Week's balance: Ukraine signs concession deal for Olvia seaport, Cabinet once again replaces customs chief, while economy ministry downgrades crops forecast

The Cabinet of Ministers has once again replaced the head of customs, the Ministry of Infrastructure transferred the Olvia seaport to a Qatari company for concession, while the Ministry of Economy has worsened the forecast for the grain harvest – these are the key economic developments of the outgoing week.

An important event for Ukraine's transport complex: the government has transferred the specialized Mykolaiv Seaport Olvia to QTerminals (Qatar) as part of the concession deal.

The infrastructure ministry had announced the bidding in September last year. In January 2020, QTerminals was declared the winner. The company operates Qatar's largest commercial port, Hamad, worth over $7 billion, which is one of the most powerful and modern maritime logistics complexes in the Middle East.

Minister of Infrastructure Vladyslav Krykliy says that for Olvia, concession means not only stable development and jobs, but also the well-being of the city and the region as a whole.

"QTerminals is a world-acclaimed port operator. According to the agreement, at the first stage, the concessionaire will invest about UAH 3.4 billion in the port development over the next five years. Over the entire period of concession, which is 35 years, up to UAH 17.3 billion in direct investment will be attracted. This event is truly historic due to the fact that this is the first direct Qatari investment and the second largest after Kryvorizhstal in the entire history of Ukraine," Krykliy said.

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The minister noted that the concession agreement was signed on really favorable terms for the country. "The amount of annual concession payments will be at least UAH 80 million, which is 16 times higher than the port's profit for 2019. Also, the concessionaire undertakes to provide at least 2.5 million tonnes of cargo transshipment per year and to invest about UAH 80 million in Mykolayiv's infrastructure" the minister stressed.

He also said that a universal transshipment complex will be built in the port, and jobs will be saved.

"The concessionaire undertakes to guarantee jobs for the staff and preservation of wages over the next six years," the minister said.

During the signing of the agreement, he announced the intention of the Ministry to launch in early 2021 a tender for the concession of a ferry crossing in the port of Chornomorsk.

Economy Ministry lowers crops forecast

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In the outgoing week, the Ministry for Development of Economy, Trade, and Agriculture slightly worsened the forecast for grain harvest to 70 million tonnes due to lower expectations for the gross corn harvest. The previous forecast of the total gross grain harvest for all categories of crops was 72.1 million tonnes.

"Weather conditions in recent weeks have caused either a loss of the potential corn crop, or its significant decline. If weather conditions are favorable in autumn, the corn harvest is expected at 35 million tonnes, while the total grain harvest – at 70 million tonnes," said Deputy Minister Taras Vysotsky.

According to the Ministry of Economy, the largest losses of the potential corn crops are expected in Cherkasy, ​​Odesa, and Kirovohrad regions.

"In general, across the entire territory of Ukraine, the estimated losses in corn may amount to about 2 million tonnes," the ministry emphasizes.

The State Statistics Service also released some disappointing data, stating that agricultural production in Ukraine in January-July decreased by 11.2% on year. Over the reporting period, agricultural enterprises reduced production by 15.3%, and households – by 4.2%.

"New broom" at customs

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The Cabinet at its meeting on Wednesday made a decision to dismiss Ihor Muratov from the top post at the State Customs Service. One of the deputy heads, Andriy Pavlovsky, was appointed chief a.i

In late April, the Cabinet dismissed the then customs head Maksym Nefyodov amid criticism over the failure to meet the budget revenue target. Nefyodov, for his part, spoke about objective reasons for lower inflows to the budget from his agency in the difficult conditions of hryvnia strengthening in 2019 and the economic crisis that erupted this year.

Finance Minister Serhiy Marchenko said that another reshuffle in one of the key economic agencies was due to the delay in reform. Also at the meeting, the government appointed Serhiy Kovshar interim chief of SE Commercial Sea Port Pivdenny, as well as approved Anatoly Mazurenko as Director General of the State Aviation Enterprise Ukraine.

Sliding hryvnia

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At the end of the outgoing week, the Ukrainian currency lost ground against the dollar after two weeks of confident strengthening.

On Wednesday, the hryvnia exchange rate against the U.S. currency stood at UAH 27.23, but on Thursday the hryvnia weakened by 9 kopiykas before continuing the slide on Friday, when the official NBU rate was fixed at UAH 27.48 to the dollar.

According to financiers, this is due to the redemption of foreign currency bonds of the domestic government loan on August 20 in the amount of almost $160 million.

Meanwhile, the national currency slightly strengthened against the euro on Friday – up to UAH 32.55.

For post-holiday Tuesday, the National Bank set the official hryvnia exchange rate at UAH 27.39 to the dollar. That is, the next week the Ukrainian currency will start stronger by 9 kopiykas against the dollar, and will also continue to grow against the euro – also by 9 kopiykas compared to the previous indicator.

Next week on Monday, Ukrainians will celebrate the twenty-ninth anniversary of Ukraine's independence. And on Tuesday, legislators will gather for an extraordinary session to consider, among others things, a presidential bill on raising the minimum wage.

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