Business news from Ukraine


Ukrenergo National Energy Company will finish construction of the Kreminska substation with a power capacity of 500/220 kV (Kreminna town in Luhansk region) by the end of May 2020, Ukrenergo operations director Volodymyr Kudrytsky said at a press conference in Kyiv.
“Kyiv Energy Construction Company in Ivano-Frankivsk, one of the biggest companies Ukrenergo is working with, won the bids in 2017. At present moment, it is building the facility. May 2020 is an expected date of completion of the building works,” he said.
Kudrytsky reminded that the term for completion of the works was scheduled for December 2018. However, these terms have been shifted over the Cabinet of Ministers’ delay to approve the design documentation and settling the issues with land acquisition. Kyiv Energy Construction Company in order not to waste time started to buy necessary equipment and machinery before the government approved the documentation.
According to company’s operation director, the cost of construction now totals UAH 1.3 billion, while the Cabinet of Ministers initially appraised it at UAH 1.7 billion.
He also reported that Ukrenergo was working over the project on increase of the capacities of Luhansk thermal power plant (TPP).
“To provide distribution of Luhansk TPP in full, at a moment we initiated building of another facility, it is on the stage of design. This is a 220 kV transmission line from Luhansk TPP to Yuvileina power substation,” he said.
As reported, construction of Kreminska substation launched two years ago.
The Kreminska substation will make it possible to synchronize the electricity supply system in the northern Donbas with Ukraine’s Integrated Power System (IPS) and provide a stable link to that system.
Consumers in the northern part of the Luhansk region are only supplied by coal-fired Luhanska TPP. Previously, the fuel was delivered to the station by rail through Russia, but today deliveries have ceased completely being blocked by the Russian Federation.
Now the station runs on gas, which is much more expensive than coal. This is economically disadvantageous. In addition, the station is located in close proximity to the war zone, and its continued operation is constantly under threat. These factors pose significant risks of complete shutdown of the Luhanska TPP. At the same time, due to damage to power grids as a result of hostilities, only two 110 kV transmission lines now connect the Luhanska power unit with the power grid of Ukraine. Their capacity, with no generation at the Luhansk TPP, is only 110MW. Meanwhile, the power unit’s consumption is from 140 MW at night to 220MW in the evening peak. Thus, if the operation of the Luhansk TPP stops in any reasons, the region won’t be provided with electricity as strongly as required.

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More than 20 representatives of the construction and consumer markets, including Olena Shuliak, Vadym Strunevych, Hanna Lichman from the Servant of the People party, Vadym Stolar and Dmytro Isayenko from the Opposition Platform-For Life party, and also self-nominees Oleksandr Feldman and Leonid Klimov pass to the Verkhovna Rada.
The list of the Servant of the People party included the head of the construction sector, board member of the Better Regulation Delivery Office (BRDO) Olena Shuliak (under No. 13), head of Kyivproekt and Ukrinvestbud Development LLC Vadym Strunevych (No. 39). Ukrinvestbud Development jointly with Saga Development is implementing the project of the Einstein Concept House residential complex at 24a Zlatoustivska Street in Shevchenkivsky district of Kyiv.
The list of the party also includes the head of Biant development company (Kryvy Rih), the director of the enterprise for production of concrete Rastro LLC, Yuriy Kysil (No. 42).

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The Nordic Environment Finance Corporation (NEFCO) will lend EUR 4.35 million to Norway’s Norsk Solar for the construction of a 9 MW solar power plant near the town of Brovary in Kyiv region. According to NEFCO’s press service, Norsk Solar itself will allocate another EUR 4.35 million for the construction of the plant.
“We are happy to be able to join forces with NEFCO to construct this solar power plant in Ukraine. We estimate that it will provide more than 5,000 households with renewable energy over the next few decades,” NEFCO’s press service quoted CEO at Norsk Solar AS Oyvind Vesterdal as saying.
The solar plant is located in the village of Semypolky and will be built on a total land area of 12.6 hectares. The plant is to be commissioned at the end of 2019.
The project owner and majority equity contributor, Norsk Solar AS, is part of the Norsk Vind group.
Norsk Solar is owned by Norwegian Lars Helge Helvig.
As reported, at the end of January, Norsk Solar and the Ukrainian engineering company Pro-Energy, which is owned by Ruslan Delidon and Dmytro Osypov, signed an agreement on the construction of a solar power plant in Kyiv region.

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The European Bank for Reconstruction and Development (EBRD) under EBRD’s Ukrainian Sustainable Energy Lending Facility III (USELF III), a EUR 250 million facility to support renewable energy in Ukraine, will partially finance construction of the Dnepro-Bugsky wind farm with a planned capacity of 110 MW located in Oleksandrivka (Kherson region).
The decision was made by the EBRD board on July 10, EBRD Senior Adviser External Affairs for Eastern Europe & Central Asia Usov told Interfax-Ukraine on Thursday.
EBRD said that Dnepro-Bugsky Wind Power Station LLC is the borrower of the funds. The borrower is ultimately fully owned by three sponsors, Akuo Energy SAS (France), Saffelberg Investment NV (Belgium) and Aeolus Invest NV (Belgium). The limited liability company is a special purpose vehicle incorporated in Ukraine for the purpose of developing, constructing and operating the project.
The total cost of the project is EUR 188.64 million. The possible share to be paid by the EBRD is not disclosed.
According to other materials of the project posted on the bank’s website, Dnepro-Bugsky wind farm will belong to Akuo Energy.
The project consists of 25 4.4 MW turbines on the Dniprovsko-Buzsky Lyman, which will be delivered by Nordex. Under the project it is planned to build a 150 kV power line to the Posad-Pokrovska substation of 27.3 km long with 194 pillars.

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The activity of construction on regional retail real estate markets is growing, and the reconceptualization trend for existing shopping centers would remain, UTG Director Evgenia Loktionova has said. “The construction of retail real estate is growing, and not only in Kyiv. There are all prerequisites for increasing it in the regions, as the concepts of the last five years are moving into an active construction phase, which will significantly influence the existing market. I think active construction will move to regions, and Kyiv will finish the started projects,” she said at a press conference on the results of the real estate market for the first half of 2019 at Interfax-Ukraine on Wednesday.
At the same time, according to Loktionova, in the next two years the reconceptualization trend and redevelopment of existing facilities in the retail real estate market will continue.
“Our most “sleeping” regions, where there are not many shopping centers that felt comfortable enough in the absence of competition, will now feel serious pressure. This is Khmelnytsky, where two facilities of 50,000 square meters are being built, Vinnytsia with a facility of more than 50,000 square meters, Dnipro with a facility of more than 100,000 square meters. Thus, all new facilities will be built taking into account the existing current trends and new tenants in the market, respectively, this will allow new shopping centers to be ahead 10 years of the existing centers,” Loktionova said.
In general, according to her, among those announced for opening before the end of 2022, 44 projects with a total lettable area of 1.36 million square meters are at different stages of implementation in Kyiv and the nearest suburbs.
According to Head of the UTG Strategic Consulting Department Konstantin Oleynik, if these projects are implemented and launched, there is a prospect of a surplus of retail space, which will lead to an increase in vacancy and lower rental rates in obsolete facilities.
“There are large facilities that can significantly affect the distribution of forces in the market. Some of the loudest are the River Mall shopping and entertainment center, Blockbuster Mall shopping and entertainment center, Lukyanivka shopping and entertainment center, and the second stage of the Auchan Rive Gauche shopping and entertainment center. In addition, there are a number of facilities that have just been announced, for example, a multifunctional complex in Lesia Kurbasa Avenue, the White Lines complex entering the active phase, the Respublika shopping center frozen in 2014, Ocean Mall shopping center, April Mall shopping center, Retroville shopping center, Lesnaya Mall shopping center,” Oleynik said.
According to the expert, among the projects for reconstruction/reconceptualization in Kyiv is the Karavan shopping and entertainment center, which will turn into an outlet center, the Lukyanivka shopping center, the Dream Town shopping center, and the Gorodok Gallery shopping center. The tenants of the Sirius shopping center in Troyeschyna, which will become the New Way shopping center of the district format, will change, and the Marmelad shopping center will also be updated.
According to UTG, in 2019, the Smart Plaza Obolon shopping center and the Oasis shopping center opened.
Thus, as of the end of June 2019, there were six regional trading facilities operating in Kyiv, 26 – district, 24 – microdistrict, 18 – specialized and 32 detached hypermarkets.
Despite this, the company records a reduction in the vacancy rate of retail space to 5.5%, and the entry of new international retailers to the market, such as Decathlon and In Wear Matinique, contributed to this. Until the end of the year, another seven operators are expected to enter the market, among which are Ikea, The North Face, Eataly, Funday, and others.
According to the UTG’s information, the average daily attendance of the shopping and entertainment centers at the beginning of July 2019 is 677 people per 1,000 square meters, which is 4% higher than in the same period in 2018. In terms of saturation with high-quality retail space, Kyiv is ahead of Budapest and Sofia, with an indicator of 527.1 square meters per 1,000 inhabitants.
According to the company, rental rates in U.S. dollars have increased by $0.9 since the beginning of the year and amounted to $24-70 per square meter a month. At the same time, fixed rental rates for restaurants and cafes are $15-30, for large-format clothing stores (600-1,500 square meters) – $1.5-20, for fashion galleries (100-200 square meters) – up to $70, for cinemas – $4-15, for grocery supermarkets – up to $15.

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Volume of construction production by type by region in jan-may 2019 (mln.Uah)

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