Business news from Ukraine

UKRAINE SHOULD OPEN MARKET TO ATTRACT INVESTMENT IN ENERGY – EUROPEAN EXPERT

BRUSSELS. May 25 (Interfax-Ukraine) – Ukraine should continue and complete reforms in the energy sector that would indeed open the market for investors, an employee of the Directorate-General for Energy of the European Commission Hans Rhein said during an international expert discussion of the electricity market development in Ukraine on Tuesday in Brussels.

He said that despite the adoption of relevant legislation on the natural gas market in Ukraine, the European Commission still receives claims about the dominant position of national joint-stock company Naftogaz Ukrainy on the market.

“The important issue is the opening of the market… We do not see large investors in Ukraine. I hope they would come soon,” the expert said.

He welcomed the results of reforms in the Ukrainian energy sector conducted in the past two years. He said that they should continue and be finished, in particular, in part of legislative and implementing processes.

Former Director of the Ukrainian Energy and Coal Industry Ministry’s Planning and European Integration Department Mykhailo Bno-Airiian said that the government’s strategy for setting special prices in the energy sector to ensure investment inflow is a mistake.

“The market should provide for free and fair rights, while prices should be market prices. No one should control prices,” the expert said.

He believes that the new government must continue reforms started by the previous government.

DONETSK REGION AUTHORITIES, BUSINESSMEN LOOK DISCUSS DONBAS RESTORATION PLANS

KRAMATORSK. May 25 (Interfax-Ukraine) – The Ukrainian business forum devoted to Restoration of Donbas aimed at developing private entrepreneurship in Donetsk region and attracting investment from other Ukrainian regions was held in Pokrovsk (former Krasnoarmiysk) on Tuesday.

The press service of Donetsk regional military-civil administration reported that First Deputy Chairman of Donetsk Regional Administration Yevhen Vilinsky, representatives of the Association of Taxpayers of Ukraine, the State Fiscal Service, lawmakers, self-employed individuals and the public took part in the forum.

Two discussion panels were held. The first one was devoted to political and economic preconditions for revitalizing the region on the territories that are under control of the Ukrainian government. The participants discussed the problems appeared at the enterprises due to the Anti-Terrorist Operation (ATO).

Vilinsky urged businessmen to come to the administration with problems they have and promised help.

“We cannot monitor all red tape problems. We ask for feedback. We are trying to simplify procurement. Donetsk region was the first region that had switched to the ProZorro system. We would also launch a pilot centralized procurement project. They would be implemented under public control. Only in the conditions of competition the new economy of the region could be built,” he said.

The second discussion panel was devoted to the conditions for creating economic incentives for investment in Donbas revival. The participants discussed social partnership and joint steps of authorities and business.

CRISIS OF TRUST BETWEEN POWER, BUSINESS, SOCIETY HINDERS REFORMS IN UKRAINE – EXPERT

KYIV. May 25 (Interfax-Ukraine) – The main obstacle on the way of reforms in Ukraine is the lack of mutual trust in the power-business-society triangle, coordinator of the Ukrainian Business Initiative Andriy Nikolayenko said on ICTV television when discussing the draft plan of top priority steps of Ukraine’s Cabinet of Ministers.

He said that Ukrainian Business Initiative submitted proposals of Ukrainian business to add them in the government’s action plan and some of them have been included, but many provisions of the government’s plan require specification.

“This is the program to create new jobs. It should be more clearly pegged to current and promising drivers of the Ukrainian economy, opportunities and needs of the Ukrainian business and achieving the target growth rate,” he said.

Nikolayenko said that annual economic growth in Ukraine in next 10 years should be no lower than 7% to end the crisis. Business is ready for active communications with executive power to implement these tasks, he said. Business society understands that the Cabinet would not be able to implement its top priorities without tight cooperation with the National Bank of Ukraine (NBU).

“The NBU is to switch from the function of the regulator of several dozens of banks to the function of providing for economic growth. The key criterion for efficiency of the NBU’s work is to be the increase in the number of jobs, as it was done in the U.S. Federal Reserve System. The NBU is to help the government to conduct reforms. Now these relations are far from partner relations,” he said.

LIFECELL UPGRADES 3,000 BASE STATIONS WITHIN 3G LAUNCH OVER YEAR

KYIV. May 24 (Interfax-Ukraine) – The Lifecell mobile operator has upgraded 3,000 base stations within a year after the launch of 3G technology in May 2015, which now provides 3G coverage in 617 cities and towns throughout the country, including 17 regional centers.

According to the press service of the company, with reference to its Chief Executive Officer Burak Ersoy, the first anniversary of the network deployment, in his opinion, it is the most significant.

The operator noted it is deploying the 3G network in Ukraine based on a three-channel data transfer technology, which allows to reach a maximum speed of up to 63.3 Mbps.

In 2015, the owner of 100% in Astelit mobile operator became Turkcell (Turkey).

In mid-January 2016, Astelit announced the re-branding of the (life) brand to Lifecell.

SPF EXPECTS $300 MLN SELLING SIX REGIONAL ENERGY SUPPLY COMPANIES

KYIV. May 24 (Interfax-Ukraine) – The State Property Fund of Ukraine (SPF) intends from early autumn to start the sale of controlling stakes in six regional energy supply companies, namely Ternopiloblenergo, Khmelnytskyoblenergo, Kharkivoblenergo, Mykolaivoblenergo, Zaporizhiaoblenergo and Cherkasyoblenergo and expects to obtain a total of about $300 million, SPF Head Ihor Bilous has said.

“All six power companies will have an initial price of about $250 million… What would we like to get? Some $300 million for all these companies,” he said in an interview with the Dzerkalo Tyzhnia weekly.

He added the starting price of Ternopiloblenergo will stand at $20 million, that of Khmelnytskyoblenergo at about $ 30 million.

“These are absolutely real prices for potential investors, not $130-150 million. In future, by the way, Ternopiloblenergo could cost $50 million,” Bilous said.

According to him, in spite of a long-standing corporate conflict at Ternopiloblenergo, both mentioned companies [together with Khmelnytskyoblenergo] will be easily sold.

“There is a simple business model there. Consumers are mainly individuals. The fundraising level is very high, and economic benefit in this case is very easily calculated,” the official said.

REGIONAL DEVELOPMENT MINISTRY APPOINTS NEW COORDINATOR FOR WORLD BANK JOINT INVESTMENT PROJECTS

KYIV. May 24 (Interfax-Ukraine) – Deputy Regional Development, Construction, Housing and Utilities Economy Minister Eduard Kruhliak has been appointed coordinator for investment projects “Urban Infrastructure Project 2” and District Heating Energy Efficiency Project implemented using loans from the World bank.

The press service of the ministry reported that the ministry’s selection panel selected new consultants for the key groups for investment project management at an open tender.

The tender was announced in late March 2016. The candidates were selecting using the consultant hiring rules of the World Bank.

The agreement between Ukraine and the World Bank on a loan as part of the six-year investment project Urban Infrastructure Project 2 worth $350 million was launched in December 2014.

The following companies signed the agreements for taking part in the project: public joint-stock company Kyivvodokanal (Kyiv), Kramatorsk Vodokanal (Kramatorsk, Donetsk region), Dnipro-Kirovohrad regional municipal enterprise (Kirovohrad), Kolomyiavodokanal (Sheparivtsi, Kolomyia district of Ivano-Frankivsk region), Zhytomyrvodokanal (Zhytomyr), Ternopilvodokanal (Ternopil), Ivano-Frankivskvodoekotekhprom (Ivano-Frankivsk), Kharkivvodokanal and Waste Treatment Municipal Company (both based in Kharkiv).

The International Bank for Reconstruction and Development (IBRD) in 2014 provided a $382 million loan to implement the project introducing energy saving solutions in heating area at 10 companies.

Vinnytsiamiskteploenergo, Miskteplovodenergia (Kamianets-Podilsky, Khmelnytsky region), Donetskmiskteplomerezha, Kharkivski Teplovi Merezhi, Ivano-Frankivskteplokomunenergo, Mykolaivoblteploenergo, Khersonteploenergo, Dniproteploenergo, Kirovohradteplo and Chernihiv combined heat and power plant were selected as participating companies.