22 January 2018 The Business Week Week 2

TIU Canada to complete a $90million, 90 mw network of five solar power plants in southern www.ukraineinvest.com

By this summer, TIU Canada is to complete Ukraine’s wheat production will fall a $90 million, 90 mw network of five solar about 4% to a four-year low this year, power plants in southern Ukraine. The UkrAgroConsult forecast. With winter first project, a 10.5 MW plant in Nikopol, sowings vulnerable to winterkill from this Dnipropetrovsk, recently went on line. One week’s cold snap, the consultancy forecast more is to be built in Kherson and three a 2018 harvest of 25.1 million more in Mykolaiv. NovoyeVremya reports tons. Last Friday, the Wall Street Journal The Business Week is that reported that engineering is done reported that, due to low prices and large written and by Helios Strategia of France and Focal stockpiles, American farmers are cutting produced for Line Solar of the United States. Panels wheat plantings. The current crop is UkraineInvest by the Ukraine and equipment are supplied by JA expected to be the smallest since 1909. Business Solar Holdings of and SMA Solar Journal Technology of Germany. TIU is owned by Refraction Asset Management, a Canadian investment company.

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Agriculture In one bidding, the EU awarded all the duty-free Ukrainian wheat and corn Halfway through the marketing year, imports available for 2018, Reuters Ukraine has exported 52% more oil seeds reports. The EU awarded all 1 million tons than last year, 3.5 million tons versus 2.3 of wheat and 1.1 million tons of corn. million tons. The big growth is in rapeseed Reuters data analysis show that each which has been exported at double the bidder only will only receive between 1.8 volume of last year, Finance.ua reports. The and 2.7% of amounts requested. seeds are crushed to make canola cooking oil. In the first 10 days of January, Ukraine fully used up its duty free EU quotas for Now one of the world’s top five honey honey, grape juice and apple juice, Maksym exporters, Ukraine’s exports climbed Martyniuk, first deputy Agrarian Policy and again last year, by 19%, to 68,000 tons. In Food Minister writes on his dollars, exports increased by 38% to $134 Facebook page. The honey quota had been million, four times the amount of 2012. hiked by 46% to 7,900 tons. Exports above This year EU’s duty free import quota rises that level pay a 17.3% duty. Juice quotas are by 46% to 7,900 tons. Exports above that 14,000 tons. Martyniuk also said that chicken level pay a 17.3% duty. The top buyers are: farmers rushing to export used up 25% of the Germany, U.S, , France and Belgium. nation’s duty free quota by Jan. 10. www.ukraineinvest.com recorded a30%jump. in grapeproduction andKhersonwhich this year were Odesawitha24%growth In southernUkraine,thebiggrowth regions reports. 2016, theStateStatistics Service last year, Production ofgrapesforwine,grew by 7% Ukraine’s overall inflationrateof13.6%. prices jumped27.6%lastyear, wellabove surge,by theexport domesticbutter butter from Ukraine.Perhaps pulledalong Zealand. 2,300tonsof TheEUimported second placeafterlongtermsupplierNew to theEUnearlyseven times, Ukraine increased itsbutterexports meat andmilk.” including, genetics,production ofboth newlivestock herds.start We willsupport, told theCabinet:“I wanttobuildnewfarms, contributing toinflation.ThePrimeMinister herds dwindled,milkandmeatpricesrose, operations.Lastyear,ranches anddairy as loans at3%interest Minister Groysman promises subsidized To rebuild andbeefherds, dairy Prime rising. offruitsandberriestotheEUare Exports production afterthelossofCrimeain2014. Southern Ukraineisrebuilding grape Cabinet onWednesday, reports. Interfax year, percent oftheirnew plantingstockthis get government compensationfor80% Growers ofgrapes,berriesandfruitwill hybrid cars. speed ofEurope’s shiftto electric and aboutthe decision makingisuncertainty manufacturing carsinUkraine. Slowing foreign carcompaniesare studying produced 200,000carsayear. Several Ukrautoprom. In thelateSoviet era, Ukraine tradeassociation, to thecarindustry 63% lastyear, Ukraine’s vehicle production increased by Automotive PrimeMinisterGroysman toldthe

slowing down after a 31% jump in slowing downaftera31%jumpin to 8,586vehicles, according for the opening of new for theopeningofnew taking taking million project. in financingwhatistobea2-year, $140 Bank forReconstructionandDevelopment from rail toriver. JapanjoinstheEuropean reliabilitydelivery by shiftingitslogistics Nibulon seekstosave money andincrease One ofUkraine’s largest grainoperators, its mainBlackSeaterminal,inMykolayiv. to buya reloading craneandtoexpand to buildriver terminalsandariver fleet, EBRD willloanNibulonupto$50million license andclosing, Bank, orPromfin, islosingitsbanking Another bank,IndustrialandFinancial TransferGoservice increased by almost. from Poland toUkrainethrough theonline year theamountandnumber oftransfers company, saidinapress release: «Last Albee, director ofmarketing forthe almostdoubledlastyear.service countries, reports itsPoland-Ukraine remittance companyactive in45 TransferGo, aLondon-based money currency this year.” devaluationfurther pressure on thelocal The wideningtradedeficitwillcreate 2018 deficittouchingthe$7billionmark… goods trade deficitin2017,weseethe Akhtyrkowrites: “Given themuchwider up 30.4%.Concorde Capital’s Evgeniya 48.8% and overall totheEUwere exports side,mineralproductsexport were up up 52.5%andvehicles up43.8%.On the side, thetwobigvariables were: energy lagged, growing 20.6%.Ontheimport wereImports up27.5%yoy, whileexports according totheState Statistics Service. to $5.2billionthrough November, Ukraine’s tradedeficitmore thandoubled Banking andFinance the National Bank of theNational Bankof 2 / Magnus Magnus 2 / 3

Ukraine reports.Last year, the central bank currency only weakened by 3.1% during all closed nine banks. of 2017, it’s most stable performance in four years. To prevent exchange After and Egypt, Ukraine ranked rate spikes, the National Bank of Ukraine third among the 37 nations receiving has injected $53.5 million into the banking loans last year from the European Bank system this month. Concorde Capital’s for Reconstruction and Development, or Evgeniya Akhtyrko writes: “By the end of EBRD. Ukraine received EUR 581 million in 2018, we expect the hryvnia will touch UAH EBRD funding, about 6% of the bank’s total 29 to the dollar on the back of further current funding. Turkey and Egypt each received account deficit widening.” about triple Ukraine’s amount. Rents in upscale Kyiv shopping centers As part of the fight against the shadow rebounded last year by 23%, to $960 per economy, Ukraine will require that all square meters per year, the highest jump in merchants have point of sale card the history of the local index, reports Jones terminals within two years. Customers will Lang LaSalle, the real estate consultancy. have the option of paying with cash At the same time, vacancies dropped by or card. The new rule will extend terminals 6.5 percentage points, “a record drop in the to 183,000 new businesses, the Economic annual vacancy rate,” JLL reports. Pressing Development and Trade Ministry calculates. the market, real wages in Kyiv increased last year by 11.3% and, for the first time in As the Ukrainian banking sector stabilized recent memory no new shopping centers last year, the closing of bank branches opened. Due to construction delays, five slowed to 8%, half the 2016 percent closure new shopping centers are to open in 2018, rate of 16%. Today, Ukraine has 9,489 bank adding 114,000 square meters of new retail branches, according to the National Bank space. Also, this year, Kyiv is to see several of Ukraine. By shuttering 443 branches, new international brand stores: De Facto, Oschadbank accounted for about half of Decathlon, FLO, H & M, IKEA, Koton, and last year’s closings. Zara Home.

Today, lawyers for the new management The average sale price for a Kyiv of PrivatBank will argue in the Economic apartment fell 6% last year, to $977 Court of Dnipropetrovsk for the bank’s square meter, consulting company SV $65 million claim against Dniproavia, a Development tells UNIAN. While prices bankrupt airline once controlled by Igor fell across the city, the lowest drop was in Kolomoisky. Podil, where prices fell by 4.4% to $905/ square meter. Financing now is lined up for construction of the EUR 44 million Radisson Blu hotel Business in Odesa, reports the Black Sea Trade and Development Bank. The bank is loaning EUR 15.4 million for the project, joining Ukraine’s IT exports should grow by 25% two other institutional investors – the this year, to $4.5 billion, the IT Ukraine Danish Investment Fund and The Nordic Association predicts. Last year, growth was Environment Finance Corporation. Located 20% to $3.6 billion, the industry group says. on Primorsky Boulevard, the 205-room It says that the sector employs 116,000 hotel will be one of the first international specialists and pays about $600 million in hotels in Odessa. taxes.

The hryvnia weakened by 1.6% over the The EU-Ukraine free trade accord may be first two weeks of January to UAH 28.5 the best model for Britain’s post Brexit to the dollar. This comes after the national relationship with the EU, writes Tony 2 / 4

Barber, Europe Editor of the Financial rockets, which placed 26 satellites for 20 Times. He cites “an excellent paper on customers into orbit. the EU-Ukraine accord” written by Erika Szyszczak of the University of Sussex’s Thailand is to receive by ship next week UK Trade Policy Observatory. Attractive a final batch of Oplot battle from a to Brexiters, the EU Ukraine accord allows 2011 order to ’s , extensive access to the EU market, without reports. To complete the offering a path to membership in the EU or $240 million Thai order, Malyshev is to ship www.ukraineinvest.com the EU Customs Union. Ukraine’s accord several combat vehicles in coming weeks. calls for close defense and foreign affairs Fulfillment of the order was held up by the cooperation, without uncontrolled need to make tanks for Ukraine’s war effort movement of people. Noting continental after Russia supplied hundreds of tanks Europe’s move toward a closer union, in 2014 to separatists 300 km southeast Barber concludes: “To the extent that of Kharkiv Now, the plant is returning a more integrated Europe takes shape, the to producing Oplot tanks full time for most comfortable place for the UK, Ukraine Ukraine’s army. and Turkey may be outside the EU, but closely associated with it.” Saying “even our closest friends must play by the rules,» US Commerce Strengthening ties with China was one of Secretary Wilbur Ross has slapped anti- Ukraine’s top economic achievements of dumping duties on Ukrainian steel wire 2017, Ukraine’s Economic Development rod. Subject to final approval by March 1, and Trade Ministry said Wednesday. Trade the duties range from 35% to 44%. Interfax between China and Ukraine increased reports that American pressure for tariff 18% to $7.7 billion. In reporting the protection came after Ukraine’s exports to announcement, China’s news agency, the US of carbon and alloy steel wire rod Xinhua highlighted the bilateral Belt and more than doubled in 2016, to 146,470 Road action plan signed by both countries. tons, or $55 million. It called last month’s visit to Kyiv of Ma Kai, a Chinese Vice Premier, “a powerful signal of the strengthened economic partnership.” Commodities

New state support will allow the Ukraine nearly doubled exports of scrap production of over 120 films this year in metal last year, to 486,500 tons. Most of Ukraine, says President Poroshenko. He the scrap goes to Turkey and Moldova for writes on Facebook: “A bright future awaits the production of new steel, according to Ukrainian cinema!» the Ukrainian Association of Secondary Metals. The Eva drugstore chain expanded by one third last year, opening 154 new stores across Ukraine, according to the owner, Rush LLC of Dnipro. Employing 7,600 people, Rush saw its profit during the first three quarters of last year increase to $6 million. Energy Yuzhmash will supply 20 rocket engines to the European Space Agency through 2020, the Dnipro-based company TrailStone, a US energy trader, is applying reports. The engines are used in Vega for a license to trade natural gas in rockets which launch satellites. Since Ukraine, according to the website of the 2013, Ukrainian engines have powered 11 National Commission for Regulation of 2 / 5

Energy and Utilities. So far, the commission GE Renewable Energy will supply 26 wind has licensed about 300 energy traders, turbines this year to DTEK’s Primorsk many of them foreign. The commission wind energy station, in Zaporizhia, on the will consider TrailStone’s application on Sea of Azov. Catching wind off the sea, Tuesday. the power plant will have a capacity of 200 MW. The turbines are being made in Clare Spottiswoode, a veteran British Europe and will be maintained by a GE unit energy economist and manager, has in Ukraine. Scheduled for commissioning in been elected chair of Naftogaz’s new 2020, Primorsk is 45 km east of a second supervisory board. During the John Major DTEK wind farm, at Botijeve. Also 200 MW, years, from 1993 to 1998, Spottiswood this station uses Vestas wind turbines from directed the breakup of British Gas and Denmark. Britain’s gas market liberalization. Joining Spottiswoode as international board Ending a two-year boycott, Naftogaz will directors are: Steve Haysom of Canada, resume purchases of gas from Russia in Amos Hochstein of the US, and Bruno coming weeks, Andriy Kobolyev, company Lescoeur of France. Last summer, the CEO, told reporters in Kyiv Wednesday. first group of international directors quit, Referring to the Russian gas company’s complaining of government resistance to decision to lower prices after last month’s free market changes. The new board, with Stockholm court decision, Kobolev new Ukrainian directors, has the backing said: «We plan to import gas from two of Prime Minister Groysman and the directions. The price which Gazprom is European Bank for Reconstruction and now obliged to set is very attractive. We Development. The Bank gives Naftogaz should take advantage of this economic loans to purchase gas on the condition benefit.” He said Ukraine would probably of corporate restructuring. In addition to import 4 to 5 billion cubic meters of gas, de-monopolizing Ukraine’s gas market, the an amount equal to one third of Ukraine’s new board faces the challenge of breaking expected imports this year. In Nov. Ukrtransgaz off from Naftogaz and then 2015, Ukraine stopped buying gas from splitting it into two companies — one Gazprom, but much of the gas Ukraine to manage gas transit and the other to bought from the EU was actually Russian manage gas storage. gas that did a U-turn through a gas hub in Slovakia.

Working with foreign drilling companies, Ukrgazvydobuvannya, the nation’s largest natural gas producer, plans to double exploration and production drilling this year, to almost 500,000 meters. At the same Ukraine’s state gas production company time, the state company aims to increase plans to boost gas production at its production by 4.5%, equal to last year’s fields in Lviv region. Under new pressure growth, Oleg Prokhorenko, company CEO, to raise production, the company, told reporters Wednesday. The company Ukrgazvydobuvannya, intends to drill plans to increase exploration wells at six fields of its Lviv production in Western Ukraine by 50% affiliate. Last year, Ukraine’s gas production through 2025. Turning to Eastern Ukraine, rose by only 4%, a baby step compared Prohkhorenko blasted Poltava’s regional to the giant strides needed to reach the council for ‘blocking’ his drilling plans. government’s goal of self sufficiency by 2020. A 6-hectare site near Chernobyl is about to put for tender for a 30-year-lease, the State Property Fund reports. The Fund 2 / 6

says it already has one proposal, from a company that wants to build a 3M solar power plant.

Ukraine almost cut in half its consumption of anthracite coal last year, a cut prompted by Kyiv’s boycott of coal from secessionist Infrastructure controlled mines Increased nuclear power www.ukraineinvest.com production saved 2.3 million tons of coal, and a switch to gas coal saved another 1.8 A 5-year, $11 billion program to rebuild million tons of anthracite, Deputy Prime and repair Ukraine’s highways was Minister VolodymyrKistion said. approved Thursday by the Cabinet of Ministers. The plan calls for rebuilding Ukraine has enough proven natural 1,000 km of highways and repairing gas reserves to guarantee production 9,100 km. The project would create 55,000 at current rates through 2040, reports jobs. Interfax reports: “The program aims YaroslavKlymovych, chair of NadraUkrainy, to create a modern network of highways the state geological survey that will increase traffic and improve company. Reserves available for the investment climate and ensure the production amount to 453 billion cubic efficiency of transport services.” meters. However, he said 10 times that volume could be identified if Ukraine The Beskidy railway tunnel, designed undertook a nationwide survey program to speed freight from Ukraine to using modern technology. Hungary and Slovakia, will open May 25, according to Ukrinform. The new Nuclear power production increased by 1.8 km double track tunnel cuts under a 5.7% in 2017, Energoatom reports. About Carpathian mountain spines separating half of Ukraine’s power comes from its Lviv and Zakarpattia regions. It is to four nuclear power plants, a ratio topped in end bottlenecks caused by the existing Europe only by France. Last year, the single track tunnel, built in 1886. The nation’s 15 nuclear reactors produced 85 $120 million new tunnel is funded by the billion kWh. European Bank for Reconstruction and Development, European Investment Bank Engineering and Ukrzaliznytsia, the state railroad.

Antonov’s An-132D is Ukraine’s first Ukraine’s three major mobile operators aircraft without Russian parts, completed have agreed on terms for tender to extend with avionics from Honeywell, engines 3G and 4G into the Kyiv Metro, Kyivstar from Pratt & Whitney Canada, air President Petr Chernyshov, writes on management from Liebherr of Switzerland, Facebook. Kyivstar, Vodafone and Lifecell and propellers from GE Aviation Systems in hope faster cell speeds could be installed Britain, UkrOboronProm, the state defense in the metro one year from now. conglomerate, reports. The An-132D was developed in partnership between One third of Ukraine’s villagers, half of UkrOboronProm and Saudi Arabia’s Taqnia schools and almost all medical facilities Aeronautics. Now UkrOboronProm is do not have access to high speed talking with Saudi Arabia, Turkey broadband internet, StepanKubiv, Minister and the to similarly of Economic Development and Trade told upgrade the An-70 with “new avionics and the Cabinet Wednesday. Unveiling a 3-year no Russian components.” A four engine plan for “the development of the digital medium range transport aircraft, the An-70 economy and society,” he said a priority is can ferry 47 tons for a range of 3,000 km. to extend broadband Internet to 80% of the No sales have been made of either aircraft. national territory by 2021. 2 / 7

murder cases, while 466 cases were solved that had been dragging over the years.» Last November, The Wall Street Journal started a feature story: “Bodies are piling up in Kiev...” Last week, The New York Times published a lengthy story on the murder of Iryna Nozdrovska, the Privatization human rights lawyer.

Ukraine is preparing tenders to sell 20 large state companies, including 68% of Zaporozhye Aluminum Smelter, 99.567% of Odessa Port Plant and 99.995% of Sumykhimprom and five regional energy companies, Vitaly Trubarov, head of the State Property Fund, writes on Facebook. At the same time, Rada, deputies are to Telecommunications start debating a new privatization law this week. Digital audio broadcasting is to come to researchSocial projects in Ukrainian universities. Kyiv in the second half of 2018 as a DAB+ broadcasting license is to be issued shortly by the National Television and Radio The CIA blames Russian military Broadcasting Council of Ukraine. The new hackers for the cyberattack that crippled multiplex will feature 14 radio, stations computers in Ukraine last June, an which will be made up of five national effort to disrupt the financial system, radio stations and nine regional and local The Washington Post reports. Delivered stations, reports Radio World news site. through a mock ransomware virus dubbed Concern Radio Communications and NotPetya, the attack wiped data from Television is managing the project, which the computers of banks, energy firms, involves building by June two transmitters, senior government officials and an airport. one on the left bank and one on the right Launched on Ukraine’s Constitution Day, bank. the virus spread around the world, but more than half of the victims were in Over the Christmas/New Year’s holidays, Ukraine. Post reporter Ellen Nakashima Ukrainians called less, but used twice reports that the CIA concludes with “high as much internet traffic on their smart confidence” that NotPetya was created phones, according to the nation’s top three and sent out by hackers working for the mobile operators. Kyivstar, the largest GRU’s Main Center for Special Technology, reports: “The total amount of data traffic or GTsST. used by subscribers in the Kyivstar mobile network for the New Year and Christmas Despite foreign press reports that imply 2018 reached 2,4 thousand terabits (nearly that Ukraine has a high crime rate, the 200 years of HD video viewing). number of murders is one third the level of 20 years ago, ViacheslavAbroskin, deputy Tourism chief of Ukraine’s National Police writes on Facebook. In 1997, 4,529 people were murdered in Ukraine, three Tourists spent $750 million in Lviv last times as many as the 1,551 murders year, calculates the City Council. About 2.6 recorded in 2017. He wrote: «In 2017, million tourists visited western Ukraine’s culprits were identified in 1,387 out of 1,551 largest city, about 3.5 tourists per resident. 2 / 8

By comparison, Prague gets about 5.4 Wizz Air’s traffic in and out of Ukraine tourists per resident. Lviv’s visitors spend jumped 64% last year, to 685,000 an average of 4.4 days and spend $90 a passengers, the Budapest-based discount day, Unian reports. The top 10 nationalities airline reports. Last year, Wizz Air restarted are: Ukrainians, Poles, Belorusians, Turks, service to Lviv and added a second Airbus Germs, Americans, Lithuanians, Britons, to its Kyiv Zhuliany base. This year, it Czechs and Canadians. Of the total, 41% launches service from Kharkiv and will were Ukrainians and 58% were return base a third Airbus in Kyiv. With more www.ukraineinvest.com visitors. destinations and more frequencies, Wizz Air aims to increase this year its Ukraine Ukrainian visa centers open today in 10 traffic by another 60%, to 1.1 million new foreign cities, including three in China, passengers. according to the Foreign Ministry. The cities are: Abuja, Beijing, Beirut, Cairo, Delhi, Passengers using Ukraine’s airports Guangzhou, Luanda, Rabat, Shanghai and increased by 27.6% to 16.5 million people Tunisia. In contrast to the current bare last year. International travelers accounted walls format, the new centers will offer for 88% of the total traffic, or 14.5 million new services -- making I.D. photographs, people. Foreign travel was up 29.2% over translating documents into Ukrainian, 2016, according to the State Aviation copying documents, preparing medical Service. Ukrainian airlines accounted for insurance policies, courier services, SMS- 64% of the traffic. The number of flights by alerts, and “servicing in Ukrainian airlines increased by only 16%, a comfortable lounges.» situation that resulted in fuller flights and fewer ticket discounts.

Bulgaria Air, the flag carrier of Ukraine’s Black Sea neighbor, plans with start service to Ukraine Feb. 2 with flights twice a week between Sofia and Odesa. UIA and Windrose currently fly between Sofia and Transportation Kyiv Boryspil. Betting on India, UIA has decided to Elon Musk’s SpaceX has chartered an increase the frequency of its new Kyiv Antonov Airlines AN-124-100 cargo Boryspil-Delhi flight to five times a week. jet to carry a 28-ton carrier rocket nose Boeing 767s will fly the route, which starts cone across the US this week, from Los May 1. At the same time, UIA will Angeles to Kennedy Space Center in increase its flight frequency from Boryspil Cape Canaveral, Florida. Known as the to Colombo, Sri Lanka to three flights a ‘Ruslan,’ this massive plane was the only week. strategic airlift jet capable of handling such oversized cargo.

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