Business news from Ukraine

UKRAINIAN PARLIAMENT RATIFIES CHANGES TO ENERGY ANNEX TO EU-UKRAINE AGREEMENT

The Verkhovna Rada of Ukraine has ratified amendments to Annex XXVII to the Association Agreement between Ukraine and the EU.
Some 231 people’s deputies voted for the corresponding bill at a meeting of the parliament on June 6.

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RADA RATIFIES AGREEMENT WITH FRANCE ON PROVISION OF EUR 64 MLN LOAN FOR DRINKING WATER PROJECT IN MARIUPOL

The Verkhovna Rada has ratified an agreement between the governments of Ukraine and France regarding the official support of a project on supply of drinking water to the city of Mariupol (Donetsk region). An Interfax-Ukraine correspondent has reported that a total of 258 lawmakers backed the agreement. According to the Framework Agreement, the French side provides Ukraine with a loan in an amount not exceeding EUR 64 million for the project on supply of drinking water to Mariupol.
The agreement also provides for the development of a master plan for improving the water supply and drainage system of Mariupol until 2040.
According to an explanatory note to the bill on ratification, the project will include the construction and launch of modern filtering stations in Mariupol, as well as the modernization of the existing centralized water supply pipelines and drainage system to reduce the consumption of drinking water and discharge of sewage into the environment.

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UKRAINIAN UKREXIMBANK SIGNS AGREEMENT ON COOPERATION WITH CHINA EXPORT & CREDIT INSURANCE CORPORATION

Ukreximbank (Kyiv) and China Export and Credit Insurance Corporation (Sinosure) on April 17 signed a framework agreement on cooperation in Kyiv, a press release from the bank said. The agreement foresees that Sinosure will provide insurance support for those projects for the which applications were filed through Ukreximbank and contracts were concluded by Chinese enterprises in Ukraine. In particular, the matter concerns the implementation of construction projects in Ukraine and other countries, in which Ukreximbank is involved, as well as projects in the field of infrastructure, agriculture, energy, transportation, oil, gas and chemical industries.
The total limit of Sinosure financial insurance for use by Ukreximbank will be $500 million. The loan term will be set depending on the parameters of each contract and could reach 15 years, the report said.
“An agreement on cooperation for the first time signed between the Ukrainian bank and China Export and Credit Insurance Corporation is a landmark event, as it opens up great potential for expanding external financing channels for the key sectors of the national economy,” the press service of Ukreximbank said, citing chairman of the bank board Oleksandr Hrytsenko.
Sinosure is the official export credit agency of China, founded in 2001. Sinosure is the only state-financed insurance organization.

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UKRAINE’S GOVERNMENT TO ASK PARLIAMENT TO RATIFY AGREEMENT ON DEVELOPMENT COOPERATION WITH TURKEY

The Cabinet of Ministers has approved a draft law on ratification of an agreement on the development of cooperation with Turkey.
The government took a corresponding decision at a meeting on Wednesday.
According to the explanatory note to the draft law available to Interfax-Ukraine, the implementation of the document will favor the implementation of technical cooperation projects – the transfer of know-how, training of personnel, the supply of equipment and materials, and will also contribute to financial projects and grants to finance the supply of goods, equipment and materials.
The agreement also provides for the creation of a Programs Coordination Office of the Turkish Cooperation and Coordination Agency (TIKA) in Ukraine.

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UKRENERGO AND MOLDELECTRICA SIGN AGREEMENT

National energy company Ukrenergo and Moldelectrica have signed the operation agreement on the creation of a regulating unit as part of the power grids, which contains general technological aspects, provisions and technical conditions for ensuring synchronous operation of the Ukrainian and Moldovan power grids and fully meets the requirements and rules of the European Network of Transmission System Operators for Electricity (ENTSO- Е).
“The agreement regulates and ensures the synchronous operation of the power girds of Ukraine and Moldova, and in the future it will ensure the synchronous operation of the ENTSO-E power system of the continental Europe,” the company said, citing Ukrenergo’s Deputy CEO for Operational Management, Chief Dispatcher Vitaliy Zaichenko in the report.
According to him, the document approved all the required technological conditions in accordance with European rules and standards to regulate the frequency and power capacity within the power grids of Ukraine and Moldova.
Ukrenergo said that a procedure has also been developed for a quick amendment of the agreement required at the moment of the integration of power grids into ENTSO-E.
In addition, the parties agreed on a quarterly monitoring of the implementation of the agreement.
Ukrenergo operates trunk and interstate transmission lines, as well as centralized dispatching of the country’s integrated power grids. Ukrenergo is a state-owned enterprise under Ukraine’s Ministry of Energy and Coal Industry, but it will be transformed into a private joint-stock company soon.

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CABINET OF MINISTERS APPROVES AGREEMENT BETWEEN PHILIP MORRIS AND UKRAINE

The Cabinet of Ministers of Ukraine has approved a draft amicable agreement between Philip Morris and Ukraine, foreseeing the abolishment of the tax notification for the amount of UAH 635.3 million by the State Fiscal Service of Ukraine.
According to the draft government resolution, this agreement should ensure the investment dispute settlement, prevent bringing a claim to international investment arbitration against Ukraine amounting to more than UAH 635 million, avoid significant expenses from the national budget during the arbitration, demonstrate to the partners of Ukraine and foreign investors that the government adheres to commitments to provide incentives and protect foreign investment.
The amicable agreement will be signed between Philip Morris International Inc., Philip Morris Global Brands Inc. (both the United States), Philip Morris Brands Sarl (Switzerland), PrJSC Philip Morris Ukraine and the state of Ukraine.
Acting Head of the State Fiscal Service Oleksandr Vlasov is authorized to sign the amicable agreement, and the State Fiscal Service is authorized to execute it after signing.
As reported, PrJSC Philip Morris Ukraine in March 2015 appealed and received permission from Kharkiv customs office to apply the processing mode in the customs territory of Ukraine for the production of cigarettes and accompanying products and their re-export for the period from April 1, 2015 through March 31, 2016. The company was authorized to conditional exemption from Ukrainian import duties and other import taxes on materials for processing under the terms of re-export.
After Philip Morris Ukraine carried out processing and re-export operations, the main directorate of the State Fiscal Service in Kharkiv region conducted an unscheduled inspection of the company’s compliance with the customs legislation of Ukraine regarding the clearance of goods in the processing mode in the customs territory of Ukraine.
According to the results of the inspection of the main directorate of the State Fiscal Service in Kharkiv region, on June 14, 2016, it approved decision notices that determined the liabilities for paying of import duties, additional import duty and VAT on the import of materials, as well as penalties for the total amount UAH 635.3 million Philip Morris Ukraine. Philip Morris Ukraine said that the actions of the State Fiscal Service are pressure on the company. After that, the parties entered into litigation.

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