the card facilitates residency and work in Poland. To date, about 130,000 Ukrainians have received the card.
The Dnipro shipping season ends tomorrow, just ahead of this weekend’s freezing temperatures. Although shipping companies got an extra month – December – 2020 cargo was down 5% yoy, to 11.25 million tons. Construction materials – largely sand and gravel – were up 7% to almost 6 million tons; grain was down 27%, to 3.5 million tons; and metals were up 7%, to almost 2 million tons. In 2019, 11.8 million tons were transported on the Dnipro, 19% more than
Increasing the company’s attractiveness, new management increased profits six-fold last year to $21 million and announced last month a doubling of reserves of titanium-bearing ore sands at the Vilnohirsk Plant, in Dnipropetrovsk. Decreasing attractiveness, men opposed to privatization have burned a company manager’s car, conducted ‘searches’ of company offices, and opened 10 hopper cars filled with ilmenite concentrate, destined for the US company Chemours, a DuPont spinoff.
Whittling away at Ukraine’s state property mountain, 1,899 privatization auctions were held in 2020, yielding $107 million for the budget, Dmitro Sennychenko, executive chairman of the State Property Fund, reported yesterday. With this month’s end of the suspension of ‘big’ privatizations, the Fund expect to present to investors for sale this year the Odesa Port Plant and six regional power companies. Through the end of 2023, investors have the right to contracts drawn up under English law.
The dollar remains king in Ukraine, with the hryvnia 61% undervalued against the US currency, The Economist reports in its annual Big Mac index. In Ukraine, a Big Mac costs UAH 62, or $2.21. In the US the same hamburger goes for $5.66. Using this index, Ukraine has the world’s fifth most undervalued currency. The cheaper currencies are: South African rand – 61.9%; Turkish lira – 64.5%; Russian ruble – 68%; and Lebanese pound – 68.7%.
Bills on ‘virtual assets,’ on cloud storage and on creating Diya.City, a virtual free economic zone for IT companies, are legislative priorities this year for the Ministry of Digital Transformation. Minister Mikhail Fedorov wrote on Telegram that another bill will allow people to change their place of registration with “a few clicks.” Referring to this hangover from Soviet days, he called for “unlinking registration from many situations in life (where it is really not needed).”
Turkish Airlines displaced Ukraine International Airlines as the top carrier in Ukraine last year, UkSATSE, the air traffic control agency, writes on Facebook. Turkish carried out 14,623 Ukraine flights. UIA carried out 14,406. The other leaders were: Belavia (Belarus) -10,644 flights; Wizz Air – 9,151; Windrose (Ukraine) – 8,511; SkyUp (Ukraine) – 8,434; LOT Polish- 6,260; and Ryanair – 5,965.
Just in time for this afternoon’s snow, Kyiv ranks 7th in a ranking of 416 world cities for traffic congestion, reports TomTom, the Netherlands-based provide to satellite navigation devices. Sandwiching Kyiv between Bangalore and New Delhi, TomTom gives Ukraine’s capital a traffic congestion level last year of 51%.
Odesa region plans to build 400 km of bicycle paths in coming years, Ukravtodor writes on Telegram. Two priority sections are along the Black Sea: from Chernomorsk to Sanzhiika and from Shabo to Kurortne. The state highway agency writes: “In the Odessa region, bike paths can be an additional incentive for tourism development.”
Drivers spent an unnecessary 207 hours in rush hour traffic last year, TomTom reports, detailing Kyiv’s traffic patterns. Congestion adds an extra 25 minutes to morning commutes and an extra 29 minutes to evening commutes. Last year, December was the most congested month and Friday, Dec. 18 was the worst day of the year to be behind the wheel. Of no surprise to drivers, the satellites report the worst times to drive in Kyiv are at 8 am and 6