Renault considers manufacturing cars in Ukraine

French car manufacturer Renault is considering manufacturing cars in Ukraine.

Renault told the Kyiv Post on July 23 that it is currently evaluating the Ukrainian market.

“Renault confirms that it is studying various projects with potential local manufacturing partners that has to do with the localization of assembling specific models of the group’s brands in Ukraine,” the company’s Ukraine branch responded to the Kyiv Post’s inquiry after Ukraine’s government said last week Renault might build a car manufacturing plant in Ukraine. “In regards to this, there was a (Renault) meeting with Ukraine’s Prime Minister Volodymyr Groysman on July 18.”

The same day, Groysman tweeted that he met with Renault managers to discuss manufacturing possibilities.

“This means (potential) additional jobs and the expansion of export opportunities,” Groysman wrote.

The interest comes at a time in Ukraine when car manufacturing has plummeted since 2008. Back then, the country produced more than 401,000 vehicles whereas in 2017 it was only at 7,296, according to Ukrautoprom, Ukraine’s association of car manufacturers.

And Ukraine is expected to buy just 100,000 new cars in 2018, or about one-sixth of what it bought in 2008.

Back in May, Renault’s country manager Francois Mariotte told the Kyiv Post that the company is not planning to open any factories in Ukraine yet, but also mentioned that it’s not out of the question in the long run.

“As far as the market will remain around 100,000, it is too small…. It’s too small and frankly speaking for the time being we don’t have any project (in Ukraine),” Mariotte said. “Nevertheless if you look at a 5-10 year plan we could imagine again that the Ukrainian market will recover and reach 250,000, 300,000, 400,000 cars or even more.”

“One day when the market will recover, we can imagine that car manufacturers could make some kind of revival plan of automotive industry in Ukraine. For this, (Ukraine needs) conditions from the government to avoid taxes, good conditions to help us invest in Ukraine, we also need stability. In one word I would say – trust.”

The car company opened a manufacturing plant in 2014 in Algeria that accounts for 60 percent of new car sales in the African nation. The same thing could happen in Ukraine, Mariotte said.

 

Source: Kyiv Post

Minister Bibeau announces support to Women’s Voice and Leadership initiative in Ukraine

July 23, 2018 – Kyiv, Ukraine – Global Affairs Canada

Canada believes that society is more prosperous, peaceful and secure when women’s rights are respected, their voices are heard and they can exercise their leadership. Women’s rights organizations and local women’s movements in Ukraine are key agents of change in advancing Ukraine’s democratic and economic reform, strengthening the rights of women and girls, and advancing progress towards gender equality.

On the last day of her visit to Ukraine, the Honourable Marie-Claude Bibeau, Minister of International Development, announced up to $4.75 million in funding over five years to support a Women’s Voice and Leadership initiative in Ukraine.

The project will strengthen the capacity of local women’s organizations to promote and defend human rights and empower Ukrainian women and girls.

Quotes

“Women’s rights organizations and movements have invaluable experience in driving global and national action on gender equality. Local and national advocates often have the greatest understanding of the challenges that women and girls face, and essential knowledge of how to advance their rights and bring about systemic changes. That is why Canada supports women’s organizations and movement in Ukraine and across the world in tackling gender inequality.”

– Marie-Claude Bibeau, Minister of International Development

Quick facts

  • The Women’s Voice and Leadership initiative, which was launched in 2017 as part of Canada’s Feminist International Assistance Policy, responds to the needs of local women’s organizations and movements in developing countries, which are working to advance the rights of women and girls and promote gender equality.
  • Canada committed to allocating $150 million over five years to the Women’s Voice and Leadership initiative to respond to the needs of local women’s organizations in developing countries that are working to advance the rights of women and girls and to promote gender equality.

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Justine Lesage
Press Secretary
Office of the Minister of International Development
343-203-5977
justine.lesage@international.gc.ca

Media Relations Office
Global Affairs Canada
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Source: Government of Canada

Business associations, investors call on lawmakers to secure next IMF tranche before July 20

Top investors and business associations have called on the Ukrainian government and parliament to make a deal with the International Monetary Fund in order to unlock a long-delayed $1.9 billion tranche of aid money for the country.

If Ukraine does not receive further financial support from the IMF, the country will suffer, as Ukraine’s economy is still fragile, business leaders said at a press conference in central Kyiv on July 12.

“(At stake is) the loss of two years of future (gross domestic product) growth, hard-won financial stability, billions of dollars of investment, thousands of jobs, the containment of brain drain, and hope for a better future,” reads a statement released by the business leaders.

Ukraine still has to qualify for half of the $17.5 billion in conditionally approved credits granted to it under a program that expires in March.

But Ukraine is still far from completing its reform homework, as it still needs to create an anti-corruption court that is approved by the Venice Commission, raise its domestic natural gas prices to match the price of imported gas, and keep the government’s budget deficit within the promised 2.5 percent of the gross domestic product. Today it is around 4 percent.

Those who voiced their concern with the government’s progress were: Tomas Fiala, CEO at Dragon Capital investment firm; Lenna Koszarny, founding partner and CEO at Horizon Capital; Viacheslav Klymov, co-founder at Nova Poshta and president of the Ukrainian Entrepreneurs Union; Roman Shpek, head of the Independent Association of Banks of Ukraine and senior advisor of Russian-owned Alfa-Bank; Anna Derevyanko who heads the European Business Association; and Tetyana Prokopchuk, vice president at the American Chamber of Commerce of Ukraine.

“We need decisiveness, we need to make a decision,” Koszarny said. “The government, and IMF, and our (international) partners today know that everything is in front of them. All they have to do is to make a decision. We don’t want it to be (after parliament) vacations and everyone relaxes and after they close the session in Verkhovna Rada.”

Ukraine’s parliament will have a month-and-a-half vacation starting on June 14.

“We need to make a decision now throughout next week and this is extremely important,” she said.

Derevyanko, who represents more than 900 businesses, also says that cooperation with IMF is crucial for the business community.

“We understand that it gives us money that will stimulate macroeconomic stability, and with this we as businesses need reforms that serve as an anchor in the IMF’s program,” she said. This includes the privatization reform, the control of the state budget deficit, and various changes in the tax system, she said.

Derevyanko also warned of what will happen if Ukraine does not receive the next IMF tranche: there will be less competition in the business sector, fewer jobs, lower salaries and a strong hryvnia devaluation, she said.

Fiala says that Ukraine had already lost a lot of time and opportunity to ramp up its business environment with the IMF financing.

“We didn’t use the long-term cheap financing as we could have,” Fiala said. “It would have given businesses a lot more comfort to invest and could have created a lot more jobs, and fewer people would be leaving the country, and we wouldn’t have to be competing for human capital.”

Koszarny pointed to the aggressive IMF fiscal austerity program applied in Romania 10 years ago as a successful example that Ukraine could learn from.

“Let’s look at Romania, they also had an IMF program in 2008. Their (GDP) is growing the fastest in the EU. Last year it was 7 percent, and while they had to go through very tough reforms, we can see the results.”

The full written joint statement by the press conference participants is as follows:

“1. We urge the Ukrainian government, the IMF and Ukraine’s international partners to use all efforts to put a workable deal together before July 20 to unlock the $1.9 billion tranche in 2018.

2. We urge the Ukrainian government and the IMF to find a workable solution on gas tariffs and budget issues by July 20 and for the Ukrainian Parliament to support it.

3. We urge the Ukrainian Parliament to approve draft law No. 7441 with amendments on appeals of the current NABU cases on July 12.

4. We urge the IMF and Ukraine’s international partners to continue to consider the entire economic and reform picture as well as broader societal implications, and to make decisions based on today’s realities.

5. We believe that what is at stake is the loss of two years of GDP growth, Ukraine’s hard-won financial stability, billions of dollars of investment, thousands of jobs, brain drain, and the hope for a better future.”

 

Source: Kyiv Post

Feuds freeze gas market modernization

The deadline is Aug. 1.

That’s the end date of the biggest fight on Ukraine’s gas market right now, which pits the state-owned Naftogaz and its subsidiary UkrTransGaz against gas oligarch Dmytro Firtash, currently trapped in Vienna as he fights off extradition to the United States on fraud charges.

The feud revolves around switching from monthly gas purchases to daily ones, which Ukraine is set to do by the beginning of next month.

Ukraine’s current system of monthly payments depends on paper contracts and letters being sent between suppliers and purchasers. The change requires serious investment in making new software and electronic platforms for gas purchases.

Supporters of the policy argue that this would eliminate the risk of market manipulation, while adding the transparency of constantly changing prices. Naftogaz and UkrTransGaz – Ukraine’s gas pipeline operator – are pushing for the policy’s implementation to be delayed, after already putting off its implementation for three years.

But the push for daily balancing has led to Naftogaz crying foul, alleging that regulatory changes associated with the shift will allow Firtash’s Regional Gas Company to rob the system of more gas with a lower level of liability. RGK denies the allegations, and has implied that Naftogaz is delaying a policy that would increase transparency on the Ukrainian gas market.

The battle comes in the shadow of accusations from Naftogaz that Firtash has robbed as much as $2.5 billion from Ukraine’s gas market since 2014 by cooking the books of the regional gas distribution firms that form RGK. Others accuse UkrTransGaz of benefitting from certain “understandings” that arise from accounting manipulations made possible through monthly, and not daily purchases of gas.

“It’s infighting between Naftogaz and RGK,” said Gennady Kobal, director of the ExPro consulting firm. “But the development of Ukraine’s gas market is being delayed by the lack of daily balancing.”

At stake in the conflict is Ukraine’s compliance with the European Union’s Third Energy Package, a set of regulatory requirements that, once implemented, will allow Ukraine to fully integrate into Europe’s energy market.

The issue has gained momentum in recent months as EU bureaucrats have applied pressure to Kyiv to speed up the unbundling of Naftogaz and bring gas prices in line with their import price from Europe.

The Kyiv Post obtained a letter from the World Bank, EU delegation to Ukraine, and the European Energy Secretariat to Prime Minister Volodymyr Groysman on June 19 which “underlined the urgency” of the issue, and called on the government to “accelerate” the “introduction of daily balancing.”

WHO’S SABOTAGING WHO?

Both sides of the conflict have accused each other of sabotaging the other.

RGK suggests that Naftogaz and UkrTransGaz are delaying the policy out of a mix of technical incompetence and unspecified benefits from monthly balancing.

But Naftogaz’s Yuriy Vitrenko, in a blistering letter to the European Business Association, said that the daily balancing policy change was coming as part of a larger operating code for Ukraine’s gas pipelines that would allow the country’s regional gas distributors to allocate how much gas was lost to “unsanctioned removal.”

“We emphasize that the problem lies not in the frequency of balancing, be it daily or monthly, but in the complex of rules on which the balancing will operate,” Vitrenko wrote, implying that regional gas distributors could use the regulation to place “billion-dollar sums” on “honest purchasers.”

Oleksandr Paraschiy, an analyst at Concorde Capital, phrased it diplomatically.

“There are certain risks that payables in the gas sector will increase,” Paraschiy said. “Because, actually, these gas companies in fact are not obliged to pay on time for the gas they are purchasing.”

On top of that, Naftogaz’s public service obligation forces the company to keep supplying, widening the possibility that even more gas and cash will be drained from its coffers.

RGK denies the allegations, saying that it would take “a country-wide mafia” to trade in billions of dollars of illegal gas.

“It’s like the joke about your daughter being a prostitute,” said an RGK spokeswoman. “One person says to another: I heard your daughter is a prostitute. The other replies, ‘I don’t have a daughter.’ ‘Well, it’s my opinion,’ the other says.”

“It’s simply an attempt to drag out by any means the implementation of daily balancing.”

UkrTransGaz spent Hr 98 million ($3.7 million) on a software contract with Hungarian firm IP Systems Zrt. in 2016 to modernize its systems for daily balancing. Naftogaz has claimed that the project was sabotaged, leading it to fire the head of UkrTransGaz in April.

Two sources on the market told the Kyiv Post that representatives of Naftogaz have claimed that the Hungarian software contractor was secretly bought out by Firtash, who then corrupted the software.

But when asked about this claim, IP Systems Zrt. General Manager Fuzi Akos denied it.

“Please be informed that IP Systems Zrt. is 100 percent owned by myself and employees of the company in the frame of Employee Stock Ownership Plan,” he wrote. “We have never had and don’t have any cooperation with Dmytro Firtash or companies associated with him.”

Akos added that UkrTransGaz accepted the software after testing in 2017.

“The delivered commercial dispatching platform for UkrTransGaz is fully functional and is used in Croatia and Hungary in everyday business operations for daily balancing and storage services,” he said. “The software complex is able to support daily balancing operations in its current form.”

SCANDALS AHEAD

RGK was the first company in Ukraine to switch to daily balancing, announcing the modernization drive at the end of May 2018.

Firtash’s team have seized on the opportunity, positioning themselves as trying to modernize the country’s gas market despite the best efforts of recalcitrant and backwards state operators.

Associates of Ukraine’s President Petro Poroshenko have joined in on the effort, attacking UkrTransGaz for failing to implement the policy.

The National Energy Regulatory Commission, which formulated the daily balancing policy in November, said it was preparing to audit UkrTransGaz over the conflict.

“Over the past few months quite odd things have occurred, UkrTransGaz has blocked access to the system of all service orders and actually blocked work on the implementation of the system,” said NERC Chief Oksana Krivenko.

Kobal, the gas industry analyst, pointed out that the European Commission had approved the code in January.

“And only now has NAK Naftogaz presented its complaints,” he said. “100 percent of companies support the implementation of daily balancing, but nobody wants to have problems with UkrTransGaz. So they are trying not to say it publicly.”

If UkrTransGaz fails to be prepared to handle daily balancing by the Aug. 1 deadline, it will raise, at a minimum, serious questions over the Hr 100 million spent on software.

Or, as Krivenko joked, “The worst that could happen is that the accounting will be done in (Microsoft’s spreadsheet program) Excel.”

 SOURCE: Kyiv Post