Business news from Ukraine

EBRD SUPPORTS UKRAINIAN GOVERNMENT’S NEW APPROACH TO PRIVATIZATION, DISCUSSES PROVISION OF TECHNICAL AID

KYIV. Aug 31 (Interfax-Ukraine) – The European Bank of Reconstruction and Development (EBRD) supports the new approach of the Ukrainian government towards the privatization of state-owned facilities and continues to discuss the provision of technical help on the issue, EBRD Director in Ukraine Sevki Acuner told Interfax-Ukraine.

“We consider the new approach more sensible and wise. The privatization must be conducted in a transparent way by giving the potential investors time for due diligence: If the sale was conducted in the old way, by putting 5% on the exchange house to determine the price, it wouldn’t allow for a full attraction of investors to the market. Only an insider with inside knowledge could ‘put money on the table.’ The attempt to assess the actual market value of the asset in such a way would be futile,” he said.

According to the agency’s interlocutor, this position is shared by not only the EBRD, but also by international financial organizations working in Ukraine.

Acuner said that the EBRD and other donors are discussing the provision of technical help to Ukraine in two directions: to prepare legal amendments for the privatization under new rules, and in practical issues of privatization.

“We’re looking into the possibility of giving the aid to the State Property Fund to organize and conducting the ‘due diligence,’ pre-privatization analyses, including value assessment, ecological research, legal analyses.

There’s also a possibility of help in reforming the laws needed for the privatization taking the best international experience into account,” Acuner said.

According to him, both the EBRD and USAID are ready to provide significant technical aid to Ukraine to conduct transparent and efficient privatization.

“There will be a discussion next week among international financial organizations working in Ukraine to coordinate the support,” Acuner said.

Acuner also expressed hope that Ukraine would continue to pass progressive reforms.

OVOSTAR SEES 42% RISE IN NET PROFIT IN H1 2015

KYIV. Aug 31 (Interfax-Ukraine) – Ovostar Union, one of the leading producers of eggs and egg goods in Ukraine, saw a 42% rise in net profit in January-June 2015, to $15.893 million, the company said in a report on the Warsaw Stock Exchange (WSE).

The company said that its revenue decreased by 2%, to $33.509 million and gross profit grew by 14%, to $14.231 million.

Operating profit rose by 30%, to $14.864 million and earnings before interest, taxes, depreciation and amortization (EBITDA) – by 18%, to $15.875 million.

The company said that its revenue decreased mainly related to lower revenue from non-core sunflower processing segment. Net profit has been influenced by a non-cash item, finance in-come that arose from translation of the company’s EUR-denominated loans into presentation currency.

Production cost in H1 2015 totaled $20.718 million. Lower year-on-year U.S.

dollar terms cost of grains, the company’s main production cost component, resulted in a 12% decrease in cost of sales value, although selling volumes have been higher than in the H1 2014.

Devaluation of Ukrainian hryvnia that continued in the first half of 2015 compressed the U.S. dollar value of the company’s balance sheet items. In H1

2015 the USD-denominated value of total assets decreased by 6% to $95.062 million compared to the end of 2014. Current assets decreased by 3% to

$32.368 million while non-current assets decreased by 8% to $62.694 million.

During the reporting period, total liabilities increased by 12% to $18.554 million. Trade payables de-creased by 54% to $2.622 million.

TOP PRIORITIES OF FINANCE MINISTRY ARE TAX REFORM, BUDGET DECENTRALIZATION, GROWTH OF BUDGET REVENUES – MINISTER

KYIV. Aug 31 (Interfax-Ukraine) – The tax reform is a top-priority in the current work of the Finance Ministry of Ukraine, Minister Natalie Jaresko has said, reporting on the work of the Cabinet of Ministers last week.

“Demilitarization of the tax police and institutional restructuring of the State Fiscal Service would make tax administration easier and reduce the pressure on responsible and fair businesses,” she said.

She added that tax amendments should stimulate economic growth and change taxation culture in general.

The quick introduction of all international projects that improve infrastructure and create additional jobs is one more top-priority of the ministry.

Jaresko said that among important tasks is the deepening of budget decentralization, increase of budget revenues thanks to fight against smuggling, bringing business out of the shadows, improvement of tax payments, reform of state enterprises, fight against budget infringements and the acceleration of seizure of assets of Yanukovych regime’s officials.

Commenting on the 2016 national budget, the minister said that it should be effective and parsimonious to finance defense and allow developing, as well as support vulnerable people.

Jaresko also announced the launch of a portal on the use of public funds as a first step of the E-Data project from September. The project would disclose information of the State Treasury and all expenses of the central and local authorities.

Among key achievements during her work on the post of the finance minister in the past nine months was the signing of the new four-year $17.5 billion program with the International Monetary Fund (IMF) supported by an additional financing of $7.2 billion, the realistic 2015 budget, the launch of the real budget decentralization and the agreement on restructuring the country’s commercial foreign debt.

UKRAINE BOOSTS SHARE OF PROCESSED FOOD OF TOTAL AGRICULTURAL EXPORTS TO EU IN H1 2015 – MINISTRY

KYIV. Aug 27 (Interfax-Ukraine) – The Agricultural Policy and Food Ministry of Ukraine has reported that the share of processed food of the total agricultural exports to the European Union (EU) countries has grown.

“Gradually, Ukrainian agricultural producers started to use more new opportunities of exports of products after processing to the high-margin EU market,” Minister Oleksiy Pavlenko said.

He said that exports of poultry grew by three times, to $27.3 million, tomato paste – by 9.5 times, to $6.9 million, processed grain by almost two times, to $5.6 million, sugar and confectionary with sugar – by 1.8 times, to $17.8 million, and finished products made of grain – by 1.3 times, to $18 million.

In January-June 2015, egg products worth $4.5 million were exported to the EU, while a year ago Ukraine did not export eggs to the EU.

“Top-priority directions of development of the Ukrainian agricultural sector are the orientation to the increase of the share of processed food and products with high added value of total agricultural exports of Ukraine. This would allow us to increase currency proceeds of the national budget. The current results of exports to the EU show that Ukrainian products have large potential and good prospects on the global market,” Pavlenko said.

 

UKRAINE, WORLD BANK SIGN AGREEMENT ON $500 MLN LOAN FOR REFORMS

KYIV. Aug 28 (Interfax-Ukraine) – Ukraine’s Minister of Economic Development and Trade Aivaras Abromavicius and World Bank Director for Ukraine, Belarus and Moldova Qimiao Fan have signed a loan agreement on the World Bank issuing a loan to Ukraine in the amount of $500 million to accelerate the pace of reforms.

“This $500 million of financial aid is intended for strategic and institutional reforms,” the Ukrainian minister said.

He said the money has been granted to improve public administration and the business climate, reform the energy sector, and provide assistance to the needy.

The loan has been granted for 16 years, with a seven-year grace period at a variable interest rate, which now stands at 1.25%.

“The package of reforms supported by this operation will help address the deep-rooted structural problems that have contributed to Ukraine’s current economic crisis. We are helping Ukraine to implement an urgent set of measures, which will be essential to stabilize the economy, provide quality services to all Ukrainians, and return the country to a sustainable growth path,” Qimiao Fan said.

He added that the World Bank is preparing another loan of $500 million, and that documents for granting this loan will be submitted to the World Bank Board of Executive Directors for consideration in September.

 

KYIV’S 2025 GENERAL PLAN FORESEES CITY DEVELOPMENT THANKS SUBURBS IF LOCAL COMMUNITIES AGREE

KYIV. Aug 28 (Interfax-Ukraine) – The new draft general plan of Kyiv until 2025 retains the possibility of developing the city thanks to its suburban zone, although this is only possible if local territorial communities give their consent, Head of the Town-planning and Architecture Department of Kyiv City Administration Serhiy Tselovalnyk has said.

“Kyiv city agglomeration would be created for sure, but not thanks to a change to Kyiv’s borders or territorial expansion, it would be done on the basis of the law on voluntary cooperation of territorial communities when, as is done in France, for example, Lyon, Paris, agreements between Kyiv’s communities or its districts and local authorities of the territory to which the function is transferred will be signed,” he said during lawmaker hearings on the Kyiv’s general plan on Thursday.

According to the new draft general plan of Kyiv until 2025, in the next 20 years if the planning decisions for the further development of Kyiv, the territory of which as of January 1, 2015 was 83,558 hectares, are agreed, a total of 1,416 hectares of new territories are additionally required.

Tselovalnyk said that the new general plan has been drawn up taking into account the forecast for the development of the demographic situation and transport infrastructure on the basis of updated data, while in the current general plan until 2020 the forecast indicators were set too low, and have now been exceeded.

According to the new plan, it is planned that the population of Kyiv would increase to 3.147 million within the next 20 years from 2.847 million as of January 1, 2015.

The draft document plans the construction of 22 million square meters or 314,300 new apartments, the increase of the average number of square meters per person to 27 from 22.3 as of January 1, 2015, and the removal of 912,500 square meters of housing area.

In the next 20 years it is planned to increase the housing fund of Kyiv to 84.707 million square meters or 1.386 apartments from 63.619 million square meters or 1.088 million apartments as of January 1, 2015.

The draft document states that during this period the Kyiv’s landscape, recreation and green space would be reduced to 27,981 hectares from 32,997 hectares as of January 1, 2015, and the city nature reserve fund would be expanded from 12,452 to 18,899 hectares.

In the next 20 years it is planned to reduce industrial and scientific space to 2,954 hectares from 3,739 hectares as of January 1, 2015.

Tselovalnyk said that the new draft general plan includes construction of new roads and redirection of transport flow to bypass the central part of Kyiv.

It is planned to increase the general length of streets and roads to 1,869 kilometers from 1,663 kilometers as of January 1, 2015.

In addition, it is planned to build four waste recycling complexes with a total annual capacity of 800,000 tonnes.

It is planned to increase the number of solid waste landfills to four with a total area of 115.9 hectares and the number of construction waste landfills to two with a total area of 74.2 hectares, while as of January 1, 2015, one of each kind of landfill was operating with a gross area of 63.4 hectares and 32.5 hectares respectively.

It is also planned to increase the number of preschool educational centers and schools to 107,000 from 87,900, and to 358,800 from 308,300 as of January 1, 2015 respectively.