6:23 AM Sunday, October 21, 2018 - Tuesday, December 26
OPIC loans for $1.4 billion nuclear fuel storage plant; Russia/Ukraine claim victory in gas arbitration; Ukraine’s deep East-West industrial divide
image/svg+xml Kyiv Lutsk Rivne Zhytomyr Lviv Ternopil Khmelnytskyi Uzhgorod Chernivtsi Vinnytsia Chernigiv Sumy Kharkiv Poltava Cherkasy Kirovohrad Lugansk Dnipropetrovsk Donetsk Zaporizhzhia Mykolaiv Odesa Kherson Simferopol Sevastopol Ivano- Frankivsk
  • Washington’s OPIC is loaning $250 million to Kyiv’s Energoatom for the first stage of a $1.4 billion nuclear waste storage facility to be built in the Chornobyl exclusion zone. Holtec International, a New Jersey-based supplier of equipment and casks to manage spent nuclear fuel, broke ground last month on the project, which is to end Ukraine’s dependence on Russia for spent fuel storage. Energoatom, which operates Ukraine’s four nuclear power plants, stated: “Ukraine will not spend about $200 million annually on removal of spent nuclear fuel to the Russian Federation, and it will safely store valuable nuclear materials locally until their processing becomes feasible and energy efficient as much as possible.”
  • Westinghouse Sweden is displacing Russia’s TVEL as the primary source of nuclear fuel for Ukraine 15 power reactors, says Ihor Nasalyk, Minister of Energy and Coal Industry. Three years ago, at the time of Russia’s military attack on Ukraine, TVEL supplied 95% of Ukraine’s nuclear fuel. Nasalyk told reporters last week: “Next year we will get a 55-45 proportion, in favor of the U.S. company.” Now, if Russia were to launch a fuel embargo, Nasalyk said, Ukrainian plants could keep operating, by drawing on fuel stocks and by buying fuel from Westinghouse and other Western suppliers. Ukraine gets 55% of its electricity from nuclear.
  • After a Stockholm arbitration court ruling Friday on a 2009 gas supply contract, Ukraine and Russia are claiming victory and selectively leaking what they say are details. Gazprom says Naftogaz was ordered to pay more than $2 billion for Russian gas – and to keep buying it. Naftogaz says it won a major price reduction. Full details and final figures will be known in two months, when the court rules on a separate case, revolving around transit fees for Russian gas. In this case, Naftogaz claims Gazprom owes $16 billion.
  • Sweden’s Ukrainian Sawmills opened its first woodworking plant in Rivne, about 200 km east of the Polish border. Johan Dunbek, Swedish co-founder of the company, said the plant in Kostopil, “is a high-tech production plant with the capacity of 300 thousand cubic meters of products meeting European quality standards.” A second plant is to be built 50 km to the north, in Sarny. Using Finnish, Italian and Swedish equipment, each plant costs about EUR20 million. To boost domestic production of furniture and building materials, Ukraine has banned the export of raw logs.
  • Sweden’s Lars Peter Elam Håkansson, has won permission from Kyiv to build a $6 million, 660-seat school in Obolon, near the golf center, at the southern end of the riverside park. Håkansson, who is chief investment officer of Stockholm’s East Capital Holding AB, makes the investment through a new local company, AR Osvita. To win the building permit, AR Osvita agreed to spend $540,000 refurbishing government schools in Obolon, the city’s northernmost district.
  • Vietnam now recognizes Ukraine’s ownership of 37% of Lotus Port on the Saigon River, and will pay $250,000 in back dividends, says Infrastructure Minister Volodymyr Omelyan. A Soviet legacy, Ukraine’s ownership of the port, about 15 km downriver from central Ho Chi Minh City, fell under control of Ukrainian businessmen who ‘privatized’ Ukraine’s share without the permission of Kyiv.
  • U.S. President Donald Trump will suspend some of Ukraine's benefits under a preferential trade program in four months unless Kiev improves its protection of property rights, Reuters reports from Washington. Neither the proclamation signed by Trump nor the statement by the U.S. Trade Representative's Office indicate which preferences would be suspended.
  • Rising yields will boost Ukraine’s annual grain crop by 60%, to 100 million tons, in 2020, Mykola Gorbachov predicts, according to World-Grain news site. Under this optimistic forecast, Ukraine’s exports would similarly jump to 70 million tons.
  • The Rada dispersed for the holidays last week without voting on new governor of the National Bank of Ukraine. If a new central bank governor is elected at the start of the new session, in mid-January, it would end a 9-month transition period since April 10, the day Valeriya Gontareva submitted her resignation.
  • Large bank failures are not expected in 2018, Konstantin Vorushylin, head of the Fund for Guaranteeing Individual Deposits, told reporters. During 2017, nine insolvent banks were transferred to the Fund, making for a total of 94 banks under Fund management.
  • President Poroshenko has submitted a new draft law to the Rada to create an anti-corruption court. A committee must now review and approve the bill, before it can be voted on by parliament at the session. Resistance to setting up such an independent court has been a big barrier to progress with the IMF loan program.
  • Behind a marginal nationwide industrial output increase of 0.3% in November, Gosstat statistics show a sharp east-west divide. Year over year, the deepest declines were in Ukraine-controlled Luhansk -41%; Mykolayiv -11%; and Ukraine-controlled Donetsk -10%. Western regions showed the biggest growth: Ternopil +23%; Rivne +14%: and Ivano-Frankivsk +14%. Concorde Capital’s Alexander Paraschiy writes: “For 2018, we project strong industrial recovery of 4.6% yoy growth owing to strong export prices and a low comparative base.”
  • Prime Minister Groysman signaled opposition to the bill "Buy Ukrainian, pay Ukrainians" which would mandate national content of government supplies and services. Speaking Friday of the bill, which passed its first reading in the Rada, Groysman said: “It requires a lot of meaningful expert work to ensure that, first, it does not violate any of our international obligations, which is unacceptable, and, second, not create any corruption risks." Several government officials have spoken against the bill, saying it violates Ukraine’s free trade pact with the EU.
  • Ukraine’s foreign trade is up 24% through October, Trade Representative Natalia Mykolska said in a year end press conference. Exports are up 21%, to $35 billion. The negative trade balance is not "critical" she said, arguing that imports often modernize factories. Separately, Economic Development and Trade Minister Stepan Kubiv said that the government will spend $7 million next year to fund the new export credit agency.
  • Wizz Air will launch its flight from Lviv to London Luton on May 1, instead of September as planned. At the same time, the discount airline is delaying by two months, to June, the launch of flights from Kyiv Zhuliany to new cities in Europe: Bratislava, Cologne, Copenhagen, Dortmund, Hanover, Larnaca, Lisbon, Memmingen, Tallinn. The delay stems from a delay in basing a third Airbus A320 at Zhuliany.

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