This is a curated list of all the most important stories on the Ukrainian economy this week.
Much has happened since the last economic overview, where the Ukrainian government, for example, has charged Pro-Russian oligarch Viktor Medvedchuk and Taras Kozak with high treason. It is a significant development for several reasons. It is, first of all, a big blow for Russian influence in Ukraine, but it is also, according to some, a sign that the Ukrainian President might start to take reforms seriously again.
“First, this is about President Zelensky appreciating their efforts. Secondly, they seek a positive social effect by demonstrating strength, influence, and capabilities,” argues Volodymyr Fesenko, chairman of the Penta Center of Applied Political Studies, “The effect of competition, including on Medvedchuk’s case, is already noticeable. And this will be the case in the future, serving as an additional impetus, pushing law enforcers to boast of their results. Of course, they all need to remain professional and collect due evidence. But the impetus is already in place.”
“The second important point, besides Zelensky’s political will influencing the actions of law enforcement, is public demand and support of a significant part of the public. I have already said that calls for legal action against Medvedchuk appeared immediately after sanctions were imposed. Since people demand this, it will only motivate the president and law enforcement to act in this direction,” he wrote.
Both Viktor Medvedchuk and Taras Kozak are members of the Ukrainian parliament for the pro-Russian party Opposition Platform – For Life, and Kozak owns several Tv-channels, which were closed by the Ukrainian President Volodymyr Zelensky back in February. They are both some of the most powerful men in Ukraine.
What we know about Ukraine’s high treason charges against lawmakers Medvedchuk and Kozak
Many companies plan to sue Ukrenergo
This week also broke the news that members of the Solar Energy Association of Ukraine, ASEU, are threatening to file claims against the energy transmission system operator in Ukraine, state-run Ukrenergo. Companies claim that Ukrenergo has deprived them of the opportunity of receiving compensation for green energy production by putting – what they call – illegal restrictions on the generation of renewable energy sources, which we wrote about on Ukrainenu.
“(Ukrenergo) systematically applies commands to restrict the production of green energy… This will not allow market participants to receive compensation for these restrictions. According to the norms of the Economic Code of Ukraine, the deliberately incurred losses must be compensated in full by the guilty party. Therefore, the producers of electricity from renewable energy sources are already preparing to recover the losses incurred from the PCB in court,” said Artem Semenishin, head of the Solar Energy Association of Ukraine.
The current crisis between renewable energy producers and Ukrenergo comes after another big turmoil in 2020. Several companies threatened Ukrenergo with lawsuits as the government had stopped paying support to the renewable energy sector in Ukraine for several months, owing around one billion dollars in green tariffs.
Naftogaz again in the news
The story about Naftogaz and the dismissal of the company’s CEO, Andriy Kobolyev, continues to attract headlines in Ukraine. Here at Ukrainenu, we have tried to look at what we know about the story at this point and made it into one large piece, looking at what the turmoil means for Ukraine.
“We are seriously concerned about recent events in Naftogaz of Ukraine… We urge the leadership of Ukraine to ensure that critical management decisions at state enterprises are approved in full compliance with the main fundamentals of recognized corporate governance standards,” wrote the European Union, the European Bank for Reconstruction and Development, the European Investment Bank, the World Bank, and International Finance Corporation in a joint statement on Facebook.
Also, the U.S. Secretary of State Antony Blinken has been criticizing how the Ukrainian government has acted in the crisis. He points out that it “sends a bad message, a bad signal,” and he is not alone with that conclusion.
“The recent decision to abuse the Naftogaz corporate governance regime in order to remove Kobolyev now threatens to bring all the gains of the last seven years crashing down. Already, a proposed Eurobond issue has been canceled. It is questionable whether the recent Black Sea exploration agreement will go ahead, as Western investors are likely to walk away from the deal,” wrote Dr. Alan Riley, a Senior Fellow at the Atlantic Council, and Suriya Evans-Pritchard Jayanti, a US international energy policy expert.
Harvest might break all records
Ukrainenu spoke to Andrey Novoselov, an agricultural analytical manager at Barva Invest, this week about what we can expect from the harvest this year. He is very optimistic and says that the yield may be better than in 2019.
“We have had a little more rain and lower temperatures here in spring than we might have expected, but it is not a problem for the winter crops,” says Novoselov, “If we compare with last year, we are experiencing quite a big jump in output this year. The soil is well moistened, and we are experiencing better weather now. It looks excellent.”
“As it looks right now, we just need to have the farmers make sure that they plant everything in time for the rest of the year,” says Novoselov, “I think that it is possible to reach the levels from the record harvest in 2019. The harvest of wheat and barley could become higher than expected, and if that happens, the harvest could be really good.”
Trade expert to Ukrainenu: Harvest might break all records this year
IMF is concerned
The International Monetary Fund is still not satisfied with the Ukrainian reform progress if they send the second tranche to Ukraine. Preservation of the independence of the National Bank of Ukraine including flexible exchange rate policy, medium-term fiscal stability and the fight against corruption and improvement of corporate governance, remains the focus of the IMF.
In June 2020, the first tranche was paid out to Ukraine with the explicit demand that NBU would remain independent. However, not long after, the former governor of NBU Yarik Smolii resigned from the position citing political pressure.
Ukraine has loads of rare minerals
A new report from the International Energy Association, IEA, named “The Role of Critical Minerals in Clean Energy Transitions,” points out that these rare minerals are essential for the world’s green energy transition. Many rare minerals are used in clean energy, such as Lithium in batteries. The reports come as the government is preparing an Investment Atlas, which will map 30 rare mineral assets such as titanium, lithium, nickel, cobalt, chrome, tantalum, niobium, beryllium, zirconium, scandium, molybdenum, gold, and graphite around Ukraine.
Ukraine could play a crucial role in the supply of rare minerals around the world.
“Ukraine’s subsurface resources include a concentration of around a hundred types of minerals, the market value of which is estimated by experts to reach $7.5 trillion USD. In total, Ukraine’s mineral resource base is formed of 20,000 deposits, and ore manifestations, of which 7,800 are explored, and only 3,300 are being developed,” concludes Mining World, “Ukraine harbors significant reserves of non-ferrous and rare-earth metals including unique deposits of beryllium, zirconium, tantalum, and a complex of phosphoric rare-earth and rare-metal ores.”
The world needs rare minerals for the green energy transition: Ukraine got loads of them
Prime Minister: Herd immunity is achievable next year
The vaccination process in Ukraine is slow, but Ukrainian Prime Minister Denys Shmyhal says that herd immunity can be achieved during the following year. It sets some kind of horizon for how long it will take before things return to normal.
“Next year, we plan to complete the vaccination of over 70% of the adult population, which makes it possible to develop herd immunity,” he said, “We’ve been able to double the supply of the Pfizer/BioNTech vaccine this calendar year. That is, we will receive 20 million doses of the Pfizer vaccine instead of 10 million doses.”
A new way of paying fines
UBN reported this week that Kyiv is introducing a new system for parking fines. The inspectors can now use a handheld terminal to see if you have paid for your parking, and you can get a ticket on the spot.