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UKRAINE


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 49,537 41,380 37,600 55
         
GNI per capita
 US $ 970 770 720 137
Ranking is given out of 208 nations - (data from the World Bank)

Books on Ukraine

REPUBLICAN REFERENCE

Area (sq.km) 
603,700 

Population 
47,732,079

Principal 
ethnic groups 
Ukrainians 72.7%
Russians 22.1%
Jews 0.9%. 

Capital 
Kiev

Currency 
Hryvnya

President 
Viktor Yushchenko




Update No: 293 - (27/05/05)

PM the key figure
All the world knows about President Viktor Yushchenko, the victor of the Orange Revolution last year. He now bestrides the world's stage and is feted in every capital he visits, bar Moscow. The Euro-Vision Song Contest took place in Kiev on May 21st, watched by 170 million viewers. Ukraine is coming up in the 'pop'world.
The key figure domestically is not Yushchenko, but his premier, Prime Minister Yulia Timoshenko, who played a major role in the revolution after he was incapacitated for weeks from September 9th, when he was poisoned by his political enemies in the election campaign.
She is now deciding the course of the government. 

Privatisation revision to finish by year-end
A vital matter is whether, or rather how, the sale of state assets in the 1990s is to be revisited. As in Russia, the population deeply resent what they see as the rape of their nation by a few corrupt oligarchs, enabled by a corrupt government.
The irony is that Timoshenko was one of them until targeted by the previous regime. She made a fortune out of selling Russian gas in the previous decade. She is not likely to mount a huge purge. There are to many skeletons in the cupboard for that. Indeed, she has as her first vice-premier no less a figure than Anotoly Kinakh, head of the Party of Ukrainian Industrialists and Entrepreneurs, a former premier himself and the arch representative of the oligarchs. 
She said recently all questions concerning the legality of privatisation would be solved by the end of 2005. She said a special law would be adopted to name the enterprises that were privatised in violation of the law. 
The prime minister said the government was not preparing any list of problem enterprises as mass media reported. "I want to say officially that the government did not approve any such list at its meeting," she said. 
In her words, the ministers received a draft law on the revaluation of the enterprises that were privatised with violations. Timoshenko said she would present it to the president shortly. The draft law lists criteria by which to judge whether privatisation was lawful or not. These include privatisation contests, compliance with investment obligations, etc. 
The prime minister stressed that the list would not include medium-sized and small enterprises. The owner of an enterprise privatised with violations will be allowed to pay the difference. The funds will be used to pay compensations to the depositors of the former Soviet savings bank who lost their savings and to finance housing credit programmes. 

Steel giant to be auctioned
A recent move is indicative of the pragmatic way things are developing. The Ukrainian cabinet recently decided to start the process of renationalising and then re-privatising the big Kryvorizhstal steel mill. But this is a very special case, as has been made clear.
Kryvorizhstal controls a fifth of Ukraine's steel market. It was sold at a tender in May last year. Mittal steel, in consortium with US Steel, offered US$1.5bn for the company, which was sold for only US$800m to the Ukrainian Investment and Metallurgical Union (IMU).
IMU incorporates nine shareholders: the Interpipe corporation, comprising also the Nyzhnedniprovsky pipe plant, the Ukrainian-Cypriot company Bipe Co Ltd, the Credit-Dnipro bank and the insurance company Aura; the Ukrinvest company, which is an UkrSibBank shareholder, and also the metallurgical combine Azovstan, the Avdiyivka coking and chemical plant, and the Markokhim coking and chemical plant controlled by the Donetsk-based company System Capital Management.
Viktor Pinchuk, son-in-law of ex-Ukrainian President Leonid Kuchma, is the founder of the Interpipe corporation. Last September the Polish magazine Wprost rated Pinchuk, who is also a member of the Ukrainian parliament, as the 10th richest person in the Central and Eastern Europe, worth an estimated US$2.5bn. Donetsk businessman Rinat Akhmetov was rated the 6th, which makes him the richest Ukrainian according to Wprost. Akhmetov's enterprises also took part in the Kryvorizhstal tender.
Yushchenko and Timoshenko have said Ukraine should revise the privatisation result because the tender conditions rendered the result of the sale non-competitive.
The Pechersk court in Kiev at the end of January froze 92.02% of Kryvorizhstal. IMU, which the court banned from alienating the shares, filed an appeal. Mittal Steel has said it is still interested in purchasing Kryvorizhstal. Russia's Severstal is also thought to be interested in the asset.
Timoshenko said after the February 5th cabinet meeting that the government decided to analyse the "legal aspects of the resolutions and orders passed on privatisation of Kryvorizhstal."
"Today's government meeting annulled all documents that had been passed unlawfully. This means that we have started the process of returning Kryvorizhstal to the state," she explained.
Timoshenko said the process would be as intensive as the laws permit. At the same time, she noted that there will be no mass re-privatisation, and the government will act strictly within the framework of law.
The new prime minister said the new cabinet would spend a while making a far-reaching and systemic analysis of all privatisation processes and devise a strategy on the issue. She said the government would take "very balanced and of course legal steps."
Valentina Semeniuk of the Socialist party has accepted an invitation from Ukrainian President, Viktor Yushchenko and Timoshenko to replace the current State Property Fund Chairman, said Alexander Moroz, the Socialist party leader. The change is expected shortly.

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ENERGY

Ukrainian energy company, Shell sign cooperation agreement

The national joint-stock company Naftohaz Ukrayiny and Shell Exploration and Production Services (RF) B.V. have signed an agreement on cooperation in the area of technical research with the further joint exploration and extraction of hydrocarbon resources in the Dnieper-Donetsk valley, the press centre of Naftohaz Ukrayiny said recently, Interfax-Ukraine News Agency reported.
According to the document, Naftohaz and Shell will jointly research "the zone of mutual interest" with an overall area of more than 30,000 sq.km. with the aim of expanding it.
According to a geological survey, there are still considerable amounts of undiscovered natural gas in the depth of the Dnieper-Donetsk valley and their exploration requires complex technological solutions and the most up-to-date achievements of modern science and technology.
Naftohaz Ukrayiny is pleased with the signing of the contract with Shell: "We think that the deep knowledge of the Naftohaz Ukrayiny staff and the experience of exploiting the basin using up-to-date technologies will become a key to achieving mutually beneficial results," the deputy chairman of Naftohaz, Illya Rybchych, said.

Ukraine plans to build 11 nuclear reactors by 2030

Ukraine intends to build 11 nuclear generating sets by 2030, the national nuclear energy company Enerhoatom has said, Interfax-Ukraine News Agency reported. 
The decision was taken at a meeting chaired by Prime Minister, Yuliya Tymoshenko, on 6 May. The meeting discussed a strategy for the development of the country's fuel and energy complex by 2030.
It is planned to build the first two generating sets at the Khmelnytskyy nuclear power plant. An international tender will be invited to choose the type of reactor.
It is necessary to build new generating sets as the service life of the oldest generating sets will expire starting from 2011. In this connection, it is necessary to set a deadline and task to decommission the operating nuclear power plants or prolong the generating sets' service life very soon. World practice shows that it is advisable to prolong the service life of generating sets for their safe use.
Stepping up the safety, reliability and effectiveness of generating sets was set as a priority. Although the level of safety at nuclear generating sets with VVER-440 and VVER-1,000 reactors is in line with modern principles of safety, "the potential for stepping up safety at nuclear power plants remains unexhausted."
Another strategic area for the development of the nuclear industry involves treatment of spent nuclear fuel at the existing nuclear power plants. As a solution, it is proposed to build a centralized storage site for spent nuclear fuel of the "dry" type.
The meeting tackled separately the development of some elements of [Ukraine's] own nuclear fuel cycle. It is advisable to develop them, as Ukraine has uranium and zirconium deposits and uranium deposits are shrinking in the world, which will lead to increases in the price of nuclear fuel.
The prime minister issued an instruction to prepare appropriate feasibility studies and analyse the possibility of increasing the share of nuclear power plants in the country's general electricity output by 2030.
At present, 15 generating sets are in operation at four Ukrainian nuclear power plants.

EU commissioner, energy minister ink nuclear deal

The agreement between the European Atomic Energy Community (EURATOM) and the cabinet of minister of Ukraine for cooperation in the peaceful uses of nuclear energy was signed in Kiev on April 28th by the EU Energy Commissioner, Andris Piebalgs, and the Minister of Fuel and Energy of Ukraine, Ivan Plachkov, New Europe reported.
The agreement opens a new way of cooperation between Ukraine and the EU in the field of peaceful uses of nuclear energy and, inter alia, in areas of nuclear safety, controlled nuclear fusion, nuclear research and development.
On the basis of this agreement the parties will coordinate closer their actions with regard to international transfers, trade in nuclear materials and provision of nuclear fuel cycle services. This positive development proves that Ukraine and the EU have started implementing the extended action plan with regard to the enhancement of the energy dialogue, widening one of the most important areas of their cooperation ie nuclear energy and nuclear safety. Ukraine relies on its nuclear power plants to generate electricity.

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FOREIGN COOPERATION

30 agreements on the cards

Ukrainian President Yushchenko announced his country plans to sign up to 30 agreements with Russia this year, covering border issues, the status of the Black Sea Fleet and the terms of its presence in Crimea and cooperation in the energy sector, New Europe reported recently.
"If we cope with these 3 major groups of issues today, get 25-30 agreements signed and make this the mark of the year 2005, the nation will applaud the young team that does it," Yushchenko told the press in Kiev on April 18th.
He said recent talks with the Russian leadership produced an agreement to devote this year to settling the border issue, "beginning from the demarcation, delimitation and recognition of the border in the Kerch Strait, the border regime and readmission." According to Yushchenko, "We are to sign 6 or 7 agreements which we must start preparing from scratch." He said 5 agreements regulate the Russian Black Sea Fleet's status and terms of its presence in Ukraine.
"But much in the agreements' content is at variance with the actual situation. If we are friends, let us look at each other and admit that this must be changed," said Yushchenko.
He announced that the Ukrainian and Russian Security Council chiefs have been instructed to check whether the actual conditions of the Black Sea Fleet's presence in Ukraine comply with the agreements.
He said Ukraine and Russia "have a unique chance to promote cooperation in the energy sector," adding: "If we are active enough, these projects will be with us. Or else, they will be implemented without us."
Meanwhile, Timosheko's trip to Moscow was postponed. Asked about the date of her future visit to Moscow, Timoshenko said: "The date is not so important now. What matters is that we have powerful projects to accomplish jointly."

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MINERALS & METALS

Ukraine sustains steel output in 4 months

Ukraine's steel industry produced 10.81m tonnes of finished roll in January-April, as much as in the same period of last year, the Industrial Policy Ministry said recently, Interfax News Agency reported.
Crude steel production edged up 0.05 per cent to 13.03m tonnes and pig iron production grew 2 per cent to 10.6m tonnes, the ministry said. Steel pipe production jumped 25 per cent to 712,000 tonnes. The ministry said steel output could fall this year overall due to growth in prices for ion ore, coke and rail freight and an anticipated drop in metal product prices in the second half of 2005.
Scrap metal supplies to steel mills fell 4 per cent to 2.17m tonnes in the four months.
Iron ore concentrate production rose, by 8 per cent to 17.589m tonnes, with increases of 4 per cent to 16.22m tonnes of sinter and 15 per cent to 6.24m tonnes of pellets. Crude ore production grew 8 per cent to 22.87m tonnes.
Ukrainian coke production fell 8 per cent to 6.87m tonnes, ferroalloy output was down 5 per cent 532,000 tonnes and manganese ore production fell 26 per cent to 620,000 tonnes. Metalware production also fell, by 6 per cent to 133,000 tonnes. Finished roll output grew 4 per cent to 30.16m tonnes in 2004.

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TRANSPORT

Ukraine, Belarus agree to step up transport cooperation

Ukraine and Belarus will step up cooperation in the transport field, according to an agreement reached during a meeting in Kiev recently between the ministers of transport and communications, [of Ukraine] Yevhen Chervonenko and [of Belarus] Mikhail Baravy, the press service of the Ukrainian Ministry of Transport and Communications said, Interfax-Ukraine News Agency reported.
According to the agreement, a bilateral working group will be set up soon to look into possibilities of solving topical issues of partnership. These issues cover an increase in the flow of cargo through the Mikolayiv sea port (Ukraine), search for internal reserves to increase bilateral cargo delivery and the lifting of the additional road tax on Ukrainian hauliers in Belarus.

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