Business news from Ukraine


The decision of the National Security and Defense Council (NSDC) of Ukraine to return to state ownership of a part of the main oil product pipeline Samara-Western Direction will lead to a halt in supplies along it, but will not cause a deficit and a significant increase in prices for diesel fuel, A-95 Consulting Group said.
“We see no prerequisites for resource tension in the market. In the past three years, the loading of the oil product pipeline has decreased, the main reason was the introduction in the summer of 2019 of a special duty of 3.75% [now 4%] on pipeline supplies of Russian diesel fuel. As a result, if in 2018 imports through Prykarpatzakhidtrans amounted to 1.98 million tonnes [30.5%], then in 2019 it was 1.23 million tonnes [17.76%], and in 2020 – some 635,000 tonnes [8.57%],” the group said in a statement.
According to A-95 Group Director Serhiy Kuyun, the Ukrainian market is diversified to the maximum, and it will not be difficult to replace the 50,000 tonnes of pipeline supplies per month.
“This will happen both due to reorientation of pipeline volumes for shipment by railway, and due to reserves of domestic oil refining and imports by sea,” he said.
Kuyun, in particular, assumes that at least 20,000-30,000 tonnes can additionally be delivered to Ukraine from the Belarusian terminal in Gomel, where Russian diesel fuel is transshipped form the pipeline Samara-Western Direction to the railway transport. Also, from March, an increase in imports of Russian diesel fuel by railway across the eastern border is expected. A large margin of capacity for transshipping from the sea remains at the Ukrainian ports: they are used by less than 30%. We can also count on a slight increase in supplies from Belarus.
“The greatest potential has Ukrainian oil refineries, which are loaded with raw materials by less than 30%. The main reason is the disproportion in excise taxes on motor fuels. It stimulates the consumption of diesel fuel and liquefied gas, which Ukraine is forced to import by 70-80%. A solution to this problem could give an incentive to increase oil refining and, as a result, reduce import dependence on all fuel types,” Kuyun said.
A-95 Consulting Group does not exclude an insignificant (within 1-1.5%) increase in wholesale prices for diesel fuel in the central and western regions, where pipeline diesel fuel was mainly distributed.
As reported, Prykarpatzakhidtrans operates a section of the Samara-Western Direction oil product pipeline with a length of about 1,100 km, intended for pumping diesel fuel from Russia and Belarus, both for the internal needs of Ukraine and for transit to Europe, in particular, to Hungary. The design capacity of the pipeline is 3.5 million tonnes per year.
The Ukrainian section of the Samara-Western Direction oil product pipeline belongs to Prykarpatzakhidtrans LLC (Rivne). Until 2016, the company was a structural subdivision of Russia’s Transneft subsidiary Transnefteprodukt. In February 2016, Transneft sold Prykarpatzakhidtrans to the Swiss International Trading Partners AG. In March 2019, the Antimonopoly Committee of Ukraine (AMCU) allowed the unitary enterprise Oil Bitumen Plant, owned by the large private Belarusian oil trader Interservice, to acquire control over Prykarpatzakhidtrans.
At present, Prykarpatzakhidtrans with a charter capital of UAH 105.563 million belongs to the Oil Bitumen Plant (51%), International Trading Partners (48%) and Anatoliy Shefer (1%).
The pipeline was built during the Soviet era and after the proclamation of Ukraine’s independence was to become the property of the state on the basis of succession, as a main pipeline. At the same time, Russian Transnefteprodukt did not transfer this pipeline to the ownership of Ukraine. In 2011, the Economic Court of Rivne region recognized the Ukraines’s ownership of a part of the pipeline passing through the territory of Ukraine, and the Economic Court of Appeal and Supreme Economic Court in 2014-2015 upheld this decision.
However, in 2015, the Economic Court of Rivne region canceled the decision due to allegedly newly discovered circumstances. Later, in 2017, the same court ruled that the ownership of a part of the oil product pipeline belonged to Prykarpatzakhidtrans LLC. It was based on the conclusion of the forensic engineering and technical expertise of the experts of the Ukrainian Research and Design Institute of Nitrogen Industry and Organic Synthesis Products that this pipeline was not a main pipeline. The NABU considers such a conclusion to be deliberately false, therefore, together with the SBU in February 2021, it announced suspicions to the experts.
President of Ukraine Volodymyr Zelensky, by decree of February 19, 2021, put into effect the NSDC decision on taking measures to protect the property interests of the state, which, among other things, instructed the Cabinet of Ministers to determine the central executive body responsible for the preservation and operation of a part of the oil product pipeline passing through the territory of Ukraine.
According to NSDC Secretary Oleksiy Danilov, “an instruction has been given to all relevant bodies: to return the property of the Ukrainian people in a legal way and to find out why the state property ended up in private hands.”

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Foreign companies are interested in entering the Ukrainian electronic health care system market, and the Ministry of Health intends to assist them, Deputy Health Minister Yaroslav Kucher said during a press briefing in Kyiv on Wednesday.
“There is an interest from many countries around the world in our system, how it works and whether it is possible to enter the market. It is the best time for this now. Our team is ready to assist new companies, but first of all we support the national producer,” he said.
The deputy minister added that the Ministry of Health is working on approving the concept of the electronic health care system and developing an action plan. In addition, Kucher noted that from 2021 all medical institutions should have access to the electronic health care system.
“In accordance with order of the Ministry of Health No. 587, from January 1, 2021, all medical institutions and private entrepreneurs who have received the appropriate license must be able to enter medical records on referrals and prescriptions for medicines, have access to the electronic health care system respectively,” he said.
Kucher also added that Ukraine had already introduced electronic medical certificates of birth. “As of Wednesday morning, the first document of a newborn has been written out more than 6,000 times. The leaders in issuing such documents are Dnipropetrovsk and Kharkiv regions, as well as Kyiv,” he said.

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One of Ukrainian banks and the large Ukrainian agricultural holding Kernel signed a first non-deliverable forward (NDF) contract in the history of Ukraine last week, the National Bank of Ukraine (NBU) has said.
“This is the first transaction to hedge currency risks of this type in the Ukrainian market. Earlier, deliverable forward contracts were also concluded in the market, but their share is still insignificant and has great potential for growth,” the regulator said in a statement last week.
NBU Deputy Governor Oleh Churiy said that in the world on the foreign exchange market spot transactions, that is, those that are actually settled on the same day, make up no more than a third of the total foreign exchange market.
“The rest are transactions using hedging instruments: forwards, futures, swaps. Unfortunately, in Ukraine it is the opposite: spot transactions dominate, and cases of hedging currency risks by the business are still isolated,” Churiy said.
According to him, with a floating exchange rate, business owners and financial directors should pay attention to hedging tools that are already available in Ukraine. These are, in particular, deliverable and non-deliverable forward contracts, which can be concluded with banks for export-import operations or loans from nonresidents.
“For four years now, Ukraine has been living in a flexible exchange rate environment that avoids the accumulation of imbalances in the economy, but also requires prudent planning for the business,” the NBU deputy governor said.

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The international hotel operator Accor (France) has signed a management contract for the Swissotel Living hotel at 13 Luteranska Street in Pechersky district of Kyiv, the opening of which is scheduled for 2021-2022. “This will be an aparthotel designed for long and medium-term accommodation (extended stay). The owner of the hotel and Accor believe that this format has good prospects in the city,” Accor New East Europe Development Director Yekateryna Marchenko told Interfax-Ukraine.
The object will be housed in a historic building near Khreschatyk Street, after restoration it will have 58 rooms.
The expert noted that before joining the Accor chain, the Swissotel brand already made attempts to enter the Ukrainian hotel market, but the planned projects were not implemented.
Accor Group is one of the leading hotel operators in the world. It opened its first hotel under the Novotel brand in Lille (France) in 1967.

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The BlaBlaBus bus low-cost carrier, founded by the world’s largest international online service of the search for automobile travel companions BlaBlaCar (France), plans to enter the Ukrainian market. “Our first BlaBlaBus bus route has already been launched in Germany. We plan to connect 60 cities across Germany and Benelux with our routes in the first year of operation. Then we will expand the BlaBlaBus coverage to the whole of Europe. In our non-European markets where we have already started connecting professional bus carriers to our platform, we will also redouble our efforts in this direction, with a focus on Russia, Ukraine and Latin America,” co-founder and CEO of BlaBlaCar Nicolas Brusson said in an interview for the Journal.Octobus magazine.
According to him, the BlaBlaBus service will help reduce the number of cars on the roads, as well as reduce the cost of travel.
BlaBlaBus launched its first bus route in Germany on June 11, 2019. In 2018, BlaBlaCar bought the French carrier Ouibus, on the basis of which BlaBlaBus was created. Before the merger, the French service had more than 300 bus routes around Europe.
BlaBlaCar (France) is the world’s largest international online service of the search for automobile travel companions, it was founded in 2006. The company operates in 22 countries, the total clientele of the project exceeds 70 million people.
BlaBlaCar entered the Ukrainian market in early 2014, having bought the Ukrainian startup Podorozhniki.

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