6:18 AM Sunday, March 25, 2018 Tuesday, March 6
Gazprom breaks gas transit pact with Ukraine; Naftogaz closes office in Moscow; Bavaria opens office in Kyiv; US-Ukraine free trade pact? Siemens, Bombardier, CRRC and Alstom want to sell locomotives; Ukraine pawn shop chain takes Bitcoins
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Gazprom announced Monday that it is breaking its gas transit contract with Naftogaz, threatening a $3 billion a year business for Ukraine. Yuriy Vitrenko, Naftogaz commercial director, reacted calmly predicting that after 45 days, the dispute will go to arbitration. He said at a press conference: “The process will last for years…from a practical point of view, nothing will happen. The contract will be in place by the end of 2019 [the scheduled end date.]”

Vitrenko said the only cause of concern would be if Gazprom resorts to ‘extra-legal’ actions. Alluding to a mysterious explosion of a natural gas pipeline in the Turkmen desert in 2009, he said Naftogaz is increasing security around key installations of Ukraine’s gas transportation system.

Gazprom's decision to end supply contracts with Naftogaz has alarmed Germany, Europe’s largest gas importer and consumer. German government spokesman Steffen Seibert told reporters Monday: "The federal government has taken with concern the announcement that Gazprom intends to terminate its contracts with Ukraine's Naftogaz. The fact that gas is not supplied to Ukraine causes even greater concern...if Gazprom now wants to prematurely announce the termination of contracts, it causes irritation not only here in Germany, but also in other EU countries and in the European Commission."

Gazprom announced that it is breaking its supply and gas transit contracts with Ukraine, Naftogaz announced it will close its representative office in Moscow on March 12. It is unclear whether Russia’s belligerent attitude toward Naftogaz will continue after Russia’s March 18 presidential election.

A German environmental lawsuit against the Nord Stream 2 pipeline will be joined by Ukraine’s Ministry of Ecology and Natural Resources. With construction about to begin, the suit was lodged by the German Nature and Biodiversity Conservation Union, NABU, Ukraine’s Minister of Ecology, Ostap Semerak, wrote on Facebook March 5.

Foreign Affairs Minister Pavlo Klimkin says Ukraine will seek a free trade area with the US. “The future foreign trade area is really a way forward for me," Klimkin said Monday at a press conference in Kyiv. “This is one of the issues that we will try to discuss in detail as part of our commission on strategic partnership.” In January, President Poroshenko said that in the first five months of the Ukraine-Canada free trade agreement, bilateral trade grew by 60%.

Sale of goods and services in January were 28% percent higher in hryvnia than one year earlier, the State Statistics Service reports. This is double the year over year inflation rate of 14%.

Aerospace production increased 26% last year, to the hryvnia equivalent of $170 million, reports the State Space Agency. The increase came in an environment of 13.7% inflation in 2017. The Agency manages 26 aerospace enterprises and organizations.

General Electric’s contract to supply 30 diesel locomotives to Ukrzaliznytsya is for $140.4 million, or $4.7 million per locomotive. Ukreximbank, which is financing the sale, revealed the numbers through the ProZorro procurement system.

Germany’s Siemens, Canada’s Bombardier, China’s CRRC and France’s Alstom, are negotiating sales of electric locomotives to Ukrzaliznytsya, the state railroad’s acting board chairman Yevgeny Kravtsov, tells cfts news site.

A national Credit Register of all loans over $12,000 started Monday. Maintained by the National Bank of Ukraine, the Credit Register is designed to help banks assess credit risks of clients.

Ukrainian pawnshop chain Skarbnytsya, or Treasury, will start offering cash loans taking Bitcoin and other cryptocurrencies as collateral, according to Skarbnytsya says it has 300 shops and millions of customers. Ivan Ipatov, head of marketing department, told the news site: “The implementation of this project is due to the rapid development of crypto and blockchain in the world.”

A liberal new foreign exchange bill follows the principle that "everything that is not forbidden is allowed," President Poroshenko, the sponsor, tells the National Reforms Council. The draft law "On Currency" envisages the introduction of gradual, consistent and flexible liberalization in the foreign exchange market, and free movement of capital, the President said. Noting that 10,000 Ukrainian businesses make 2.5 million foreign exchange transactions each year, he said of the bill: "The ultimate goal is to improve the conditions for investors, attract investment, new jobs, new revenues to the state budget, currency inflows into the country.”

National Bank of Ukraine author of the foreign exchange bill, believes it will bring Ukrainian “legislation in correspondence with European standards.” Oleh Chiry, NBU deputy governor, tells reporters: “This will indicate that we are finally moving towards free capital movement, removing many restrictions that are currently ineffective and inhibit the inflow of foreign investments.”

The National Bank of Ukraine has simplified procedures for repatriating dividends by foreign investors, reports the Kyiv office of Baker McKenzie law firm. Foreign investors can now repatriate $7 million a month in dividends, a 40% increase over previous limits. In another liberalization, Ukrainian borrowers can now prepay their cross-border loans for up to $2 million a month.

Intensifying ties between the Black Sea and the Baltic were discussed in Riga last week by Prime Minister Groysman and his Latvian counterpart, Prime Minister Māris Kučinskis. The leaders discussed increasing use of Belarus’ Zubr, or bison, container train, which travels a 2,000 km north-south route, connecting the Baltic ports of Riga, Ventspils, Liepāja and Tallinn with the Black Sea ports of Chornomorsk, Odesa and Yuzhne. Trade between Ukraine and Latvia increased by 27% last year to $460 million, pacing overall trade growth between Ukraine and the EU. Trade with Estonia was up 30%, to $322 million.

Germany’s state of Bavaria opened a “bureau” Monday in Kyiv’s Gulliver business center. With Germany’s car industry centered in the southern state, ties have grown with Ukraine, a growing source of auto parts. The office was opened by Dr. Beate Merck, state minister of European affairs and regional communications. Joining her were: First Vice Prime Minister Stepan Kubiv, Minister of Foreign Affairs Pavlo Klimkin and Mayor Vitali Klitchko, who lived many years in Munich, Bavaria’s capital.

Klingspor, a German manufacturer of cutting discs and abrasive materials, plans to move part of its production capacity from a Paris suburb to its factory in Velyki Mosty, a Lviv region city 100 km from the Polish border. The Lviv region press service reports: "Over the past four years alone, the company has invested more than EUR 7 million in the plant in Lviv. The company has built production, storage and administrative premises with a total area of 6.7 thousand square meters in the city of Velyki Mosty, employing more than 200 people.”

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