Business news from Ukraine

Ukrenergo and SEPS, the operator of the Slovak power transportation system, have agreed on the final configuration of the request for the reconstruction of the 400 kV Mukachevo-Velke Kapusany power grid, the press service of the state enterprise has said. According to its data, during a meeting in Bratislava at the end of February the parties discussed the implementation of a common network research within the framework of this project and potential technical solutions for the reconstruction of the transmission line. The meeting was held with the participation of the Energy Community Secretariat.
“After the meeting, a protocol was signed containing a specific list of further steps and obligations of the parties with the relevant deadlines for the implementation of network settlements. The results of calculations are expected in August this year and will form the basis for choosing the best technical solution within the framework of the project, namely the modernization of the old line or the construction of a new one,” the report said.
Ukrenergo noted this project is a candidate for the “projects of mutual interest” (PMI), the list of which will be approved by the Council of Ministers of the Energy Community in autumn 2018. Following the meeting, the parties agreed on the configuration of an application for obtaining the status of PMI.

Capital investments in Ukraine in 2017 grew by 22.1% against 18% in 2016, the State Statistics Service has reported.
According to the service, over the past year UAH 412.8 billion of capital investments (excluding the temporarily occupied territory of Crimea, Sevastopol and part of the ATO zone) were used.
In the regional context, the largest increase in capital investments in 2017 compared to 2016 was recorded in Kherson (50.7%), Zaporizhia (47.4%), Donetsk (44.5%), Ternopil (42.3%), Vinnytsia (40%), Chernihiv (34.8%), Rivne (34.6%), Poltava (33.8%), Zakarpattia (32.4%), Ivano-Frankivsk (32.1%), Dnipropetrovsk (28.9%), Odesa (28.8%), Lviv regions (26%) and Kyiv (21.4%).
According to statistics, capital investments in 2017 decreased in Kyiv region (by 5.9%).
In the sectoral context, the largest growth of capital investments last year was recorded in health care (by 89.5%), education (by 68.4%), in the sphere of art, sports and entertainment (by 65.9%), in state administration, defense and compulsory social insurance (by 44.9%), at the enterprises of transport, storage facilities, in postal and courier activities (by 42.2%), advertising activities and market research (by 35.5%), professional, scientific and technical activities (by 32.4%), in agriculture, forestry and fishery (by 31.2%), industry (by 23.4%), in the field of administrative and supplementary services (by 18.7%), wholesale and retail trade, repair of motor vehicles and motorcycles (by 13%), and construction (by 10.5%).

AXA Insurance (Kyiv) in 2017 collected UAH 1.679 billion of insurance premiums, which is 20% more than a year earlier, while the company’s net profit under international standards increased by 2.3 times, to UAH 57 million, according to a press release from the insurer.
It is also noted that the net financial result for the previous year under national standards amounted to UAH 127.6 million. This result is the reflection of a one-time effect of transition to international accounting standards by changing the reserve methodology. The net effect of this transition was UAH 198.2 million. Such a one-time change will allow from 2018 to harmonize the national financial reporting with the international accounting standards as best as possible, the press release says.
“Again our company demonstrates a significant increase in profits and insurance premiums, while maintaining a high level of Customer Satisfaction. We continue to invest in innovative products and services for our customers, as well as in personnel,” AXA Insurance Board Chairman Philippe Wautelet said.
The company reports that KASKO accounts for 60% of its insurance portfolio. In 2017, a record volume of premiums for the amount of UAH 1.007 billion was raised, which is 17% more than a year ago.
Insurance claim fee payments increased by 36% compared to 2016 and amounted to UAH 818 million. The number of contracts signed during the year increased by 31%, to 1.368 million.
AXA Insurance belongs to AXA Group. It has been represented in the Ukrainian insurance market since 2007. The company employs more than 700 people and 2,800 agents throughout Ukraine.

BNP Paribas S.A. (France) has increased its stake in UkrSibbank (Kyiv) to 60% from 59.99%, the Ukrainian bank reported in the information disclosure system of the National Securities and Stock Market Commission. According to the report, the securities were transferred from the accounts of minority shareholders to the account of the French bank under the compulsory sale procedure. At the same time, the conditions for the redemption of securities are not specified.
As reported, the EBRD and BNP Paribas signed an agreement in late 2017 on the forced buyback of UkrSibbank shares from minority shareholders.
Within the framework of the agreement, BNP Paribas acts as an authorized person to acquire and fulfill all obligations.
The document also provided that the buyback will be carried out at a market price, which will be determined by the subject of valuation activities.
As reported, the law on amendments to certain legislative acts of Ukraine concerning the enhancement of corporate governance in joint-stock companies, adopted on March 23, 2017, introduced squeeze-out and sell-out procedures (the compulsory redemption and forced sale of shares) into the country’s legislative field.

GE Transportation and PJSC Ukrzaliznytsia have signed a 15-year framework agreement worth about $1 billion on partnership in the renewal and modernization of traction rolling stock.
“Its first stage envisages the delivery in the end of 2018 and the first quarter of 2019 of 30 GE TE33A cargo diesel locomotives with a localization level of 10% at the end of the warranty period (three years) and 7% at the time of accepting,” reads a press release of Ukrzaliznytsia.
Production of locomotives will start in early 2018 in the United States, and first deliveries are scheduled for this fall.
GE and Ukreximbank also signed a purchase and sale agreement estimated at $140 million (including VAT) for the delivery of the first 30 diesel locomotives. The state bank will then transfer diesel locomotives to Ukrzaliznytsia under the terms of financial leasing for seven years.
Ukreximbank board chairman Oleksandr Hrytsenko explained that the contract was signed under the guarantees of Citigroup.
Work on modernization will be held at Dnipropetrovsk Diesel Locomotive Repair Plant or at Lviv Locomotive Repair Plant, which are part of Ukrzaliznytsia.
The delivery of modernized diesel locomotives is scheduled for 2018-2021, localization of work of up to 40%, the cost of up to $110 million (excluding VAT).