Business news from Ukraine

GOVT APPROVES DRAFT AGREEMENT TO RECEIVE BENEFICIAL EUR 100 MLN LOAN FROM POLAND

KYIV. Aug 27 (Interfax-Ukraine) – The Cabinet of Ministers of Ukraine has approved the signing of an agreement with the Polish government on the provision of a loan by Poland under tied aid conditions.

According to cabinet resolution No. 855-r of August 19, 2015, Finance Minister Natalie Jaresko has been authorized to sign the agreement.

“The signing of the agreement would allow for starting the procedure of raising the beneficial loan of EUR 100 million to the Ukrainian national budget to realize investment projects in the country. The agreement foresees the provision of a loan to the Ukrainian government to finance projects on the development of border road infrastructure and checkpoints on the Ukrainian-Polish border, as well as other projects that would be agreed by the sides and financed under separate contracts between Polish exporters and Ukrainian residents,” reads a post on the cabinet’s website.

As reported, Prime Minister of Ukraine Arseniy Yatseniuk said in January 2015 that the Polish government had announced a 10-year crediting program worth EUR 100 million for Ukraine. In April, Yatseniuk said that Ukraine and Poland agreed to allocate half of the credit to building roads to checkpoints on the Ukrainian-Polish border.

TURNOVER OF IMPORTED CARGO SHIPMENTS BY RAIL TO UKRAINE IN 2015 TO BE LARGEST IN ALMOST 20 YEARS

KYIV. Aug 26 (Interfax-Ukraine) – Turnover of imported cargo shipments by rail to Ukraine in 2015 is projected at 19.336 billion tonne-kilometers, which is 2.1% up on 2014 and the largest since 1996.

According to an explanatory note to the financial plan of Ukrainian railways for 2015, which has been posted on the Infrastructure Ministry’s website, the key goods that will be imported to Ukraine are coal, fuel and ore.

Transit shipments in 2015 are projected at 29.34 billion tonne-kilometers, which is 4.2% down on 2014 and the smallest over the last five years.

The formation of the volumes of transit shipments took into account the relaxed customs control scheme for transit cargo in the Customs Union of Russia, Belarus and Kazakhstan, and almost 90% of Ukrainian transit is formed in these countries. The key transit cargo will be ore, fuel and coal.

Fuel shipments fell due to a decline in shipments of crude oil from Russia and due to partial reorientation to Russian ports.

Nitric fertilizer shipments from Russia decreased due to the small demand of foreign consumers, taking into account stagnation on the fertilizers market. Companies are reoriented to sell nitric fertilizers on the domestic market.

Exports shipments are planned at 89.262 billion tonne-kilometers, which is 5.2% down on 2014.

“The decline in exports shipments would be due to the fall in shipments of construction materials and coal, taking into account demand on the domestic market. Ore that is supplied to Ukrainian metal companies in the Anti-Terrorist Operation (ATO) zone would be exported. Transportation of stone would be reduced due to a fall in orders from Russian companies,” the note said.

According to the note, at present, loading of most metal plants located in eastern Ukraine is low due to a shortage of coke and iron ore.

“The main reason of the decline in shipments of coal is active hostilities and damaged infrastructure in the ATO zone where most coal dispatchers are located. In the past months mines that produce coking coal did not work. Moreover, due to damage of railway tracks, coal companies cannot ship coal washhouses and concentrate – to end consumers,” the note said.

Domestic shipments are predicted at 56.07 billion tonne-kilometers, which is 16.9% less on 2014. The core cargo would be coal, fuel, ore and construction materials.

In general, the financial plan for 2015 projects shipment of 335.445 million tonnes of cargo by rail, which is 13.9% down on 2014.

 

AVTOKRAZ WINS ANOTHER KRYVY RIH IRON ORE PLANT TENDER TO SUPPLY TRUCKS

KYIV. Aug 26 (Interfax-Ukraine) – Public joint-stock company AvtoKrAZ (Kremenchuk, Poltava region), the only Ukrainian producer of heavy trucks, has won a tender to supply various trucks to Kryvy Rih iron ore plant (Dnipropetrovsk region), the company said in a press release on Tuesday.

The company said that under the agreement, the cost of which has not been disclosed, KrAZ-65055 (6×4) dump trucks with a carrying capacity of 18 tonnes will be made for the customer. The rear suspension of the trucks will be reinforced as demanded by the customer.

Along with dump trucks, a KS-55729V crane truck on a KrAZ-65053 (6×4) chassis with a carrying capacity of 32 tonnes will be delivered to the customer.

The trucks will be shipped to Kryvy Rih iron ore plant in the fourth quarter of 2015.

In 2014, Kryvy Rih iron ore plant also bought two KrAZ-65055 dump trucks with a carrying capacity of 20 tonnes.

AvtoKrAZ makes 33 basic vehicle models, and more than 260 modifications and trim levels for civilian and military vehicles. The company’s trucks are in use in more than 60 countries. About 80% of production output is exported.

AvtoKrAZ is part of the Finance and Credit financial and industrial group.

Kryvy Rih iron ore plant produces iron ore. The plant mainly sells its produce to Yenakiyeve Steel Works and Mariupol Illich Steel Works.

NBU BUYS AROUND 70,000 TROY OUNCES OF GOLD, RETURNS GOLD STOCKS TO OCT 2014 LEVEL

KYIV. Aug 26 (Interfax-Ukraine) – The National Bank of Ukraine (NBU) in July first this year bought around 70,000 troy ounces of gold or around 2.2 tonnes, the regulator has said on its website.

The central bank said that its official gold reserve has been returned to the level of October 2014 – 0.84 million troy ounces or around 26.1 tonnes.

Due to the decline in the cost of gold the value of gold reserve as of late July 2015 was $912.54 million, which is 7.7% less than in October 2014.

As reported, since August 2004 the official gold reserve of the NBU was permanently expanded.

The largest gold reserve of 1.38 million troy ounces was reached in April 2014, and after the audit of reserves the gold reserve narrowed by 90,000 troy ounces in May. In October 2014, the NBU sold around 0.46 million troy ounces of gold or 14.3 tonnes.

As for the unofficial gold reserve, in December 2014 it fell by 2.8 times in money terms, to $43.3 million and it has been estimated at $54-58 million in the past three months.

The share of gold reserve of total forex reserve of the country was the largest in February 2015 – 16.4%. By late July the share of gold reserve was 8.8%, while in October 2014 it was 7.9%.

WORLD BANK APPROVES PROVISION OF $500 MLN TO UKRAINE UNDER DPL-2

KYIV. Aug 26 (Interfax-Ukraine) – The World Bank’s Board of Executive Directors on August 25 approved a $500 million IBRD loan to finance the Second Multi-Sector Development Policy Operation in Ukraine, the World Bank has said on its website.

“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,” Qimiao Fan, World Bank Country Director for Belarus, Moldova, and Ukraine, said.

World Bank said that this new financing (Development Policy Loan, DPL) supports a number of high-priority structural and macroeconomic reforms to improve the country’s public sector governance, business environment, energy and social assistance.

In particular, reform measures supported by this loan – the second in a series of two – will promote good governance, transparency, and accountability in the public sector. The loan ensures that scarce public resources will be used effectively to provide quality public services at a crucial time.

At the same time, the operation will support efforts to strengthen the regulatory framework and reduce the cost of doing business. This should help unleash the private enterprise and help create sustainable and good quality jobs for Ukrainians.

Finally, this operation will assist the authorities to continue reforming inefficient and inequitable utility subsidies while protecting the poor from tariff increases by strengthening social assistance, World Bank said.

This operation is part of the World Bank Group’s broader financial support package announced in February this year, which aims to provide Ukraine with up to $2 billion in 2015. The $750 million First Multi-Sector Development Policy Loan was disbursed in May 2014.

Earlier, deputy head of the presidential administration of Ukraine Dmitry Shymkiv and government officials clarified that the World Bank’s issue of a $500 million DPL-2 will enable Ukraine to receive $300 million from the government of Japan under a bilateral intergovernmental agreement on the promotion and protection of investment (an investment agreement between Japan and Ukraine).

The Verkhovna Rada adopted the necessary laws for this new funding in the spring and summer of this year along with other laws that have allowed Kyiv to get a $1.7 billion second tranche from the International Monetary Fund within the EFF program in early August.

The World Bank is a major development partner of Ukraine. With this new investment, the Bank’s active lending portfolio will amount to over $5 billion. The bank’s current investments go into improving basic public services that directly benefit people of the country, such as water, sanitation, heating, power, roads, social safety net programs and health services.

Since Ukraine joined the World Bank in 1992, the Bank’s commitments to the country have totaled over $9 billion for 45 projects and programs.

UKRAINE MUST DRAW UP, ADOPT 5,000 STANDARDS BY 2020 – TECHNICAL REGULATION SYSTEM DEVELOPMENT STRATEGY

KYIV. Aug 26 (Interfax-Ukraine) – A total of 5,000 standards are to be drawn up and approved by 2020 to harmonize the Ukrainian standard system with the European one.

This is stipulated in the technical regulation system development strategy for the period until 2020 approved by cabinet resolution No. 844 of August 19.

According to the strategy, its goal is to modernize the Ukrainian economy and provide for competitiveness of Ukrainian products via gradual integration of Ukraine into the EU market, overcome technical barriers in trade between Ukraine and the EU and strengthen its positions on the global market thanks to the recognition of the technical regulation system of Ukraine on the European and international levels.

According to the document, small volumes of Ukrainian products exports to the EU shows that the quality and safety of products and relevant technologies used in Ukraine should be improved.

“The important task is the increase of efficiency and competitiveness of the economy, in particular, industrial production. The proper quality and safety of product is to be retained, as the EU laws pay special attention to this,” reads the strategy.

The key directions of the realization of the strategy is the adaptation of Ukrainian law in the technical regulation area to EU laws; the adoption of the European standards as national with the synchronous revoking of GOST standards; removal of doubling functions in state supervision (control) over the compliance of products to the requirements; and the provision of the full correspondence of the Ukrainian technical regulation system to the EU requirements. The strategy also foresees the improvement of the existing material and technical base to assess the compliance of products to the requirements, securing the reorganization letters of accreditation issued by the National Accreditation Agency of Ukraine at the European and international levels, securing the integration of the information exchange system in the area of state market supervision with the EU systems.

The strategy includes 58 clauses and the Economic Development and Trade, Finance Ministry, Foreign Ministry, Justice Ministry, Infrastructure Ministry, Regional Development, Construction, Housing and Utilities Economy Ministry, National and state scientific metrological centers, etc are responsible for the implementation of the strategy.