BUSINESS IN BRIEF (06/20/99)

BUSINESS IN BRIEF

Despite problems, Monsanto to stay in Ukraine

KYIV - Monsanto's project and development coordinator in Ukraine, Volodymyr Vasyliev, said on June 10 that the U.S. agricultural company intends to curtail its operations in Ukraine due to the slow pace of economic reform and the growing debts of its local clients, which are running debts into the tens of millions of dollars. Mr. Vasyliev, however, refused to go into details of the company's plans, reiterating merely that Monsanto's sales dropped 30 percent in 1999. He pointed to the lack of private property and the prevalence of low-productive Soviet-type collective farms as factors that influenced the company's tentative decision, which will be finalized after the presidential elections in October. Two days later, however, Monsanto Ukraine Acting General Director Maria Osyka disavowed those remarks by a lower-ranking Monsanto official. "Ukraine is a strategic country for Monsanto and we will work here," Ms. Osyka told wire services on June 12, adding, "The company is willing to increase supplies in the nearest future if debts are partially paid off." Headquartered in St. Louis, Mo., the Monsanto Corp. has operated in the former Soviet Union since 1988, supplying 15 -20 percent of imported herbicides and other chemicals used for crop protection. (Eastern Economist)

Khlib Ukrainy to become 100 percent private

KYIV - State Property Fund Vice-Chairman Yurii Gryshan announced on June 8 that 50 enterprises under the umbrella of the state company Khlib Ukrainy will be completely privatized by the end of the month. Mr. Gryshan said that the State Property Fund (SPF) has fulfilled all major requirements set by the World Bank and International Monetary Fund for Ukraine to receive the last EDAL II loan of 100 million hrv and the next tranche of the EFF loan. In order to qualify for the WB's loan, the SPF privatized 100 enterprises with nominal value of assets amounting to 170 million hrv. "Cooperation with international finance organizations is our daily work, although it is not always visible," said Mr. Gryshan. As of June 1, the SPF collected privatization revenues worth 275 million hrv. (Eastern Economist)

Lucent picks up where Qualcomm left off

KYIV - Lucent Technologies and Telesystems of Ukraine signed two contracts for a total of $50 million (U.S.), for supply of equipment to provide cellular connection in CDMA standard. Telesystems of Ukraine decided to switch its equipment supplier from Qualcomm to Lucent Technologies after Ukraine's State Committee for Telecommunication recalled Qualcomm's license. (Eastern Economist)

Sea launch plans for an August launch

KYIV - Sea Launch, DIRECTV and Hughes Space and Communications announced that DIRECTV is to be the first commercial client of the Sea Launch program. A DIRECTV 1-R satellite is to be launched in August. A Ukrainian-made Zenith 3SL rocket will be used to propel the satellite into space. (Eastern Economist)

Akhmad Tea plans to launch 12 new lines

MOSCOW - According Akhmad Tea representative Makhdi Mansurfar, British Akhmad Tea plans to start production of its blends in Ukraine. The British-Ukrainian joint venture of Kharkiv completed the construction of three packing lines at the Kharkiv-based tea packing factory. Production is scheduled to start in July. Akhmad Tea plans to install 12 packing lines, which will make the Kharkiv factory the largest facility of its kind in the former Soviet Union. According to Mr. Mansurfar, factory production will be exported to Russia and other CIS countries. Ukraine's legislation presently provides customs duty breaks for unpacked tea. (Eastern Economist)

British Airways celebrates three-year mark

KYIV - British Airways celebrated its third anniversary of operations here by launching "Ukrainian Initiatives" on June 3. Daniel Burkard, BA general manager in Kyiv, explained that in his three years in Ukraine, "the share of Ukrainian passengers on British Airways has increased significantly, and we want to speak our customers' language." The program involves using the Ukrainian language in printed materials, on the BA website and by flight and ground staff, including at London's Gatwick Airport. The initiative was accompanied by a brief promotion aimed at local travelers, offering extremely low prices to three BA destinations. (Eastern Economist)

Boeing keen on cooperating with Ukraine

KYIV - Leading U.S. aircraft maker Boeing said on May 21 that it would strengthen cooperation with Ukraine in the aerospace sector. Raymond J. Waldmann, Boeing vice-president for international affairs, said Boeing is primarily interested in supplying its passenger aircraft to Ukraine and cooperating in commercial satellite launches. It has so far made no investment into Ukraine's economy, but Mr. Waldmann said the company may buy stakes in several local aerospace companies or airlines. Last month Ukraine's second largest carrier, Ukraine International Airlines, bought a new Boeing 737-300 and plans to increase its fleet. Mr. Waldmann said Boeing is interested also in cooperating with Ukraine's Defense Ministry and could eventually start selling its modern military equipment and planes to Kyiv. (Eastern Economist)

French billionaire interested in Antonov

KYIV - French billionaire Andre Gelfi expressed a wish to participate in promoting the Antonov Construction Bureau on European markets at a meeting in Kyiv on May 25. He is ready to provide financial and political assistance on condition that imported engines are used on the planes. Mr. Gelfi also wants sales rights to Antonov planes, especially the AN-124, known as the Ruslan. Mr. Gelfi expressed interest also in the AN-225, Mria, which can be used as a platform for space launches. (Eastern Economist)

Motorola in radio station production

KYIV - The Kharkiv-based Kommunar electronics plant and the U.S. firm Motorola announced on May 25 the imminent start of a joint project to manufacture GP-300 and GM-350 duplex radio stations to be used primarily by special services, police and fire brigades. Kommunar Director General Oleksander Asmolov announced that 12,000 radios will be produced the first year, their sale being guaranteed through the Motorola dealer network in Ukraine. Phase one of the project will be jointly financed by Motorola, contributing $300,000 (U.S.); Kommunar, $300,000; and the U.S. Defense Department, $300,000. The Defense Department's contribution will be regarded as compensation for a failed Ukrainian-U.S. accord to establish a joint venture to produce cellular telephones. Total initial investment in radio station production will be $5 million (U.S.), and Motorola has promised to increase its investment if the project proves successful. Mr. Asmolov also announced an agreement to establish another JV between Kommunar and Motorola that may attract additional investors. Kommunar specializes in control systems for spaceships, telecommunications systems and TV sets. (Eastern Economist)

Naftohaz Ukrainy, BP Amoco sign deal

KYIV - Ukraine's national oil and gas monopoly company, Naftohaz Ukrainy, signed an agreement with BP Amoco on May 24 on the implementation a geological research project in the Dnipro-Donetsk oil and gas region. According to Naftohaz President Ihor Bakai, the agreement implies investment of $1 billion (U.S.). According to Mr. Bakai, another Western firm, Shell, plans to invest in another project in Ukraine. He confirmed that implementation of these projects may require the creation of an international consortium with total investment of about $2 billion (U.S.) needed. (Eastern Economist)

EBRD loan to improve water supply

KYIV - Ukrainian Finance Minister Ihor Mitiukov and EBRD Vice-President Charles Frank signed an agreement on May 21 on implementing a program investment and development of the water supply and water purification systems in the city of Zaporizhia. The value of the project is $42.5 million (U.S.) and the loan is worth $28 million. It provides for improving the water supply and sewage systems, and cutting water losses and electricity consumption. The project also aims to improve the environment in the Dnipro and Black Sea basins. (Eastern Economist)

Hilton hotel contract finally signed

KYIV - Hilton International, Teatralnyi Hotel and the Kyiv City Administration on April 29 signed a contract for construction of a five-star Hilton hotel in Kyiv based on the current Teatralnyi Hotel. The four-year legal dispute over ownership of the hotel was resolved in the following way: shares in the hotel will be split among KCSA Real Estate Department, the Nigma company, Hilton International and an American real estate investment fund. "Total project costs will be $60 million (U.S.), 50 percent of which are to be financed from the capital of JSC Hotel Teatralnyi and the other half from loans," said Valerii Mishenko, president of Teatralnyi Hotel. Hilton is to invest $5 million (U.S.), according to Clive Hillier, Hilton's vice-president for corporate development in Eastern Europe. He said that construction should be finished by the end of 2000, with the project expected to show a profit extremely quickly, since it will be the only hotel of its class in Ukraine. (Eastern Economist)

| Home Page |