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5 March 2018 The Business Week Week 8 GE Signs $1 billion locomotive deal with Ukraine www.ukraineinvest.com KYIV -- In one of the biggest US infrastructure, thereby helping to move investments in Ukraine ever, GE cargo faster and more efficiently. It will Transportation signed a 15-year, $1 strengthen Ukraine’s position as a key billion diesel locomotive supply deal with Europeanrail hub and operator.” Ukrzaliznytsya on Friday. The deal was facilitated by a To start, GE is to supply 30 locomotives performance bond of over $100 million, The Business – worth about $140 million -- to extended by Citibank to Ukreximbank. It Week is written Ukraine’s state railways this year. During would cover losses if GE does not deliver and produced by James Brooke, the contract, GE is to produce up to 225 this year’s locomotives, said Steven Editor in Chief new diesel locomotives and upgrade 75 A. Fisher, Ukraine country officer for of the Ukraine Business Journal older models. The degree of localization Citigroup. for and on behalf in Ukraine is reach 40%. of UkraineInvest Marie Yovanovitch, US Ambassador “Our dynamic talks with GE lasted only to Ukraine, said: “By modernising its five months and led to the signing of railroad, this project will bring Ukrainian Ukraine Business Journal this unprecedented agreement,” Prime more product to ports. Ukraine will Minister Volodymyr Groysman said of the benefit for decades to come. This deal. “My government is always ready agreement sends a very strong message to support innovative investments that to the world that Ukraine is changing result in high value-added products and the way it is doing business,” she said, create new jobs in Ukraine.” noting that the first group of locomotives will be manufactured in Texas and At the signing at Ukrzaliznytsya’s Pennsylvania. headquarters on Tverska street, Raphael Santana, President and CEO of GE UkraineInvest, the government’s Transportation, noted this is GE’s largest investment promotion agency, pushed deal in the company’s 80-year history of hard last fall to make the GE deal working in Ukraine. happen. President Poroshenko traced the start of the deal to last July when «Our cooperation can serve as a catalyst he visited Washington and met with for attracting international investment President Trump. “During my visit to and accelerating Ukraine’s economic America, we discussed with Trump growth,» Santana said, noting that that our countries’ relations should be the American company also has wind practical,” he said Friday at the railway and biogas projects in Ukraine today. headquarters. “The company was in need “We also are proud to take part in the of rolling stock, new locomotives. A $1 modernization of Ukraine’s railway billion contract was signed very quickly.” 8 / 2 In an interview before the signing, week a $100 million revolving credit line Yevhen Kravtsov, acting CEO of from a syndicate of European banks. Ukrzaliznytsya, said the average age of According to a company note on the the railroad’s 300 diesel locomotives is website of the Warsaw Stock Exchange, 30 to 40 years, at or over the end of their the 2.5-year line will be used to replenish expected working lives. Last August, working capital in Ukraine for Kernel’s at the start of the peak season for export business. Kernel exports to more moving grain harvests to the ports, the than 60 countries. railroad was short as many as 60 diesel locomotives to move freight, of 20%. An Sugar prices will be soft this year on a intensive repair effort helped railroad get worldwide oversupply of sugar of nine through the harvest season. million tons, Igor Buchatskiy, CEO of ED&F Man Ukraine, tells AgriLand news www.ukraineinvest.com Some of the new, US-made locomotives site. Low prices could push the EU to cut are to arrive here in time for this year’s sugar subsidies. ED&F modernized their harvest. In addition, Ukrzaliznytsya, may Zasylsky Sugar Factory with equipment lease locomotives from Baltic countries imported from three sugar mills closed in where locomotives are idle due to drops Ireland. Around the plant, near Mykolaiv, in trade with Russia. Due to the war, ED&F farms 14,000 hectares of sugar Ukrzaliznytsya lost access to Ukraine’s beets, with 9,000 under irrigation. only locomotive manufacturing plant, located in a rebel-controlled portion of OKKO-Agrotrade plans to triple pre- Luhansk. Unofficial reports say the plant crop financing to farmers to $110 is damaged beyond repair, with some million this year, the OKKO group holding factory equipment shipped to Russia. company reports. Founded in 2016, OKKO-Agrotrade provides farmers with Under the deal with GE, locomotive parts fuel, mineral fertilizers, plant protection will be made in Ukraine to GE world products, seeds and financing. Last year, standards. This way Ukraine will become OKKO exported 500,000 of farm products, part of GE’s world supply chain. Some about half of which were financed by parts are to be made at Kriukiv Railway OKKO. Car Building Plant in Kremenchuk. Ukraine’s crop production increased by Daniel Bilak, director of Ukraineinvest, 7.3% last year, and animal husbandry said that the arrival of GE Transportation - by 30.7%, the State Statistics Service boosts Ukraine’s reputation as a reports. During the year, the cost of crop desirable investment destination. production increased by 9.7%, and cost of “We continue to target global brands animal husbandry by 22%. for investment, in order to reach the Government’s goal of 5-7% economic Anti-corruption growth per year by 2020,” he said. John Sullivan, US Deputy Secretary Agriculture of State, said in Kyiv Wednesday that economic development depends on Ukrainian corn producers will have an reform. “Deeper reforms are needed to lift edge for March and April ship loadings the economy over the long-term,” he said due drought in Argentina which is in a speech at the Diplomatic Academy. damaging corn quality and delaying “And comprehensive judicial and law harvesting, Platts reports from London. enforcement reform, which Ukraine has embarked on is the key.” He cited the need Kernel, the world’s largest producer and for an independent Anti-Corruption Court, exporter of sunflower oil, attracted last 8 / 3 adding: “The Prime Minister just told me Airlines, tells reporters. By 2021, the about a package of over 30 new draft laws airline plans to have 74 aircraft flying that he expects will improve the business 13.3 million people a year. Bolstering its environment once implemented.” Boryspil hub, UIA plans to increase its share of transit passengers from 52% Automotive today, to 60% in 2021. UIA plans to restore scheduled service to three mothballed Ukraine could become a «European Ukrainian airports – Vinnytsia, Mykolaiv China» for producing electric cars and Uzhhorod. By 2022, Ukraine’s flag and batteries for the EU, Oleg Boyarin, carrier plans to start flights to three board chairman of Eurocar, tells Liga. Chinese cities - Guanzhou, Sanya and net. Boyarin, whose company makes Shanghai; to three North American Skoda cars in Uzhhorod, said he works cities – Toronto, Chicago and Miami; to with the Infrastructure Ministry to work three Central Asia capitals – Ashgabat, out an electric car strategy for Ukraine. Bishkek, and Turkmenistan; to two African With government support, Ukraine could cities – Cairo and Addis Ababa; and to 12 develop an export-oriented car industry European cities. in partnership with American, Chinese or With the upsurge in air travel from European brands. Ukraine, AirAdvisor has expanded from Poland to Ukraine, opening an Aviation office in Kyiv on Monday. This online service collects compensation from DART Ukrainian Airlines wants to emerge airlines in case of delay or cancellation from bankruptcy as Alanna LLC. On of a flight, denied boarding, or missing Tuesday, Alanna will ask the State Aviation a transfer. Average payment is EUR400. Service permission to resume DART’s AirAdvisor takes a 25% commission. routes to Albania, Georgia, Greece, Italy SerhiyAleksandrov, company head, said of and Montenegro. It will ask for authority his work in Ukraine: «AirAdvisor has been to open new routes to Helsinki, Stockholm operating in a test mode for more than and Erbil, Iraqi Kurdistan. With the same three months, during which we managed CEO as DART, VyacheslavLisichonok, to collect thousands of euros from airlines Alanna wants to fly from Kyiv, Kharkiv, Lviv around the world, including Lufthansa, and Odesa. Air France, LOT Polish Airlines, Ellinair, A Ryanair corporate jet was spotted Ryanair, Air India and Windrose.» Wednesday night at Boryspil, prompting Infrastructure Minister VolodymyrOmelyan Infrastructure Minister Volodymyr to announce Thursday that high level Omelyan wants to double traffic in and “successful” discussions had taken place out of Boryspil to 20 million passengers with executives of the Dublin-based by 2020. At the same time, he tells discount airline. With 421 Boeings serving reporters, he wants to promote Lviv, 205 cities, Ryanair is Europe’s largest Odesa and Kharkiv as regional air hubs. airline by scheduled passengers flown. Air Azur Ukraine launches March 25 In 2016, it carried more international a once a week flight from Kharkiv to passengers than any other airline in the Barcelona. The airline already flies from world. Kyiv Boryspil to Barcelona. UIA plans to double passengers and double aircraft by 2021 and to add Banking & Finance 38 new cities by 2022, Aron Mayberg, board chairman of Ukraine International Ukrposhta is taking a big step toward becoming a postal bank by partnering 8 / 4 with First Ukrainian International Bank Blu hotel in Odesa, on the site of the to offer financial services at post offices. Seamen’s Palace on Primorskii Boulevard. Igor Smelyanski, acting CEO of the state Conversion of this early 19th century postal service, says he will concentrate on landmark building can now start as the villages without bank branches.