From January 2007
Ukrainian News Agency, Kyiv, Ukraine, June 26, 2008
FOUR NEWS ARTICLES RE: BUNGE
BUNGE SAYS OLEINA TRADE MARK IS SUBJECT TO
RAIDERS' ATTACK IN UKRAINE
Bunge Ukraine, Kyiv, Ukraine, Thursday, June 26, 2008
STATEMENT FROM ERNST & YOUNG
TO U.S.-UKRAINE BUSINESS COUNCIL
RE: Main Control and Revision Office of Ukraine (GolovKRU) states that Ernst & Young, in its valuation of Pridneprovska Railways, undervalued two items; Ernst & Young LLC’s license to provide valuation services should be reviewed by the State Property Fund of Ukraine.
UKRAINE: ERNST & YOUNG CONSIDERS ITS APPRAISAL OF UKRZALIZNYTSIA PROPERTY OBJECTIVE
Ukrainian News Agency, Kyiv, Ukraine, Thursday, June 19, 2008
UKRAINE: CONTROL & AUDITING DEPARTMENT ASKS SPF TO REVOKE APPRAISING LICENSE OF ERNST & YOUNG
Dmytro Kuzmin, Ukrainian News Agency, Wednesday, June 18, 2008
CANCELLATION OF VANCO PRIKERCHENSKA
PRODUCTION SHARING AGREEMENT
Background Briefing Paper
Vanco's Corporate Relations Company
Kyiv, Ukraine, Friday, May 30, 2008
VANCO TO DEFEND ITS POSITION ON PSA WITH UKRAINIAN GOVERNMENT IN COURT, SAYS COMPANY REPRESENTATIVE
Interfax Ukraine Business Express
Kyiv, Ukraine, Thursday, May 22, 2008
Ukrainian News Agency, Kyiv, Ukraine, Thursday, May 22, 2008
VANCO PRESS CONFERENCE
Speaker's Notes from Jim Bown, Vanco Consultant
Ukrainian House Press Room
Kyiv, Ukraine, May 22, 2008
Vanco News Conference Press Release Kyiv, Ukraine, 15 May 2008
UKRAINIAN AGRICULTURE
The Breadbasket of Europe
Agro Sector Report, Equity Research
By Renaissance Capital, Kyiv, Ukraine, May 12, 2008
BUSINESS DRIVES UKRAINE'S EURO-ATLANTIC INTEGRATION
Private sector moves Ukraine forward
By Morgan Williams
"Welcome to Ukraine" magazine
Kyiv, Ukraine, 2 (44), May 2008, p. 48-51
"CONFRONT INFLATION NOW TO AVOID REGRETS LATER"
OP-ED: By Balazs Horvath, Resident Representative in Ukraine,
International Monetary Fund (IMF) and by
Martin Raiser, Economic Advisor, Poverty Reduction and Economic
Management, Europe and Central Asia Region, The World Bank
Economic News (in Russian), Kyiv, Ukraine, Friday, May 16, 2008
Article re-published in English by the U.S.-Ukraine Business Council
Kyiv, Ukraine, Friday, May 16, 2008 with permission of the authors
"TAMING INFLATION IN UKRAINE"
By E. Segura, O. Pogarska & S. Kasyanenko
The Bleyzer Foundation, Kyiv, Ukraine, May 2008
USUBC Legal Affairs Working Group Policy Paper
"Encouraging A U.S. Government Initiative To
Improve The Environment For U.S. Investors In Ukraine"
USUBC, Washington, D.C., May 13, 2008
INTERNATIONAL MONETARY FUND (IMF) ECONOMIC
REPORT ON UKRAINE - 2008
Ukraine-2008 Article IV Consultation: Preliminary Conclusions
of the IMF Mission to Ukraine
International Monetary Fund (IMF)
April 17, 2008
U.S. SENATOR DICK LUGAR CALLS FOR TRANS-ATLANTIC
ENERGY SECURITY STRATEGY, SHOULD REFUSE TO TOLERATE
THE USE OF ENERGY AS AN INSTRUMENT OF COERCION
Russia made clear to European energy importers their strong opposition
to Ukraine and Georgia receiving NATO Membership Action Plans.US Ukraine Energy Dialogue Series III Conference
Speech of Senator Lugar, Office of Senator Dick Lugar (R-IN)
Washington, D.C., Tuesday, April 15, 2008
UKRAINE: "FLOATING THE HRYVNIA ARMS THE
NATIONAL BANK TO FIGHT INFLATION NOW"
Ukraine's inflation has got out of control. This inflation
crisis is Ukraine's most urgent economic problem.
OP-ED: By Anders Aslund, Senior Fellow of the Peterson
Institute for International Economics, Washington, D.C.
Kyiv Post, Kyiv, Ukraine, Thursday, April 03 2008
Financial Returns Audit Obligatory for All Business Companies Starting from 2007; Asters advised EBRD on USD 139.3 million financing to Expert Capital S.A. to finance commercial real estate construction projects in Ukraine
Legal Alert by Asters, Attorneys at Law
April 2, 2008
COUNTERFEIT CHEMICALS: Ukraine's Euro-integration hopes threatened by growing fake pesticides trade
By Jim Davis, Business Ukraine magazine
Kyiv, Ukraine, Monday, March 31, 2008
UKRAINE: TRADE SUMMARY
WTO, Import Policies, Standards, Procurement, Export Barriers, Intellectural Property Rights, Services Barriers, Investment Barriers, Electronic Commerce
National Trade Estimate Report - Ukraine
Office of United States Trade Representative (USTR)
Washington, D.C., Friday, March 28, 2008
UKRAINE'S ROLE IN INCREASING WORLD FOOD SECURITY
By Jim Davis, Business Ukraine magazine
Kyiv, Ukraine, Monday, March 24, 2008
UKRAINE'S EXPRESS DELIVERY SECTOR: IN DIRE
NEED OF EXPRESS FIXING (quotes USUBC member UPS)
By Jim Davis, Business Ukraine magazine
Monday, March 3, 2008, Kyiv, Ukraine
HIGH COMMERCIAL COURT TRAMPLES INTERNATIONAL AGREEMENTS
OP-ED: by Gene Burd, Kyiv Post, Kyiv, Ukraine, Thursday, Feb 28 2008
VAT REFUNDING REMAINS A MAJOR ISSUE
Statement by USUBC Agribusiness Working Group
USUBC Agribusiness Working Group
U.S.-Ukraine Business Council (USUBC)
Washington, D.C.
Monday, February 25, 2008
PRIME MINISTER'S COUNCIL OF INVESTORS (CI)
Membership, Regimen, Work Bodies, Schedule
Key Organization Documents, February 25, 2008
Translated from Ukrainian to English by USUBC
NOW IS THE TIME TO DRAMATICALLY REFORM
UKRAINE'S LEGAL SYSTEM
OP-ED by Irina Paliashvili, Chair, Legal Affairs Working Group
U.S.-Ukraine Business Council (USUBC), Washington, D.C.,
President & Senior Counsel. RULG-Ukrainian Legal Group, P.A.
Kyiv Post, Kyiv, Ukraine, Thursday, February 14, 2008
OPIC PROGRAMS CLOSED FOR UKRAINE
U.S. Overseas Private Investment Corporation (OPIC)
Wednesday, February 13, 2008
SUMMARY UPDATE ON LEGAL FRAMEWORK FOR BUSINESS OPERATIONS IN UKRAINE
Irina Paliashvili, Chair, Legal Affairs Working Group
U.S.-Ukraine Business Council (USUBC)
President and Senior Counsel, RULG - Ukrainian Legal Group
Kyiv and Washington, D.C. February, 2008
EBA REPORT BARRIERS TO INVESTMENT IN UKRAINE
By www.eba.com.ua
February 1, 2008
WTO ADVANTAGES FOR UKRAINE
OP-ED: By Morgan Williams, President
U.S.-Ukraine Business Council (USUBC)
Novynar weekly magazine in Ukrainian
Kyiv, Ukraine, Thursday, January 31, 2008
OVERVIEW OF THE LICENSING REGIME FOR THE
USE OF SUBSOIL IN UKRAINE IN 2007
RULG - Ukrainian Legal Group, P.A., Washington, DC
January 9, 2008
PROVIDING A NUCLEAR FUEL ALTERNATIVE TO UKRAINE
Michael Kirst, Vice President, Central and Eastern European Fuel
Westinghouse Electric Company
January 9, 2008
WESTINGHOUSE ELECTRIC COMPANY
January, 2008
IMF TELLS UKRAINE TO FIGHT INFLATION, DEFICIT
Reuters, London, UK, Thursday, December 13, 2007
SIGMABLEYZER ECONOMIST: UKRAINE HAS HIGH CAPABILITY OF ECONOMIC GROWTH, BUT ITS REALIZATION DEMANDS "DESOVIETIZATION" OF ADMINISTRATIVE SYSTEM
Topical Commentary: By Dmytro Shkurko
Ukrinform, Kyiv, Ukraine, Friday, November 16, 2007
NATIONAL BANK CRITICISED AS INFLATION FEARS WORSEN
By Jim Davis, Business Ukraine magazine
Kyiv, Ukraine, Monday, November 12, 2007
CAPITAL FLIGHT: UKRAINE'S GAS PRICE CONTROLS PUSH U.S. FIRM OUT
By Tammy Lynch, Senior Fellow
Institute for the Study of Conflict, Ideology and Policy, Boston, MA
THE GROUP OF STATES AGAINST CORRUPTION
(GRECO) PUBLISHES ITS REPORT ON UKRAINE
Concludes that corruption in Ukraine constitutes a real threat to the principles of democracy and the rule of law.
Council of Europe, Strasbourg, France, Monday, October 29, 2007
STRASBOURG - The Group of States against Corruption (GRECO) has published today its Joint First and Second Round Evaluation Report on Ukraine, which joined GRECO in 2006.
The report focuses on general anti-corruption policies, specialisation of law enforcement bodies in fighting corruption, independence of the judiciary, immunity from prosecution for corruption offences, the deprivation of benefits drawn from corrupt acts, measures to counter corruption in public administration and the prevention of legal persons - such as commercial companies - from being used as shields for corruption.
The report was drawn up by a team of GRECO evaluators following a one week visit to Ukraine, during which the team held thorough discussions with officials and civil society representatives.
Information collected during the on-site visit indicates that Ukraine is perceived as being considerably affected by corruption, the problem being systemic and wide scale, affecting the whole society, its public institutions, including the judiciary, at central and local levels.
GRECO concludes that corruption in Ukraine constitutes a real threat to the principles of democracy and the rule of law. The fight against corruption can therefore not be treated in isolation from democratic reforms. GRECO stresses that the President's Concept Paper "On the way to Integrity" is a good basis for this reform process.
GRECO addresses 25 recommendations to Ukraine. They aim at the establishment of a mechanism for the implementation of an overall anti- corruption policy, including an action plan against corruption.
More particularly, the recommendations deal with problems relating to the independence of the judiciary and the procuracy, access to information held by public authorities, procurement procedures, reform of the public administration and of the civil service, codes of ethics, reporting of corruption, auditing of central and local bodies and liability of legal persons for corruption offences.
GRECO will monitor the implementation of the recommendations to Ukraine towards the end of 2008, through its specific compliance procedure.
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http://www.coe.int/t/dg1/greco/evaluations/round2/GrecoEval1-2(2006)2_Ukraine_EN.pdf
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GRECO website: http://www.coe.int/t/dg1/greco/default_EN.asp
Council of Europe Press Division, pressunit@coe.int
"OECD ECONOMIC ASSESSMENT OF UKRAINE 2007"
Tuesday, September 4, 2007
If you would like to have a copy of the complete edition of the "OECD Economic Assessment of Ukraine 2007" document with all the charts, tables and graphs, please contact mwilliams@usubc.org. We will send it to you as an attachment. The attachment is a PDF 2.00 MP file.
For links to the executive summary, etc. see the OECD links at the end of this e-mail.
REGULATORY AND COMPETITION REFORMS CRITICAL TO UKRAINE'S FUTURE ECONOMIC GROWTH SAYS OECD REPORT
Organisation for Economic Co-operation & Development (OECD) Paris, France, Tuesday, September 4, 2007
LINK: Economic Surveys: www.oecd.org/eco/surveys/ukraine
LINK: Policy Brief: http://www.oecd.org/dataoecd/26/0/39196918.pdf
UKRAINE DECREE 31 SETS LOW PRICE FOR GAS, FORCES ITS SALE TO THE GOVERNMENT AND IS DESTRUCTIVE TO THE DEVELOPMENT OF ENERGY RESOURCES SAYS ROB BENSH, PRESIDENT OF CARDINAL RESOURCES
INTERVIEW: With Rob Bensh, Chairman &
Chief Executive Officer, Cardinal Resources
BY: Morgan Williams, President
U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, August 13, 2007
WASHINGTON, D.C. - Rob Bensh, Chairman and Chief Executive Officer, Cardinal Resources, a member of the U.S.-Ukraine Business Council (USUBC) in Washington, contacted the USUBC about a major problem that has developed concerning the sale of gas by companies involved in Joint Activity Agreements (JAA) in Ukraine.
A new Cabinet of Minister's Decree (Decree 31) forces such companies as Cardinal to sell gas only to the government of Ukraine and at prices far below the competitive market price.
The decree, which is part of the Budget Law drafted by Finance Minister Azarov and approved by Prime Minister Yanukovich, is very destructive to the private development of energy resources and to private international investors in Ukraine.
Cardinal has been operating in Ukraine for 10 years conducting E&P (Exploration and Production) for oil and gas in Ukraine for resale into Ukraine.
Cardinal is a UK plc with a U.S. Corporation (Delaware Corp) 100% subsidiary (Carpatsky Petroleum) that owns 100% of the oil and gas rights in question.
The management team is comprised entirely of American oil and gas executives. A majority of Cardinal's equity held in the U.S. while 75% of Cardinal financing is from U.S. investors. Cardinal conducted an IPO last year on the London Stock Exchange.
Cardinal has been an active supporter of democratic development in Ukraine and for international engagement in reform issues associated with developing a strong, positive Foreign Direct Investment (FDI) environment.
USUBC: Rob, thanks for contacting the USUBC about the problem of private gas sales in Ukraine. Tell us about the major issue that has developed concerning Cardinal's right to sell its gas in Ukraine to private buyers at competitive market prices.
ROB BENSH: Cardinal historically sells its gas in Ukraine to Industrial End Users at market prices (currently about $4.80 mcf).
The Government of Ukraine passed a new budget act in January 2007 which obligates any JAA (Joint Activity Agreement) to sell its gas to NAFTA GAZ at a fixed government rate of about $1.50 mcf, which, indeed, is below production costs of about $$1.70 mcf.
Cardinal had been injecting its gas into storage to avoid selling it at uneconomic prices. It has recently been learned that UkrGas Production has been selling Cardinal gas to the Government of Ukraine without Cardinal knowledge or permission.
Decree 31 of the budget act is specifically designed to benefit the Government of Ukraine in this year's current budget as written by Mr.
Azarov, Minister of Finance, and it effectively confiscates the natural gas production of Cardinal's subsidiary, Carpatsky Petroleum, a U.S.
corporation.
This harms Cardinal and will also prevent other western companies who would like to operate in the sector from working with Ukrainian State oil and gas companies as they can not sell joint production.
USUBC: Please tell us about the situation with gas prices in Ukraine today.
ROB BENSH: The price for the gas for the population is established by the special National Energy Price Regulation Authority is fixed:
265.00 UAH (excluding VAT) = 52.48 USD per 1000 m3 = $1.52/mcf
318.78 UAH (including VAT) = 63.12 USD per 1000 m3 = $1.83/mcf
The market price is to a great extent regulated by the price for gas provided by Ukrgasenergo, the monopolist gas provider in the Ukrainian market. The current price for gas in Ukraine is:
708,00 UAH per 1000 m3 (excluding VAT) = 140,20 USD
per 1000 m3 = $4,07/mcf
850,00 UAH per 1000 m3 (including VAT) = 168,30 USD
per 1000 m3 = $4,88/mcf
This price can be slightly more or less, when the gas is sold to the gas trader and not to the end buyer directly, but it can't be higher at this moment, though there's a good chance and a clear tendency for the future increase.
USUBC: What actions has Cardinal taken to try and resolve this important issue?
ROB BENSH: Cardinal has taken the following actions:
1. Letters requesting a resolution of the gas sales situation were sent to the Prime Minister Yanukovich (December 19th, 2006), Energy Minister Boiko (March 23, 2007), and the Head of NAK Naftogas Bakulin (May 20, 2007).
Only once have we receiving a response, and that was from the Deputy Energy Minister, which gave us false hope that the situation with the gas sales could be resolved. This was the response to our letter sent to the Prime Minister. We've never received any responses to the other letters.
2. U.S. Ambassador William Taylor sent a letter to Energy Minister Boiko (March20, 2007), asking for resolution of this issue for Cardinal. The Minister never responded to that letter.
3. Cardinal has met with the Energy Minister Boiko twice in his office, discussing this issue. Both times the Minister promised to consider the problem and help to resolve it. There was never anything beyond the promises.
USUBC: Based on your experience so far trying to resolve this critical issue what conclusions have you drawn about the matter:
ROB BENSH: After several months of working on this problem we have drawn the following conclusions:
1. Much stronger action must taken by all those who are concerned about the very negative actions taken by the Ukraine government. Cardinal will not be able to change the current situation alone.
2. We realize that this is not exclusively Cardinal's problem, but the problem of every JAA or JV, formed with NAK Naftogas, Ukrnafta or NAK Nadra.
Every declaration of any JAA or JV of their potential possibility to sell gas at market price, when they have production, is a bluff. All existing JAAs and JVs with production either sell the gas to NAK at below production costs or put it into storage.
3. We have regularly made the point in our letters to the Government, that the Laws, which created the current situation, directly contradict other Laws of Ukraine, including the Civil Code, The Law "On Foreign Investment", etc., which are still in effect.
Indeed, in April, Europa Oil and Gas (Holdings) plc won their case in court of the right to sell gas at market prices but the government continues to ignore the court ruling.
Cardinal assumes the verdict regarding the priority of the laws can be given by the Constitutional Court. But considering the political situation in the country, the fact that the mentioned court is not able to issue the decision on one Presidential Decree for more than two months, we can hardly count on this option.
4. Given the non-responsive nature of Minister Boiko to the Ambassador's first letter, Cardinal has asked the U.S. Government to communicate via a formal demarche to the Government of Ukraine that Decree 31 is inconsistent
with:
(a) global norms for encouraging foreign direct investment
(b) WTO standards and
(c) Government of Ukraine statements regarding "energy
self-sufficiency"
(d) Laws Governing Foreign Investment in Ukraine.
Ideally we would like to see the Yanukovich government voluntarily withdraw this law which is contrary to the long term interests of Ukraine and its people. Given their lack of response so far to our requests and to those of the U.S. Ambassador, we doubt they are willing to do the right thing.
At this point, for the sake of future foreign direct investment in Ukraine and for Ukraine's efforts in the direction of energy independence, we can only hope that the September 30 elections bring about a change in the direction of welcoming investment from the West.
In the interim, we will continue to ask the U.S. government for its intervention in the form of a demarche to Prime Minister Yanukovich.
