BUSINESS IN BRIEF (08/01/99)

BUSINESS IN BRIEF

Lviv insurance company is established

KYIV - The Anti-Monopoly Committee approved the creation of a new insurance company, UkrTransNafta, that will be involved in insurance operations in the energy and fuel sectors. The founders of the new insurance company include the Kremenchuk UkrTatNafta refinery, its trade houses in Kremenchuk and Kyiv, the Prydniprovski Oil Pipe-Lines Co., the Kherson-based Dnipro-Pivden Ltd. and the commercial bank MT-Bank, in which the main shareholders are UkrTatNafta and the Prydniprovski Oil Pipe-Lines. (Eastern Economist)

Lviv bus plant shares will be up for sale

KYIV - The State Property Fund on July 19 approved a list of 20 companies whose shares will be sold at stock exchanges in the nearest future. Among the companies whose stakes have been offered for sale, the most attractive is the Lviv bus plant, which will sell 15 percent of outstanding shares with a nominal value estimated at approximately 750,000 hrv. The most attractive companies offering selling shares on the Ukrainian stock exchange are the Odesa-based engineering works Orion, which specializes in manufacturing compressors for refrigerators, and UkrSpetsTekhnika. (Eastern Economist)

UkrAvtoBusProm draw up future buses

LVIV - The Dnipropetrovsk-based PivdenMash plant can start the production of new generation of buses and trolley buses designed at the Lviv-based UkrAvtoBusProm. The new vehicles comply with current and future European standards. For example, they are designed to carry disabled people. The Industrial Policy Ministry's Scientific and Technical Council identified these models as basic for Ukraine's public transport in the new millennium. A prototype bus is now undergoing final phase trial. PivdenMash can turn out up to 100 vehicles annually at a production cost 30 to 40 percent less than similar foreign makes. The plant is awaiting a decision on funding the purchase of parts and components to start production. (Eastern Economist)

Greece denies landing pads to AeroSweet

KYIV - The Transport Ministry of Greece canceled entry on July 13 to AeroSweet, a Ukrainian air carrier, due to a delay in compensatory payments to the families of the victims of a December 1997 crash near Salonika of a YAK-42 that killed 70 passengers and crew members. Ukraine's Transport Ministry said the ban is baseless and protested to Greece. AeroSweet Director General Hryhorii Hurtovyi described the Greek decision as interference in the court procedures currently in process on claims to AeroSweet brought by the relatives of the killed passengers. "The cases have been repeatedly deferred, but not through the fault of Ukraine," said Mr. Hurtovyi, commenting that AeroSweet has issued bank guarantees to the plaintiffs worth a total of $2.7 million (U.S.), well in excess of the $20,000 per person limit of liability as envisaged by the Warsaw convention. The carrier is ready to pay $20,000 immediately to every suitor willing to accept this amount plus extra liability that may be awarded by court. AeroSweet has carried over 50,000 passengers over the past three years, 30 percent of them being Greek citizens. Some 400 Ukrainians are stranded in Greece due to the AeroSweet problem. (Eastern Economist)

Aviation plant suspends production line

KYIV - The Kyiv-based Aviant aircraft plant has suspended work on a second TU-334 plane because the plant's Russian partner has failed to pay off its $3 million debt which dates back over a year. The basic price of the 102-seat TU-334 is $17 million (U.S.). Negotiations are currently under way to license the production of these planes in Iran for a contract valued at an estimated $1.5 billion to $2 billion (U.S.). Iran is planning to make 100 such planes over the next 15 years. (Eastern Economist)

Commerce and industry chamber report

KYIV - The Chamber of Commerce and Industry of Ukraine declared a membership of 2,949 enterprises and organizations, CCIU President Oleksiy Mykhailychenko reported. The chamber has compiled a non-state register of Ukrainian enterprises who are reliable partners, domestically and internationally. In 1998 reliable partner certificates were issued to 13 Ukrainian enterprises. Also in 1998, the chamber offered assistance to entrepreneurs worth 31 million hrv focusing on expert analysis, certification and bar-coding. The chamber has concluded a total of 56 accords with partners in 49 countries on exchange of business information, promotion of partnerships, delegations, seminars, conferences, exhibitions and fairs. (Eastern Economist)

First municipal shipping company formed

KYIV - Ukraine's first municipal shipping company has been formed. The Illichivsk Municipal Shipping Company in Illichivsk, Odesa Oblast, plans to earn 500,000 hrv by the end of the year from transporting freight. (Eastern Economist)

Brewing allies strengthen their position

KYIV - The Anti-Monopoly Committee has given preliminary consent for the transfer of the Belgian NV Interbrew's stake in Desna Brewery to the U.S. Sun Brewing Ltd. According to Genk van Gelderen, Interbrew's representative in Ukraine, Desna's share of the Ukrainian beer market is 11 percent, putting it in third place behind Obolon of Kyiv and Slavutych of Zaporizhia. The Belgian company also plans to purchase a controlling stake in Rohan, a Kharkiv-based brewery, before the end of the year. Sun and Interbrew have announced a joint strategic policy in CIS countries. (Eastern Economist)

Brewery renovation under discussion

LVIV - The renovation of Lviv-based Kolos brewery is expected to cost $10 million (U.S.), but if the company's shareholders launch the project, the Lviv Oblast State Administration will support them, said Administration Head Stepan Senchuk on May 18. The assistance might be provided by way of giving the brewery tax privileges, he added. The major shareholders of Kolos are Sweden's BBH, which is also a co-owner of Slavutych, a Zaporizhia-based brewery, and Halytski Investytsiyi, a Lviv-based investment company that owns 52 percent of the brewery's shares. The remaining 6 percent is owned by brewery employees. BBH intends to invest funds in turning one of sugar plants in the Lviv Oblast into a malt-house, and to sow the arable areas in the oblast next year with Swedish barley seeds. The Lviv Oblast currently produces 40,000 tons of barley, with actual demand standing at 140,000 tons. One of the Swedish company's major preconditions for making the investment is that it increase its stake in Kolos to the size of a controlling interest. (Eastern Economist)

Rivne Oblast enjoying investment boom

RIVNE - Foreign companies invested twice as much in Rivne Oblast in 1998 compared to 1997 figures. Last year's figure stood at $20.4 million (U.S.). According to Rivne Oblast officials, most of the funds were invested in the joint venture AD-Zorya, which has already started manufacturing glass bottles in accordance with European standards. Another 11.8 million hrv was directed at launching the production of matches. (Eastern Economist)

Domestic bottle producer ups output

RIVNE - The annual capacity of AD-Zorya plant, one of the largest bottle producing plants in Ukraine, has increased from 35 million to 250 million European standard bottles. The plant's market share is estimated at over 30 percent of the domestic market . Its foreign founders include the Canadian company Consumer Package Inc. and the EBRD. (Eastern Economist)

Market growth blocked by heavy taxes

KYIV - The insurance market grew 60 percent in 1998, said Igor Yakovenko, head of the State Insurance Monitoring Committee. "This is the only industry in Ukraine that has not declined for the last five years." However, insurance companies feel that their great growth potential is not being utilized. "Insurance companies are under heavy tax pressure," said Vasyl Makhno, head of the Energopolis insurance company. "Insurance is the only industry that is taxed on revenue rather than on incomes." According to Mr. Makhno, the growth rate for the industry is impressive primarily because the industry has developed "from nothing." At present, insurance payouts per capita in Ukraine equal 4 hrv, while in the U.S. this figure is $5,000. Insurance premiums in Ukraine for 1998 amounted to 776.3 million hrv, while insurance payments totaled 164.6 million hrv. (Eastern Economist)

Ukraine and Uzbekistan agree on cotton

KYIV - Ukraine will buy 6,000 tons of cotton fiber worth approximately $8.5 million (U.S.) in accordance with an inter-governmental agreement between Ukraine and Uzbekistan on mutual equivalent product exchange in 1999-2000. Ukraine will pay for Uzbek cotton fiber in steel sheets and pipes, welding disposables, fireproof materials, pharmaceutical and other products. (Eastern Economist)

Orlan soft drink producer launches new line

KYIV - Soft drinks producer Orlan announced the launch of a new alcohol-free beverage-bottling line, with a capacity of 12,000, 0.33-liter glass bottles per hour. The company also is preparing to set up an international cargo transportation company, based on LvivUkrTrans and a production line for alcoholic beverages. "We want to help Ukraine bring these two industries out of the 'shadow economy,' and to prove that honest and legal business is possible in this country," said Yevhen Chervonenko, president of both Orlan and the Ukrainian Foodstuffs Producers League. (Eastern Economist)

Coca-Cola Kyiv gets food engineering award

KYIV - The Kyiv-based Coca-Cola plant was recognized as "plant of the year by Food Engineering International magazine. According to the GM of Coca-Cola Ukraine Ltd., Andre Teisheira, "All of Ukraine may be proud of this award, since Ukrainian-made raw materials are used in the production process." (Eastern Economist)

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