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IT Exports to grow 25%; Yuzmash to build 20 rocket engines for Europe; Ukraine has proven gas reserves for 22 years; Kroll finds fraud at PrivatBank

17 Jan 2018 1:27 PM | Laziz Rasulov

Ukraine’s IT exports should grow by 25% this year, to $4.5 billion, the IT Ukraine Association predicts. Last year, growth was 20% to $3.6 billion, the industry group says. It says that the sector employs 116,000 specialists and pays about $600 million in taxes.

Yuzhmash will supply 20 rocket engines to the European Space Agency through 2020, the Dnipro-based company reports. The engines are used in Vega rockets which launch satellites. Since 2013, Ukrainian engines have powered 11 rockets, which placed 26 satellites for 20 customers into orbit.

Ukraine’s central bank says an investigation by Kroll Inc. confirmed fraud at Privatbank that caused a loss of at least $5.5 billion before the country’s biggest lender was nationalized one year ago. The National Bank of Ukraine hired the American corporate investigations firm to study Privatbank’s operations during the decade before the December 2016 nationalization. The investigation blamed a ‘bank within the bank’ for the fact that more than 95 percent of borrowing was to parties related to the former shareholders and their affiliates. Citing the Kroll study, the central bank charged Tuesday that Privatbank “was subjected to a large, coordinated money-laundering scheme and bank fraud with the characteristics of a pyramid scheme.” Last month, London’s High Court granted a worldwide freeze against $2.5 billion of assets held by Privatbank’s ex-owners, Ukrainian billionaires Igor Kolomoisky and Gennady Bogolyubov.

Today, lawyers for the new management of PrivatBank will argue in the Economic Court of Dnipropetrovsk for the bank’s $65 million claim against Dniproavia, a bankrupt airline once controlled by Igor Kolomoisky.

Farm production in Ukraine decreased by 2.7% last year, compared to 2016, reports the State Statistics Service. The decline came after a 6.3% jump in 2016.

Production of grapes for wine, grew by 7% last year, slowing down after a 31% jump in 2016, the State Statistics Service reports. In southern Ukraine, the big growth regions this year were Odesa with a 24% growth in grape production and Kherson which recorded a 30% jump.

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 start debating a new privatization law this week.

A 6-hectare site near Chernobyl is about to put for tender for a 30-year-lease, the State Property Fund reports. The Fund 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 controlled mines Increased nuclear power production saved 2.3 million tons of coal, and a switch to gas coal saved another 1.8 million tons of anthracite, Deputy Prime Minister Volodymyr Kistion said.

Ukraine has enough proven natural gas reserves to guarantee production at current rates through 2040, reports Yaroslav Klymovych, chair of Nadra Ukrainy, the state geological survey company. Reserves available for production amount to 453 billion cubic meters. However, he said 10 times that volume could be identified if Ukraine undertook a nationwide survey program using modern technology.

Ukraine nearly doubled exports of scrap metal last year, to 486,500 tons. Most of the scrap goes to Turkey and Moldova for the production of new steel, according to the Ukrainian Association of Secondary Metals.

Ukraine increased its butter exports to the EU nearly seven times, taking second place after long term supplier New Zealand. The EU imported 2,300 tons of butter from Ukraine. Perhaps pulled along by the export surge, domestic butter prices jumped 27.6% last year, well above Ukraine’s overall inflation rate of 13.6%.

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.

As part of the fight against the shadow economy, Ukraine will require that all merchants have point of sale card terminals within two years. Customers will have the option of paying with cash or card. The new rule will extend terminals to 183,000 new businesses, the Economic Development and Trade Ministry calculates.

The Financial Times reports that Ukraine’s push to regulate cryptocurrencies is prompted by worries “that exploitation of the digital assets by criminals and geopolitical adversaries presents a growing national security risk.” The article quotes a government statement: “The lack of external and internal control over the cryptocurrencies’ turnover, and anonymity of payments, create prerequisites for their use in order to legalize criminal assets [and] to pay for prohibited goods, in particular, drugs and weapons.” This unregulated means of payment could mean, the government said, that cryptocurrencies are being used to “provide for financing of terrorism, in particular, in the occupied territories of Ukraine.”

As the Ukrainian banking sector stabilized last year, the closing of bank branches slowed to 8%, half the 2016 percent closure rate of 16%. Today, Ukraine has 9,489 bank branches, according to the National Bank of Ukraine. By shuttering 443 branches, Oschadbank accounted for about half of last year’s closings.

In advance of a visit to Kyiv by Albania’s Foreign Minister next month, Ukraine is ready to discuss a free trade pact with Albania, says Ivanna Klympush-Tsintsadze, deputy prime minister for European and Euro-Atlantic Integration. The western Balkan nation is an official candidate for accession to the EU. Ukraine has 16 free trade agreements, covering 45 countries. Historically wary of Moscow, “Albania is one of the Balkan countries that unquestionably support Ukraine in countering Russian aggression,” Pandeli Majko, Albania’s Minister of State for Diaspora, said after meeting Klympush-Tsintsadze here. About 3,000 Albanians live in Ukraine. Last year, bilateral trade was $22 million.

New state support will allow the production of over 120 films this year in Ukraine, says President Poroshenko. He writes on Facebook: “A bright future awaits Ukrainian cinema!"