Tuesday, May 16, 2006

Telecommunications--VOIP--Investment--Ukraine--Amitelo AG

The Swiss telecommunications group Amitelo AG intends to expand its presence in Eastern Europe and enter the Ukrainian and Latvian communications markets.

"Latvia and Ukraine will link up to the joint network first," Amitelo said in a release distributed in relation to the purchase of the British telephone company Panacall Ltd. by Amitelo's German subsidiary Amitelo Deutschland GmbH.

Amitelo made this purchase to expand its services, in particular IP- telephones, and strengthen its position on the markets of the Middle East and Asia, the release says...

There's more in the release. I don't know much about this market but if it can break the monopoly in Ukraine on calling prices, that's a good thing. Prices here for calling to the US vary from $.49 to $2 per minute. Skype of course if for free unless that is you have to pay so much per megabyte, which we do. But it is still cheaper.

Tuesday, May 09, 2006

Energy conservation--Ukraine--$100 million budgeted for 2006

Ukraine has budgeted $100 million for energy conservation measures this year. Two projects are highlighted in the article.

Maxim Burtovy, director of an energy savings company called Energy Alliance, is trying to put together a project to capture more waste heat from an electricity-generating station and pump it into the city's heating system. He estimates that doing so could cut gas consumption by 500 million cubic meters a year, worth about $47.5 million at the price Ukraine currently pays for gas from Gazprom, and twice that on world gas markets.

If all former Soviet-bloc nations used such heat-and-power "cogeneration" to the extent that Western Europe does, says the International Energy Agency, 80 billion cubic meters of gas a year could be saved. That would be equal to the entire annual gas usage of Germany, the world's third-largest economy.

Soviet authorities actually had the same plan for this city -- in 1986. The coal-fired power plant bought two turbines, and authorities designed a new Dnieper River bridge with built-in pipes that would carry hot water from the power plant to the city center. But before it could be built, the Soviet Union fell. Then there was no money for the pipes, and the bridge was built without them. So now, while one turbine does pump hot water from the power plant to 250,000 people on the plant side of the river, the other turbine sits in storage.

Mr. Burtovy wants to raise money to install the second turbine, a boiler and hot-water pipes along the bridge, at a cost of $20 million to $50 million, depending on the scope of the project. Up to 500,000 more people then would get their heat from the electricity plant, allowing some gas-fired boilers to be switched off. Energy Alliance would be paid with part of the energy savings. The firm is looking for more such projects in Ukraine.

The power plant's managers are enthusiastic, as are local authorities. An energy-conservation plan they drew up endorses tapping the power station for more heat as one of its major projects. "Since the gas crisis, they got serious," says the plant's director, Andrei Krepak.

Across the river, a Swedish engineering company, Alfa Laval AB, is working on another part of the city heating system. The firm is close to finishing installation of about 250 heating substations to regulate the temperature and flow of hot water moving to apartment blocks. Doing so could cut the city's gas consumption for heating by 10% to 15%, according to Alfa Laval's Ukraine director, Gennadiy Rudenko. There were plans for energy efficiency before, he says, "but the time for investment recovery was so long they didn't make sense. That's changing."

These are the kinds of projects that are possible. But there are many others that are needed here. That means a lot of opportunities for firms specializing in conservation.

Friday, May 05, 2006

Agriculture--Beef--Genetics--Quality Control--McDonald's supplier expanding cattle operation

This is interesting. The company that supplies beef to McDonald's is expanding its cattle ranch operations here some place close to Kiev.

I must say that the beef available here in most stores is better now than it was when I first got here. But that is not to say that it can't be improved. It still can and by a lot. That may have to do with other types of operations that might need to be created more from the round up like feedlots and the like. But one of the big problems in the past has been that the beef has come from played-out dairy cattle. That must be changing now to some extent because the quality has become better. But better is a relative thing.

The other problem has been genetics. That has been true particularly in the dairy industry and I can't see that other industries would not have the same problem. (It has been true of agriculture generally. A lot of the plant and grain varieties have not been the best genetic stock. That is changing slowly.) Better genetics would be a good thing.

This is a way for them to further control quality too which is a must here. We buy cheese at our place because we like it. But we can buy the same cheese from the same factory and it will taste like anything from mozzarella to Swiss to cheddar. Not good quality control. And that is true for other products also. Quality management doesn't seem to be a high priority right now.

Ukraine has been a producer oriented market. That is changing to some extent but it is slow. Ukrainians have traditionally taken what they were given and not done much about it. Some are demanding better quality and are voting with their money but more need to. And if they had the quality in the first place, maybe they would understand just what they were missing.

Some companies do have a high quality but they are in the minority right now. That will change as consumers get more sophisticated and more and more sectors open up to competition from foreign companies.

Tuesday, May 02, 2006

Opportunity--Agricultural machinery

This is from the US Government:

According to various resources, an immediate demand to replenish the physically depreciated farm and processing equipment in Ukraine is estimated at $5-10 billion, with an annual supply of $1-2 billion worth of farm equipment.

Experts estimate the current level of physical depreciation of agricultural machinery and equipment at 70-80 percent, compared to 55-60 percent in 1999. Approximately 40 percent of tractors are 15-25 years old. The need to replace basic farm machinery is becoming critical.

Best Prospects/Services
There are about 40 manufacturers of agricultural machinery in Ukraine, which still supply a significant part of Ukraine’s agricultural machinery, in particular, ploughs, harrows, cultivators, seeders and sprayers. Production facilities at most agricultural machinery plants are currently being utilized at levels ranging from 15 to 30 percent. The price of domestically produced agricultural machinery is not cheap, because of inefficient and outdated manufacturing technologies. All this makes local machinery less attractive for agricultural companies.

Western European firms actively operate in the Ukrainian market. They understand that despite the obstacles to doing business in Ukraine, the potential for hard currency agribusiness exports is great.

U.S. agricultural machinery has a good reputation in Ukraine. The list of U.S. manufacturers includes AGCO Corporation, Massey Ferguson, John Deere, Caterpillar, and Case/New Holland. They offer a full range of equipment and parts, including spare parts, for cultivating, growing, harvesting and transporting, as well as equipment for livestock production. While U.S. machinery is well represented in Ukraine, there are still good opportunities for U.S. companies to enter the Ukrainian agricultural machinery market. Existing critical demand for reconditioned (used) machinery is worth mentioning as well.

The supply of second-hand machinery from Europe has gradually decreased, and with the dollar exchange devaluation, this opens more opportunities for American exporters of used agricultural machinery. There is currently a critical demand for dependable farm machinery due to the lack of reliable domestic manufactures. High-quality U.S. equipment can have a positive impact on Ukrainian agricultural productivity. Ukraine also offers excellent opportunities for US companies to expand to other regional markets such as Russia, other CIS countries, and new European Union (EU) member countries in Central and Eastern Europe. Doing Business In Ukraine: A Country Commercial Guide for U.S. Companies, US Foreign Commercial Service and US Department of State.

I will just add that I have seen the deterioration firsthand. It's a joke that farmers in the US use bailing wire to keep things going, but here it really isn't a joke. A lot of the machinery is very old and what often happens is that one tractor or harvester is cannibalized for parts for the others to keep them running.

The other point is that the companiess here that manufacture agricultural machinery cannot keep up with demand. They put out just so many a year and that's it. So it can be tough to get what you need in the market here anyway. And the quality is suspect. Most would prefer foregn brands, though there is a concern that they might not be able to get them fixed if there is a problem. But that's a service problem that could be solved easily.

Retail--Strong retail market

From a report by AT Kearny:

Few countries have shot up the Global Retail Development Index (GRDI) rankings as quickly as rising star Ukraine. Jumping from number 11 last year to third place this year, the country offers a booming retail market, stable economy, proximity to the European Union and scant competition. Although Ukraine still poses its share of challenges, it won’t be long before international retailers begin to move more aggressively into this promising space.
Too true, too true. There is cash around and not all that many goods for it to chase, relatively speaking. That makes Ukraine a real attractive place for retailers.

So what's stopping you?

Thursday, April 20, 2006


I didn't know there was diamond potential in Ukraine. But apparently there is. Learn something new every day, no?

Retail--Profits--Kraft Foods--Ukraine

Profits are up for Kraft Foods partially on the strength of sales in Ukraine (and some other countries.) That is good news. There is a lot of growth potential here.

Oil--Natural Gas--Exploration--Black Sea--Ukraine

This from Bloomberg News

Vanco Energy, an American-based oil-exploration company, won a bid for licences to pump oil and natural gas in Ukraine's part of the Black Sea, seeing off competition from Exxon Mobil and Royal Dutch Shell, the Ukrainian government said.

Looks like they might be on their way to opening up the basin to investment. This is encouraging news. And welcome news because Ukraine has been and still is so dependent on Russian energy. That did not serve them well this past January when the gas was turned off. The threat of cold winters can focus the attention of even bureacrats, looks like.

There is some mystery about this company noted here.

Tuesday, March 07, 2006

Ski industry--Ukraine--Investments

What does a young man fresh out of college in the poverty-stricken Carpathian Mountains of western Ukraine do with his life?

Selling mushrooms by the roadside, a common career path here, was not quite what Yuri Dobrovolsky had in mind. It would be better, he thought, to start a ski area.

So, too, did a number of well-heeled investors. With master plans from Canada, high-speed lifts from Austria and $125 million in start-up capital, Mr. Dobrovolsky's Bukovel resort is the most significant investment in the region.

No great claim for this distant land of weathered wood houses and horse-drawn carriages in this Ivano-Frankovsk oblast, or administrative region. But if investment plans for the next few years are met, Bukovel will be one of the largest ski resorts in the world, with more guest accommodations than megaresorts like Whistler, in British Columbia, or even Vail.

Plans call for a total of $1 billion to be invested by 2010, when the resort will have 26 lifts and 75 miles of trails, said Mr. Dobrovolsky, now 31. The airport in nearby Ivano-Frankovsk is slated for expansion to handle international visitors.

Bukovel, while hundreds of miles from a major international city, lies at the heart of a vast area of rapidly developing economies and a growing middle class that thirsts for amenities. In fact, skiing is a good indicator of a developing middle class, said Don Murray, vice president of Ecosign, one of the world's largest mountain resort designers and creator of Bukovel's master plan.

My wife and I wanted to purchase some property in this very spot in West Ukraine. We had visited the town and had seen the beauty of the area and wanted something there for us to use and as an investment. The pity of it is that we didn't do it. Now the prices are no doubt sky high.

In any event, there is a lot of room for more investment in the area for lodging, places to eat, and other businesses that feed off the ski industry. The whole area is largely undeveloped so there is opportunity all around.

Beautiful area.

Friday, March 03, 2006

Natural Gas--Exploration--Ukraine-- Fifteen Companies to Bid on Prikerchensky Block in the Black Sea

RIGZONE - Fifteen Companies to Bid on Prikerchensky Block in the Black Sea

As many as 15 companies will bid for the right to sign a production-sharing agreement (PSA) covering the Prikerchensky oil and gas section on the Black Sea shelf, Ukrainian Prime Minister Yury Yekhanurov told a March 1 Cabinet meeting.

The companies include Tupras, Hunt Overseas Oil Company, ExxonMobil, Shell, Chevron and Petrobras, Yekhanurov said. Ukraine could increase gas production to 30 billion cubic meters (bcm) annually if the project comes off, he said.

Might present some opportunities for suppliers.