aaus-list @ ukrainianstudies.org -- [aaus-list] Fwd: Ukraine Today -- 04.03.2002

[Robert De Lossa <radelo@earthlink.net>]

[from "Yaroslav Davydovsky  {20122}" <sda@ukrainet.lviv.ua>]

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   UKRAINE TODAY
   Main weekly events from Infobank News Agency


   4 March 2002



   * GOVERNMENT MAKES LIST OF OFF-SHORE ZONES SHORTER
   * PRESIDENT REVOKES HIS DECREE ON OMELCHENKO'S LEAVE
   * BOND ISSUE BY NAFTOHAZ UKRAYINY TOWARDS REPAYMENT OF UKRAINE'S DEBT TO
     RUSSIA'S GAZPROM LAWFUL, SAYS SECURITY COMMITTEE
   * UKRAINE'S GOVERNMENT SIGNS MEMORANDUM WITH MAJOR OIL COMPANIES
   * UKRAINE'S INDUSTRIAL OUTPUT RISES 1.7% IN JANUARY
   * CABINET APPROVES REGULATION ON FINANCIAL MONITORING STATE
     DEPARTMENT
   * GOVERNMENT HAS NO PLANS TO SELL "TURBOATOM" PLANT IN 2002, SAYS ANATOLY
     KINAKH
   * UKRAINE, RUSSIA SIGN PROTOCOL ON COOPERATION IN NUCLEAR POWER ENGINEERING
     SECTOR






   GOVERNMENT MAKES LIST OF OFF-SHORE ZONES SHORTER

   KYIV. The Ukrainian government has shortened the list of off-shore zones
   for 2002 from 41 in 2001 to 34.

   Such territories as Cyprus, Campione, Madeira and Malta, Singapore, Hong
   Kong, Macao, Labuan, the Dominican Republic, Costa Rica, The Caiman
   Islands, the Bermudas, Mauritius have been dropped from the list.
   Simultaneously, the government added the following countries to the list:
   Saint-Vincent, Grenadines, Montserrat, Saint Lucia, the Dominican
   commonwealth, and the Maldiva republic.

   Under Ukrainian law on profit tax, if agreements are signed that provide
   for making payments for goods or services to non-residents located in
   offshore zones, or if settlements are made through such non-residents or
   through their bank accounts, 85% of the payments made by Ukrainian
   companies for goods or services will be counted towards their gross
   expenses.

   TELE DANMARK HAS PLANS TO SELL 16.3% INTEREST IN UMC

   KYIV. The telecommunications TDC Tele Danmark Company (Denmark)has
   plans to tender its 16.3% interest in UMC, one of Ukraine's leading
   communications companies, Korrespondent.net reports.

   According to a source in the UMC, the likely buyer of the stake
   in Germany's Deutsche Telecom giant telecommunications company, or one
   of its subsidiaries. The source also told that another UMC
   shareholder, the KPN company (Netherlands), is also going to sell its
   16.3% stake in the UMC.

   According to earlier reports, the Ukrainian government has plans
   to sell the Ukrtelecom's stake in the UMC, but the government has not
   yet decided whether to sell 25% or 51% of shares. Deutsche Telecom
   would like to acquire the state-owned stake, too.

   At present, 51% of UMC shares is owned by the Ukrtelecom, with
   Deutsche Telecom having 16.3%, Teledenmark 16.3%, and KPN the same
   16.3%.


   PRESIDENT REVOKES HIS DECREE ON OMELCHENKO'S LEAVE

   KYIV. The President of Ukraine has revoked his decree on the temporary
   removal of Oleksandr Omelchenko from his post as head of the Kyiv city
   state administration due to his registration as candidate for the
   parliamentary elections, scheduled for next March. The decree has been
   revoked on the basis of Mr. Omelchenko's personal request to recall him
   from the pre-election leave.

   As Volodymyr Lytvyn, head of the presidential administration, said on the
   STB channel late at night yesterday, in the evening on February 18 the
   President and the Mayor of Kyiv had a lengthy discussion during which
   Oleksandr Omelchenko substantiated his decision not to take a leave.
   Leonid Kuchma accepted the Mayor's arguments and decided to revoke his
   decree appointing Ihor Shovkun as acting head of the city state
   administration.

   As Infobank has reported earlier, on February 11 Kyiv's Mayor, Head
   of the city state administration, and Chairman of the Yednist election
   bloc Oleksandr Omelchenko who is running for a seat in parliament,
   revoked his earlier decision to go on leave as of February 9, 2002 due
   to election campaign. The reason for this step was that, while
   O. Omelchenko appointed his deputy for construction Mykhailo Holytsia
   to act as interim mayor for the time of his leave, President Kuchma
   named Ihor Shovkun, head of department for economic policy issues
   to run the mayor's office.

   On February 11, Prime Minister Anatoly Kinakh in person delivered the
   president's edict on Mr. Shovkun's appointment as interim mayor to the
   Mayor's Office where the ceremony of assuming office was to have been
   held, premier's press secretary Serhy Nahoriansky told journalists.
   However, the ceremony did not take place. After staying for about ten
   minutes in Mr. Omelchenko's office, the premier left it refusing to give
   any comment to journalists. Together with Mr. Omelchenko, his deputies and
   Yednist Verkhovna Rada faction members were in his office.

   On February 12 the Kyiv City Council obligated Oleksandr Omelchenko
   to perform his functions before and during the parliamentary elections
   and govern the council's executive body, the Kyiv city state
   administration.

   Kyiv councilors also made a statement in which they criticized
   attempts to weaken local administration and destabilize the political
   situation in the capital as well as across the country. The City
   Council passed a vote of no-confidence in Ihor Shovkun, the
   administration deputy head and head of the city economic department
   claiming to serve as acting head of the city administration
   - allegedly in violation of the law.


   BOND ISSUE BY NAFTOHAZ UKRAYINY TOWARDS REPAYMENT OF UKRAINE'S DEBT TO
   RUSSIA'S GAZPROM LAWFUL, SAYS SECURITY COMMITTEE

   KYIV. The state committee on securities and stock market has given the
   national joint stock company Naftohaz Ukrayiny a documental confirmation
   of the lawfulness of bond issue towards the repayment of Ukraine's gas
   debt to the Russian company Gazprom, Serhiy Biriuk, the committee
   chairman, told reporters on February 19.

   According to Mr. Biriuk, at the same time the committee decided not to
   register the bond issue as the international agreement on the terms of
   bond issue, which was ratified by the Supreme Council, does not require
   the registration or permission to circulate the bonds outside Ukraine.
   Nevertheless the committee is still holding talks with Naftohaz Ukrayiny
   on how to register the bonds documentarily.

   As Infobank has reported earlier, the Russian joint stock company
   Gazprom said that it will be ready to accept corporate bonds issued
   by the national JSC Naftohaz Ukrayiny only after it fully familiarizes
   itself with the documentation regulating their issue and after
   consultations with its adviser, "Cleary, Gottlieb, Stien and Hamilton"
   company, Gazprom's information policy department told the Oil
   Information Agency.

   The department said that Naftohaz Ukrayiny had not familiarized Gazprom
   with all the documents regulating the issue of these securities;
   consequently, Gazprom believes that the terms of the inter-governmental
   agreement on additional measures to be taken to ensure the transit of
   natural gas through Ukraine, signed on October 4, 2001, have not been met
   to date.

   On October 4, the prime ministers of Ukraine and Russia signed an
   agreement to restructure Ukraine's debt for gas, as of June 1, 2000, for
   twelve years with a 3-year grace period.

   The debt is to be repaid in eurobonds issued by Ukraine's Naftohaz
   Ukrayiny, with LIBOR+1% interest. The amount of the restructured debt is
   US$ 1,401,400,000.

   Under the same agreement, Ukraine will not be able to export Russian gas,
   unless the domestic demand has been first met. Ukraine will be allowed to
   export only domestically-extracted gas. The size of export duty on gas,
   according to Mikhail Kasianov, will be set every year before the start of
   the subsequent year. The mode of Ukrainian gas export will be discussed by
   representatives of the authorized work groups.

   On February 4, the Russian concern Gazprom did not accept the eurobonds
   issued by Naftohaz Ukrayiny with a view to repaying its gas debt.


   UKRAINE'S GOVERNMENT SIGNS MEMORANDUM WITH MAJOR OIL COMPANIES

   KYIV. On February 20, Prime Minister Anatoly Kinakh and representatives
   of major Ukrainian oil companies signed a memorandum on cooperated actions
   on the regulation of the oil and oil products market in 2002.

   Such oil companies signed the memorandum: Ukrtatnafta, Ukrtatnafta-Tsentr
   (Kremenchuk Oil Refinery), TNK-Ukrayina JVC (Lysychansk Oil Refinery),
   Lukoil-Ukrayina JVC (Odesa Oil Refinery), KazakhOil-Ukrayina (Kherson Oil
   Refinery), and NPK-Halychyna.

   Under the memorandum, the government is to render assistance in increasing
   the supplies of oil to Ukraine and make the oil refining sector attractive
   to foreign investors, cooperate with oil companies in expanding exports,
   develop an action plan for emergencies on the oil market, including
   additional customs duties on imported fuel and similar steps.

   On their part, the oil companies pledged all taxes due on transactions
   with oil and oil products, produce enough oil products to meet domestic
   demand, or up to 15 million tons, ensure high quality of oil products, and
   keep up stable prices for their goods.


   UKRAINE'S INDUSTRIAL OUTPUT RISES 1.7% IN JANUARY

   KYIV. Industrial output in Ukraine rose in January 2002 by 1.7% in
   comparison with January last year, ukraine.ru quotes the state statistics
   committee.

   According to the committee, as far as major branches of industry are
   concerned, January saw an increase in the amount of oil refined (48.3%),
   manufacturing of wood and wood products (32.1%), machine engineering
   industry (18.6%), food industry and agricultual products processing
   (10.9%), and power generation and distribution (6.0%)


   CABINET APPROVES REGULATION ON FINANCIAL MONITORING STATE
   DEPARTMENT

   KYIV. The Cabinet of Ministers of Ukraine has approved a regulation on
   the state department of financial monitoring. Under the regulation, the
   department is a governmental body of state administration within the
   Ministry of Finance.

   The main tasks of the department are gathering, processing and analyzing
   information on financial transactions that are subject to mandatory
   financial control and transactions that are connected with the
   legalization of incomes; creating a unified information system in the
   sphere of counteracting the legalization of criminal incomes; informing
   law-enforcement agencies about the instances of laundering illegal incomes
   detected by them; international cooperation in this sphere. To fulfill
   its tasks, the department has a right to receive the necessary information
   from state and non-state bodies.

   The state department of financial monitoring is a legal entity having its
   own assets, registration accounts in the State Treasury and its own
   official stamp. It is headed by the state secretary of the Finance
   Ministry.

   As Infobank has reported earlier, on December 10, 2001, President
   Kuchma signed an edict "On Measures To Prevent Legalization of Incomes
   Received In Illegal Ways" whereby all financial transactions executed
   by legal and natural persons in Ukraine and classed by the law as
   large or dubious are to be controlled beginning from January 1, 2002
   until a corresponding law has been enacted.

   Under the presidential edict, initial financial control is to be
   carried out by banks and other financial institutions that render
   banking services under licenses. The president also instructed the
   government to form within the Finance Ministry the State department
   for financial monitoring having a central executive status.


   GOVERNMENT HAS NO PLANS TO SELL "TURBOATOM" PLANT IN 2002, SAYS ANATOLY
   KINAKH

   KYIV. The Ukrainian government has no plans to sell the Kharkiv-based
   Turboatom plant in 2002, Prime Minister Anatoly Kinakh declared on
   February 21 during his meeting with regional journalists.

   According to Mr. Kinakh, this is explained by the fact that Turboatom is a
   highly successful company with a large segment of the foreign market.

   As Infobank has reported earlier, in January 2002 Turboatom director
   Anatoly Buhajets told journalists that the leaders of the Turboatom plant
   open JSC are against the intended sale of its stock to Russia's Silovyje
   Mashyny concern.

   According to him, the bid by Silovyje Mashyny is merely an attempt to
   swallow a rival because the Russian concern incorporates the Leningrad
   Engineering Plant, Turboatom's major competitor on foreign markets.
   Besides, Anatoly Buhajets believes that it would be economically
   inexpedient to sell more of Turboatom stock this year.

   Currently, the state owns a 75.22% interest in Turboatom. Late 2001,
   representatives of Silovyje Mashyny declared in the media their plans to
   take part in Turboatom's privatization.


   UKRAINE, RUSSIA SIGN PROTOCOL ON COOPERATION IN NUCLEAR POWER ENGINEERING
   SECTOR

   KYIV. On February 22 Ukraine's Minister of Fuel and Energy Vitaly Hajduk
   and Russia's Minister Nuclear Power Engineering Aleksandr Rumyantsev
   signed a protocol on cooperation in the peaceful use of nuclear energy, a
   For-ua.com report says, citing the Ministry of Fuel and Energy.

   Under the protocol, Russia will supply nuclear fuel worth US$ 246 million
   in 2002 to all 13 reactors at Ukraine's NPPs, Ukraine's minister said on
   the heels of the signing ceremony. Ukraine will pay for this fuel in
   equal S22.2 million installments, with no bank guarantees needed.

   According to Mr. Hajduk, the cost of re-exporting to Russia of 1 kg of
   used fuel in 2002 will rise to $372.5. Russia will give Ukraine discounts
   for fuel, 18% in 2002, 9% in 2003 and 2004. In 2005, the price is
   expected to reach its base level which is still lower than world prices.




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