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Friday, August 21 – Qatar’s QTerminals signed the concession for the Olvia port

Qatar’s QTerminals Signs Concession to Run Ukrainian Port…Ukraine Pivots to Asia…Banking Changes…Naftogaz in Egypt….Kharkiv Tries Poaching IT Talent…Agriculture and Employment down...
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

Qatar’s QTerminals yesterday signed the concession agreement for the Olvia port in Mykolaiv region, reports Interfax Ukraine. Infrastructure Minister Vladislav Krykliy announced: “QTerminals is to invest about [$124 million] in the development of Olvia port and preserve jobs.  The $3 million annual concession payment will be 16 times the port’s profit last year. .” QTerminals operates Hamad, the largest commercial port of Qatar, valued at $7 billion.

“The successful signing of pilot concessions for the ports of Olvia and Kherson proved that the public-private partnership model can effectively attract private investment in Ukrainian infrastructure,” commented IFC Ukraine chief Jason Pellmar. “Both projects will serve as models for future concessions in various sectors of the Ukrainian economy. This work is fully consistent with our key mission – improve the competitiveness of Ukraine and accelerate its economic growth.”

China strengthens its position as Ukraine’s top trading partner, with $6.6 billion in bilateral trade in the first half of 2020, according to the State Statistics Service. For perspective, bilateral trade between Ukraine and the United States amounted to just $382 million during the same period. China, Russia and Poland are Ukraine’s main export destinations. Ukraine’s top sources of imports are China, Germany and Russia.

Ukraine’s exports to South Korea grew by 89% to $252 million in the first half of 2020, reports the State Statistics Service.

The Cabinet of Ministers canceled a 1992 agreement with the Russia regarding mutual trade representatives, according to the government. “To stop the agreement between the government of Ukraine and the government of the Russian Federation on the mutual establishment of trade missions, concluded in Moscow on October 22, 1992,” the website says.

Ukraine’s central bank has established “flexible” guidelines for the restructuring of debt assumed by green energy producers. The National Bank of Ukraine website writes: “The NBU has provided for a possibility for the banks to apply restructuring instruments irrespective of the status of the borrower’s existing leverage.” Kyrylo Shevchenko, the new central bank governor, previously ran UkrGasBank, the nation’s largest lender to solar and wind projects.

The central bank simplifies the banking charter process. The NBU website: “The regulator has reduced the number of documents that must be submitted by banks for approval by managers. Now the process of preparing the appropriate package of documents will be easier and will save time that banks spend on the approval of managers.”

Monetary policy targets an annual inflation rate of 5%, reports Ukrinform, citing the NBU.

Oschadbank plans to auction off non-performing loan portfolios starting in autumn 2020, reports Interfax Ukraine. In the first half of this year this state bank wrote off $800 million in non performing loans. This reduced the non-performing loans in its credit portolio from 55% of total assets at the start of the year, to 48% today.  The bank’s NPL targest are: 37% in 2021; 11% in 2022; 7% in 2023.

Naftogaz will develop its assets in Egypt instead of selling them, reports the company’s press service. Last December, , the state company  announced plans to sell off two oil and gas fields near  Alam El Shawish to raise  $100 million. Naftogaz Chief Andrei Kobolyev said the SBU opposed the deal.  Sergiy Pereloma, first deputy head of Naftogaz “The Management Board and Supervisory Board of Naftogaz have set a clear task for us – the development of assets in Egypt.”

NV magazine publishes its top 100 “most influential” people in Ukraine. The top 5 in chronological order are: President Volodymyr Zelenskiy, tycoon Rinat Akhmetov, Interior Minister Arsen Avakov, Presidential Head Andriy Yermak, pro-Russian politician Viktor Medvedchuk.

Kharkiv tries to poach IT specialists from Belarus by offering relocation perks, reports Interfax-Ukraine. “Kharkiv IT-community sincerely empathizes with Belarussian colleagues who are forced to be in unstable conditions and psychological pressure. Kharkiv IT-Cluster understands that in such conditions it is difficult not only for IT-business to maintain stability, but also to live and work,” the  organization said.

Epicenter K, a local home improvement chain, is introducing a new browsing format for shoppers. “It is sometimes difficult for a buyer to imagine a complete picture of the future interior according to a single sample, therefore we present expositions in the Ceramics Center “in almost the same way as at international exhibitions,” said Julia Korsun, head of the Ceramic Tile department at Epicenter K.

Unemployment is up 67% y-o-y since the beginning of quarantine measures, reports UNIAN citing the State Employment Service. Between March and August 2020, about 432,000 more Ukrainians were officially registered as unemployed. Given the large size of Ukraine’s shadow economy, the real number is likely to be higher.

Agricultural production in the first half of 2020 dipped 11.2% y-o-y, according to the State Statistics Service. Production by industrial scale-enterprises was down by 15.3% while small-scale producers by 4.2%.

The World Bank praised Ukraine’s coronavirus response, says Deputy Health Minister Svitlana Shatalova. “On August 17, during a meeting between Health Minister Maksym Stepanov and World Bank Country Director for Belarus, Moldova, and Ukraine Arup Banerji, the World Bank highly appreciated the work of the Health Ministry of Ukraine in the very difficult conditions of the pandemic and in the conditions of extremely tight deadlines,” Shatalova said.

From the Editor: Please forward UBN news to  your friends and co-workers. You can read the news in 5 languages: RUSSIAN, UKRAINIAN, ENGLISH, GERMAN and FRENCH at www.ubn.news. Dear readers enjoy your long weekend. With Best Regards, Jim Brooke

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Thursday, August 20 – Norwegian and Austrian investors plan to invest $1 billion

Wind, Solar and Hydrogen: Renewable Investments Are Renewed...Saakashvili Prepares Radical Simplification of Customs...With EU Corona Barriers High, UIA Cancels Fall Flights to a Dozen EU Cities...Swedes Buy Kyiv Computer Game Co.
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

Norwegian and Austrian investors plan to invest $1 billion in Zaporizhia to build one of Europe’s largest data centers and a hydrogen production plant, next to the Dnipro hydroelectric power plant. H2 LLC signed a memorandum of understanding yesterday with Ukrhydroenergo and Energoatom, Mykhailo Fedorov, Digital Transformation Minister, told reporters in Zaporizhia. Two weeks ago in Kyiv, the principals on the project, Andriy Zhovner, Director of H2 LLC, and Walter Komarek, CEO of Yom Capital Ltd., discussed the project with Olha Buslavets, acting Energy Minister.

In Dnipropetrovsk region, River Wind Ukraine plans to build wind and solar power plants with a total capacity of 4 GW on Kakhovka Reservoir, the regional government reports. Billed as Ukraine’s ‘first hybrid renewable energy park,’ the project calls for covering 10% of the reservoir’s 2,155 square kilometers with floating solar panels placed among 155 to 172 wind turbine towers. Financed in part by German investors, the park is to create hydrogen for export to Germany. Project manager Viktor Dinysyuk tells ecotown.ua: “Germany is ready to buy hydrogen from our company.” Construction is to start next year.

Germany’s Nordex will supply 34 wind turbines for the first phase of the Franco-Norwegian wind farm on Lake Syvash, reports Novii Vizit, a regional Kherson news site. The turbine model — N131 / 3900 – is designed by the kind of weak but steady winds found in the shallow lagoons of Syvash, on Crimea’s northern border. Power China is the contractor of the project, a joint venture between Norway’s NBT and France’s Total Eren.

Witkowitz, a Czech manufacturer of machine-building equipment, plans to invest €50 million in Dnipro’s in Yuzhny Machine Building Plant. Based in the coal and steel region of Moravia-Silesia, Witkowitz plans to invest in reconstructing diesel locomotive train engines and in producing hydrogen engines.

In the government’s latest musical chairs, Andriy Pavlovsky is the new acting head of Customs – the third to hold the post in a year. The outgoing head of Customs, Igor Muratov, was fired for the same reason his predecessor lost the post in April – failure to bring in desired tax revenue for the government. With imports down by 20%, Customs is $1.3 billion below target.

A radical simplification of customs is the goal of legal package drawn up this summer by Mikheil Saakashvili’s National Reforms Council. This fall, the Rada is expected to pass the changes, including elevating the head of Customs to Deputy Finance Minister rank.

Highlights are:

  • Unify duty rates – think flat tax
  • Cut the number of documents needed at the border from 26 to two
  • Pay higher than average salaries to Customs employees
  • Remove the human interface from Customs as much as possible –in a pilot project to automate customs clearance, Kyiv Customs issued over1,000 export declarations automatically this summer
  • Introduce jail terms to for smuggling and trading in contraband
  • Clear imported cars according to a transparent formula — according to make, model, year and condition
  • The goal: clear trucks at land borders in 15 minutes

Concorde Capital’s Zenon Zawada writes: “Customs is notoriously difficult to deal with, having created enormous lines at border crossings for as long as can be remembered. Saakashvili’s customs proposals have enormous potential for positive change.”

Ukraine reported a record 1,967 new Covid-19 cases yesterday morning, says Health Minister Maksym Stepanov. “Covid is gaining momentum,” warns the Minister. “We have seen this tendency for the last month. We crossed the line very quickly with 1,000 ill per day. Now we are approaching 2,000 ill.” In Kyiv, 215 residents, including 13 children, contracted coronavirus in the latest 24-hour reporting period. Mayor Klitschko writes on Facebook: “The number of Covid-19 patients in Kyiv has increased steeply.”

Concorde Capital’s Zenon Zawada writes: “The situation is getting worse, with the authorities remaining remarkably silent (out of concern for losing poll ratings ahead of the October elections). Hospitals will be overwhelmed if new infections continue surfacing in the daily range of 2,000.”

With the EU showing no sign of lowering its corona barriers to Ukrainians, UIA is cancelling its flights this fall to 11 EU cities and to Tbilisi, Georgia. The EU cities are: Budapest, Copenhagen, Frankfurt, Helsinki, Larnaca, Naples, Stockholm, Venice, Vienna, Warsaw and Zurich.

SAS resumed flights yesterday between Oslo and Boryspil. Last October, flights resumed after an 8-year break. But this new service lasted only five months, until corona controls forced suspension of the route in March.

Wizz started flights last weekend between Italy and Lviv. The discount airline now flies between Lviv and Rome Ciampino and between Lviv and Milan Malpensa.

SkyUp, Ukraine’s discount airline, starts flights Oct. 25 between Belgrade and Kyiv Boryspil. In Southeast Europe, the carrier currently operates regular flights to Albania’s Tirana, and Bulgaria’s Burgas.

The Cabinet of Ministers is allocating $4 million in an effort to finally complete the long overdue and long over budget Odesa runway project, Prime Minister Shmygal said yesterday. Separately, in a long term effort to provide reliable air service to Zakarpattia, budget money also will be allocated to design an airport for Mukachevo. Located on site of an old Soviet air base, the Mukachevo airport would replace the Uzhgorod airport, which borders on Slovakia.

Sweden’s Embracer Group is paying $36 million to acquire Ukraine’s 4A Games. Founded by three Ukrainian developers in Kyiv in 2006, 4A Games has grown to have 150 employees between Kyiv and the company’s current headquarters in Malta. With Embracer, 4A will continue to develop its Metro which take place in post-apocalyptic Russia devastated by a nuclear war. If 4A meets defined performance targets, Embracer commits to paying the 4A principals a maximum of $35 million within five years.

How Ukrainian startups can attract investment from European venture capital firms will be the theme Sept. 2 of a webinar hosted on Zoom by Adam Smith Conferences. With the participation of leading Europeans and Ukrainians in the field, the discussion will revolve around how to “create better incubator and accelerator resources and create a culture of angel investment in Ukraine.” Speakers include: Victoria Tigipko, managing partner at TA Ventures; Kirill Bigai, CEO & Co-founder of Preply.com; and David Gilgur, Founding Partner at Blue Lake Accelerator and Director at VimesVC. The 2-hour session is free, but participants must register in advance.

Borys Paton, the Ukrainian engineer who chaired the National Academy of Sciences for 58 years, has died in Kyiv at 101. Paton became director of the Yevhen Paton Institute of Electric Welding in 1953, the year his father, Yevhen, inaugurated Kyiv’s Paton Bridge. The world’s first all-welded bridge, Paton bridge is the oldest and longest of Kyiv’s five road bridges across the Dnipro.

From the Editor – Despite last month’s tariff cuts on renewables – 15% for solar, 7.5% for wind – foreign investors continue pouring millions of dollars into new projects.  But one red flag: not only is Ukrenergo almost $1 billion behind on paying back bills, it is falling behind on new bills. Yesterday, Prime Minister Shmygal reviewed options: a $1 billion ‘Green Bond,’ or simply taking the money from Ukraine’s $28.5 billion reserves. Either way, a solution has to be found. In recent years, renewables constituted the biggest bright spot for bricks and mortar foreign direct investment into Ukraine. With Best Regards, Jim Brooke