BUSINESS IN BRIEF (10/17/99)

BUSINESS IN BRIEF

Kyiv increases export tariffs in response to Russian hike

KYIV - Ukraine's national commission on power regulation has ordered that transit tariffs for crude shipments that pass through Ukraine be increased beginning on January 1, 2000. The transit tariff will be increased from the current rate of $5.20 (U.S.) to $5.85 per ton. Shipments via the Prydniprovskyi pipeline to the Russian Black Sea port of Novorossiisk will cost Russian exporters $2.39 (U.S.) instead of $2.35 per ton. Shipments to Odesa will rise from $4.90 (U.S.) to $5.31 per ton. The move comes on the heels of Russia's decision to exclude Ukraine from the list of countries that are not subject to the new export duties on exports of oil products, which include a 50 percent increase in oil export duty effective September 23. Ukraine's latest move was prompted by the reluctance of the Russian side to reduce transit costs for the shipment of Kazak crude to Ukraine. This effectively forced President Nursultan Nazarbayev of Kazakstan to snub, during his visit earlier this month, Ukraine's proposal to supply extra crude to the Linos refinery in Lysychansk in exchange for a controlling stake in the refinery. (Eastern Economist)

Tyhypko comments on new IMF credit

KYIV - The International Monetary Fund's decision to release the next Extended Fund Facility tranche for Ukraine to finance its economic needs is evidence of the international community's confidence in our country, said Vice-Prime Minister Serhii Tyhypko at a briefing on September. 8. This is an important event, but we should not get complacent, he cautioned. Increasing state revenues, effective reform of the agrarian sector and improvement of the pension system are to remain among the government's top priorities. These measures should be implemented not so much to obtain further tranches but for Ukraine to have stable macroeconomic indicators of its development and be regarded as an equal member of the international community. He added, "I am especially disturbed by popular slogans proclaimed by some of the presidential candidates, which can adversely affect the course of reforms." Mr. Tyhypko warned that a stand-off between the branches of power and the Verkhovna Rada's obstruction of urgent structural reforms, which was mentioned at the recent IMF board meeting, may become a stumbling block for the country and set it back many years. (Eastern Economist)

29 vaccination centers to open soon

KYIV - American Medical Centers, a subsidiary of First Medical Group, based in Stamford, Conn., announced jointly with Ukraine's Ministry of Health that it plans to establish 29 vaccination centers in 13 Ukrainian cities. The contract for supplying vaccines for the centers has been awarded to SmithKline Beecham, one of the world leaders in vaccinology. The centers will provide immunization against infectious diseases such as diphtheria, influenza, hepatitis A + B, rubella, mumps, measles, polio and pertussis. AMC expects to provide vaccinations to about 200,000 Ukrainian children and adults over the first five months of the program. The centers will be staffed and managed by AMC-Kyiv. This is the only national health care provider licensed by the Health Ministry to administer these vaccinations and provide a range of American-style medical care. (Eastern Economist)

Pharmaceutical market amounts to $900 million

KHARKIV - The capacity of Ukraine's pharmaceutical market in 1998, as well as in 1997, was estimated at only $900 million (U.S.) in wholesale prices, which is due to the low purchasing capacity of the public, Yurii Spizhenko, president of the Ukrainian Pharmaceutical Association, said. According to official statistics, the total volume of drug sales in Ukraine amounted to nearly 1.3 billion hrv in 1997 and 2 billion hrv in 1998. According to the State Statistics Committee, imports of drugs amounted to $550 million (U.S.) in 1997 and $ 400 million (U.S.) in 1998. (Eastern Economist)

Lviv brewery to receive new investment

LVIV - The Lviv-based Kolos Brewery is to receive $7 million (U.S.) on October 1, said Kolos Director General Volodymyr Pechar. The money will come as a result of shares issued by Baltic Beverages Holding, which has recently bought a controlling stake in the brewery. BBH also owns the Slavutych Brewery. The investment will enable Kolos to set up a completely new production line and to raise fivefold the production of beer. The first products are expected to reach consumers on January 1, 2000. The total investment will amount to $15 million (U.S.). (Eastern Economist)

More potato chips to be made in Ukraine

KYIV - Ukraine's Anti-Monopoly Committee has permitted JSC Kraft Jacobs Suchard Ukraine, based in Trostianets, Sumy Oblast, to buy equipment producing potato chips from the Ukrayinska Mova company. According to the committee, this deal will not lead to monopolization on the Ukrainian market of chips or significantly restrained competition on the markets of other commodities. Until now Kraft Jacobs Suchard Ukraine, which owns Ukraine's biggest confectionery, has conducted its activities on the country's confectionery market. (Eastern Economist)

New Hetman brand horilka is presented

KYIV - The Hetman label of alcoholic beverages, including Hetman, Derzhava and Taras, held a presentation of its latest product, three types of Eneida horilka: Eneida Kumska, Eneida Mohorych and Eneida z Pertsem. The presentation guests included actors from the Ivan Franko Drama Theater, French actor Jan Reno, and creators of the Eneida label and the cartoon "Super Hetman" Oleksii Streltsov and Davyd Cherkaskyi. The Eneida label is marketed to the average Ukrainian at an affordable price. (Eastern Economist)

Tobacco factory launches new lines

KHARKIV - The Kharkiv Tobacco Factory, a subsidiary of Phillip Morris, has launched production of L&M and L&M Lights cigarettes, at the same time halting imports of their cigarettes into Ukraine. The plant is considered to be the best Phillip Morris group tobacco factory in Eastern Europe. (Eastern Economist)

French Business Association marks five years

KYIV - The French Business Association celebrated its fifth anniversary in Ukraine on September 9. Its main goal is to inform French and Ukrainian companies about potential joint opportunities and to inform French companies about the situation in Ukraine. (Eastern Economist)

Tank Forces Institute marks 55 years

KHARKIV - Ukraine's armed forces will soon be equipped with the most up-to-date domestically produced armored equipment, said Defense Minister Oleksander Kuzmuk on September 10, speaking at the 55th anniversary of the Tank Forces Institute. Valerii Malev, general director of UkrSpetsEksport, a state-run company specializing in military trade, stated that Ukraine could present new radar systems and radio-intelligence systems, and have an advantage if investments are made into development of anti-aircraft systems, modernization of fighter jets and helicopters, tanks and ground weapons. (Eastern Economist)

USAID will develop new strategic plan

KYIV - The U.S. Agency for International Development on September 15 announced the release of a Request for Proposals to develop a strategic plan for the regional economic development of the Kharkiv region. The RFP is part of the ongoing Kharkiv Initiative, a multi-faceted partnership program involving cooperation between the Ukrainian Cabinet and several U.S. governmental agencies on issues ranging from enterprise restructuring to humanitarian aid. The strategic plan project was developed jointly by the Kharkiv City Administration and the U.S. government and will seek to increase private sector growth and provide significant employment in the region. Thus far, the Kharkiv Initiative has resulted in expanding U.S. support for business training programs, investment promotion, educational partnerships, science and technology projects, and support for small and medium-sized enterprises in the region. Since 1992 USAID has provided over $1.4 billion (U.S.) worth of technical and humanitarian assistance in support of Ukraine's democratic, economic and social transition. (Eastern Economist)

U.N. part of joint enterprise development project

KYIV - The United Nations Development Program in Ukraine directed by Pedro Pablo Villanueva signed an agreement on September 17 with the State Committee for Enterprise Development (SCED) headed by Oleksandra Kuzhel for a yearlong project worth $200,000 (U.S.). The project is expected to promote social cohesion, strengthen social capital, and encourage sound investment and use of natural resources at the municipal level through a series of training and business counseling modules. The SCED is the executive agency for a project that will provide both training and consultancy services in developing business plans for participants in municipal investment programs from September 1999 through September 2001. The Center of Municipal Management, the Institute for International Business Development and the International Center for Enterprise and Management Development will be the implementing agencies. Of the total amount, UNDP is providing $50,000, local governments $25,000 and business $125,000. (Eastern Economist)

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