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Business news from Ukraine

UKRAINIAN CAR, AGRO MACHINERY MAKERS COMBINE EFFORTS TO REVIVE INDUSTRY

KYIV. Aug 3 (Interfax-Ukraine) – The Ukrainian associations of automobile (Ukrautoprom) and agricultural machinery building (Ukragromash), jointly with the National Academy of Agrarian Sciences, are combing their efforts to revive the industry on the basis of cooperation between research institutions and producing enterprises, promoting the technical level and competitiveness of agricultural and wheel transport equipment.

Ukrautoprom President Mykhailo Reznik said at a press conference that a coordination center for the innovative development of domestic agricultural and motor engineering was created for this purpose.

“The idea is to unite efforts with agricultural machinery producers having similar problems. For instance, today 80% of both car market and agro machinery market is occupied with imported vehicles, while we are losing competitiveness. The highest agricultural import of agro machinery is from China,” he said.

According to him, industrial cooperation is planned within the framework discussed at Zaporizhia Automobile Plant (ZAZ) and PJSC Chervona Zirka.

“Chervona Zirka has a new foundry line, and we have direct links with China, for example,” Reznik said.

He noted that there are also grounds for such cooperation because of the fact that up to 90% of components in the automotive and agricultural machinery sectors are virtually identical.

FOOD CORPORATION BUYS 500,000 TONNES OF 2015 HARVEST GRAIN ON SPOT CONTRACTS

KYIV. Aug 3 (Interfax-Ukraine) – PJSC State Food and Grain Corporation of Ukraine, as part of its program of spot purchases, has acquired about 545,000 tonnes of grain from farmers for UAH 1.8 billion.

According to a post on the company’s website, since the beginning of the new marketing season it has purchased around 108,000 tonnes of wheat, more than 182,000 tonnes of feed wheat, about 250,000 tonnes of barley and more than 5,000 tonnes of other crops (maize, rapeseeds) on the domestic market under spot contracts.

“Active spot purchases, primarily from agricultural producers, are aimed mainly at providing the trade and export activities of the corporation, as well as downloading its processing enterprises with raw materials,” corporation deputy head Denys Polezhayev said.

According to him, the corporation is conducting procurement in 16 regions. At present, 360 contractors cooperate with the corporation under spot agreements.

UKRAINIAN PM ASKS LOCAL GOVERNMENTS TO PROPOSE INVESTMENT PROJECTS, PREPARE LOCAL BUDGETS

KHARKIV. Aug 3 (Interfax-Ukraine) – Ukrainian Prime Minister Arseniy Yatseniuk has instructed local governments to suggest their investment projects to the government which will be financed by the state in 2016.

“The government issued instructions that you should start to prepare investment and infrastructure projects for 2016,” Yatseniuk said at a meeting of the government with heads of regional administrations of eastern and southern regions, which was held in Kharkiv on Friday.

He said that the government had changed its procedure on the selection of investment projects which would use public funds.

Yatseniuk said that according to the changes to the Budget Code, local budgets would be passed by local authorities without waiting for the adoption of the state budget. He also instructed regional administrations to participate in the preparation of local budgets.

“Don’t wait. You already have got a clear picture [of the situation] in the past seven months, you can begin to forecast your budgets as soon as possible, so that you should have the approved budgets in November or December,” he said.

As reported, on July 22 the Cabinet of Ministers established the interdepartmental commission for public investment projects which will select investment projects and determine the volume of their financing.

For the first time, new principles of public investment management will be used in the formation of the draft national budget for 2016. The selection of projects is scheduled to begin in July 2015, and the first meeting of the commission will be held in September. The procedure of project selection provides for conducting state examination, a clear economic justification, and determining the expected economic effect.

SECOND IMF TRANCHE FOR UKRAINE TO FUND NATIONAL BANK’S GOLD RESERVE – PREMIER

KYIV. Aug 3 (Interfax-Ukraine) – Ukraine’s Prime Minister Arseniy Yatseniuk has said that the second tranche, $1.7 billion, of the International Monetary Fund (IMF) loan, due to arrive in next few days, will be used to fill the gold reserve of the National Bank of Ukraine.

“Back in February our reserves of the National Bank stood at just $5.6 billion, and this whole amount disbursed by the IMF will go into the National Bank’s gold reserve,” he said on the “Ten Minutes with the Premier” program on the Espreso television on Sunday evening.

That the IMF is disbursing the second tranche shows that Ukraine is taking steps to fight corruption, the prime minister said.

It was reported that the IMF had approved a SDR12.348 billion (around $17.5 billion) Extended Fund Facility (EFF) program on March 11 this year, to support economic stabilization in Ukraine, and setting out broad and deep economic reforms aimed at restoring steady growth in the medium term and increasing the country’s living standards.

Overall, the four-year $17.5 billion program includes four tranches to be disbursed to Ukraine in 2015. The first tranche, $5 billion, has already been paid out. The other three will be $1.7 billion each. Four annual tranches, $620-630 million each, are expected to be disbursed over the next three years.

On July 31 the IMF Board of Governors completed the first review of how Ukraine implements the economic program propped up with the EFF loan, and approved a disbursement of the loan’s second tranche in the amount of SDR1.1821 billion (1.7$ million). The Ukrainian Finance Ministry said it is expecting to receive the money in the next few days.

Ukrainian Deputy Prime Minister Hennadiy Zubko said later that some of these funds would be used to support and stabilize the Ukrainian financial system, some to pay off debts, including those for gas and of the previous years.

CABINET SETS UP AD HOC GROUP TO PREPARE STATE COMPANIES FOR PRIVATIZATION

KYIV. Aug 3 (Interfax-Ukraine) – The Cabinet of Ministers has created an ad hoc group to hammer out recommendations and proposals regarding the privatization and terms of the sale of state-owned enterprises, and adopted the provisions on the group’s work.

Relevant Cabinet decree No. 525 of June 24 was published on the government’s website on August 3.

The Cabinet appointed the chairman of the State Property Fund (SPF) to head the ad hoc group. The government also decided that the group should include its deputy head (the SPF’s deputy chairman), and the secretary of the group will be elected from among SPF representatives. The group will also consist of the deputy minister of economic development and trade, the senior adviser to the minister of economic development and trade, the deputy minister of the cabinet, the first deputy finance minister, the first deputy minister of energy and coal industry, the director of the Cabinet secretariat’s department for the effective management of state property, and a state authorized representative of the Antimonopoly Committee.

The group will be a provisional advisory and consultative government agency whose main tasks will be to make recommendations and suggestions to draft Cabinet resolutions on the privatization and terms of the sale of state-run enterprises. It will also raise international financial and technical assistance in preparing and putting the enterprises up for sale. It will also hire a contractor to prepare the enterprises for privatization and determine sources to pay for the contractor’s services, including at the expense of international financial and technical aid.

ASTELIT SEES UAH 1.78 BLN IN NET PROFIT IN Q2 2015

KYIV. July 31 (Interfax-Ukraine) – Astelit LLC saw UAH 1.78 billion of net profit in April-June 2015, while year-over-year the operator saw net loss of UAH 667.8 million.

The operator said in a financial report that its net revenue grew by 11.9%, to UAH 1.076 billion.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 16.9%, to UAH 324.4 million. The average revenue per user (ARPU) was up by 1.2%, to UAH 34.5. The number of active subscribers totaled 10.6 million in Q2 2015, a rise of 11.6% year-over-year. Capital investment amounted to UAH 1.53 billion, while year-over-year they stood at UAH 75.4 million.

In July 2015, Turkey’s Turkcell finished consolidation of 100% of Astelit.