News (#03 March 2019)

Biznews

Energy

Ukrenergo transferred to management by the Ministry of Finance

The state enterprise Ukrenergo, operator of the United Energy System has been transferred to management by the Ministry of Finance. This means de facto completion of the process of Ukrenergo’s detachment (unbundling) and establishment of independence of the transmission system operator from activities related to the production and supply of electricity.

This process is determined by the necessity for distribution of control over generating companies and transportation of electricity.  This approach is established in EU Directive 2009/72, which Ukraine implemented into its legislation within the framework of fulfilling its international obligations to the Energy Community.

 

Norwegian company to start building one more solar power plant in Ukraine

In March Atlas Capital Energy LLC, which is owned by the Norwegian company Scatec Solar, will start construction of a 50 MW solar power plant in Holoprystansky District, Kherson Region.

There are currently five wind power stations and 31 solar ones with a total capacity of 294 MW on the territory of Kherson Region. The total amount of investment raised for these facilities is UAH 1 billion.

In January Scatec Solar announced its intention to invest EUR 180 million to build 150 MW SPP in Mykolayiv Region. In July 2018, the company signed an agreement with Rengy Development (Kyiv) on the joint construction of 47 MW SPP in Mykolayiv Region with a total value of EUR 52 million.

At the beginning of 2019 Scatec Solar also started construction of 30 MW Kamianka SPP in Cherkasy Region. The cost of the project, whose completion is scheduled for the fourth quarter of 2019, is EUR 35 million.

The European Bank for Reconstruction and Development is financing the said projects.  It traditionally grants 70% of the cost of a project.

In the Scatec Solar report for the fourth quarter of 2018 it is stated that 77 MW SPP are currently under construction in Ukraine, and another 174 MW are planned. Consequently, the total portfolio of Scatec Solar projects in Ukraine is 251 MW, worth EUR 193 million. At the same time, the profitability level of Ukrainian projects already being implemented is 65-70%, which is higher than the average figure of 58% in the company.

 

Technologies

Amazon invests half a billion US dollars in self-driving car

Amazon has invested more than half a billion US dollars in a start-up developing autopilot technologies, which is run by former Google, Tesla and Uber engineers.

Investment in Aurora Innovation coming to USD 530 million was the first public announcement by Amazon on cooperation with the company developing autopilot technologies for passenger cars.

The start-up was established in 2016 by Chris Urmson, a former Google self-driving cars program manager. Later, Stirling Anderson, the head of Tesla autopilot team, and Drew Bagnell, the head of the same department of Uber, joined him.

The aim of Aurora is to develop software for autopilot cars, and in early 2018 the company announced that its first customers would be Volkswagen and Hyundai.

Due to the involvement of specialists from serious automotive and IT corporations, Aurora positions itself as a top-class company amid many other developers in this field.

Amazon is one of the largest online retailers and, apart from the USA, operates in Canada, China, Brazil, Japan and Europe.

 

Privatization

Small privatization already earned UAH 700 million

Small privatization auctions held through the ProZorro.Sales electronic system have earned the state coffers almost UAH 700 million.

Pursuant to the Law of Ukraine On Privatization of State and Communal Property, which came into force in March, state and communal property assets worth up to UAH 250 million are objects of small privatization. These are put up for sale by the State Property Fund of Ukraine, as well as by local authorities.

 

Trade Policy

EU – Japan Free Trade Area Agreement came into force

The agreement on the Free Trade Area (FTA) created between the European Union and Japan came into force on 1 February. The free trade area is designed to revive economic growth in both the EU and in Japan. It’s expected that the FTA will enable European companies to save almost EUR 1 billion annually in duties alone as a result of the abolition of import duties.

In particular, the abolition of duties will be beneficial to European food manufacturers. At the same time, Japanese companies are interested in reducing European customs rates on industrial products, and first and foremost on automobiles, which is guaranteed by the agreement.

The EU and Japan jointly account for about one third of global GDP.

 

Fraud

USA filed formal charges against Huawei

The US Department of Justice has filed formal charges of industrial espionage and fraud against Huawei and its financial director Meng Wanzhou

Ten charges were filed against two divisions of Huawei Technologies Corporation.

According to the Attorney-General’s Office, Huawei employees violated agreements with the telecommunications company T-Mobile, which was developing Tappy the Robot to test the latter’s cell phones, and got hold not only of information about its characteristics but its individual elements.

In its turn Huawei claimed that it settled this dispute back in 2017.

 

Insurance

AXA closed sales of its insurance business in Ukraine

AXA, the international group of companies, has successfully closed a transaction on sales of all its companies in Ukraine, namely AXA Insurance and AXA Life Insurance. The acquiring company is Fairfax Financial Holdings Limited, whose head office is located in Toronto, Canada.

Following the results of 2018, the profit of both AXA Insurance and AXA Life Insurance in Ukraine under the international standards of AXA group amounted to UAH 164 million, which is 176% higher than the same in 2017 (profit under national standards was UAH 75 million).

 

Competition

AMCU allowed T.A.S. Overseas Investments Limited to acquire Cosmo chain

The Antimonopoly Committee of Ukraine allowed the Cypriot company T.A.S. Overseas Investments Limited, whose main shareholder is Serhiy Tihipko, to acquire the pharmacy business owned by the Cosmo chain. The transaction is expected to be completed in the first quarter of 2019.

The TAS pharmacy chain is part of the TAS business group controlled by Mr. Tihipko. As of now, the TAS pharmacy chain includes 114 pharmacies, 71 of which are located in Kyiv.

The pharmacy business owned by Cosmo trading network, controlled by SigmaBleyzer investment fund, includes 28 pharmacies in Kyiv and Kyiv Region.

 

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