Overview of Ukrainian infrastructure May 2016
Ukraine - geographical center of Europe Geographical center of Europe, making the country an ideal trade hub to the EU, Middle East and Asia. Kyiv U k r a ine Odessa
Ukraine country profile Largest European country. 45,5 mln. people population. Nearly 100% literate. Member of 28 international organization, including UN and WTO. Visa free travel for short stays for most Western countries. Deep and Comprehensive Free Trade Agreement with European Union. Average salary: $156 per month. Most cost-competitive manufacturing platform in Europe. Agribusiness: #1 black soil concentration globally Over 70% of Ukraine is agricultural land, valued at > $100 bln. #1 in sunflower oil exports globally #3 world grains exporter after the US and EU Grains export growth 15/16 14/15 13/14 32.4 Natural resources: 34.8 #2 manganese ores and graphite deposits globally Significant iron ore deposits Local gas production covers over 50% of needs 38.0* * 15/16 forecast mln. tons Information Technology: #1 IT engineering force in Central and Eastern Europe (CEE) 20 times growth in IT outsourcing sales since 2003 IT services are 40% of all exports to US - the #1 trade category 100+ global companies operate software R&D labs in Ukraine 130,000 engineering graduates annually 9.8% of graduates in math, sciences and computing Jan Koum (WhatsApp) and Max Levchin (PayPal) born and raised in Kyiv 3
Ukraine - important international transportation hub 20.9 thousand km of railroad tracks 159.5 thousand km of paved roads 4.8 thousand km of trunk oil pipelines 1.6 thousand km of operable river waterways leading to the Black Sea and the Sea of Azov 40.1 thousand km of gas pipelines 2015 freight transportation turnover: 1.4 bln tons 1.0 thousand km of ammonia pipelines 2015 Ukraine cargo transportation structure* 26% 1.4 bln. tons 67% * Inside the country. Trucks transportation includes non-commercial turnover. Trucks Railway Pipes Water Air 5 out of 10 European transport corridors run through Ukrainian territory. Ukraine has one of the most extensive railroad networks in Europe handling a substantial part of passenger and freight traffic. Ukraine s road network is no less extensive, covering the country s entire territory and making possible deliveries to any point of destination. The upcoming reconstruction of river waterways will help river transport become a worthy alternative to its rail and road counterparts. 4
Leading seaports sector 18 seaports 4 fishing ports Ukraine position in worldwide trade volumes: #1 Sunflower oil #3 Grains following whole EU and USA #4 Iron ore following Australia, Brazil and South Africa Ukraine handles every 3rd ton of cargo in the Black Sea region Russia Ukraine 11% 452 mln. tons 42% Romania Bulgaria Georgia Turkey 33% Odessa seaport view 5
Ukrainian private sector - to utilize state seaports potential Private vs State terminals 2015 turnover 34% 144.5 mln. tons 66% Private terminals State terminals Iron ore, grains, black iron make 74% of ports turnover Ukrainian government initiatives aimed to increase share of private terminals up to 100% via concession mechanism. Currently all state ports are audited by Big4 companies. Other initiatives: Port dues decrease. Deregulation. Already led to 14x decrease of vessels waiting time. Grains, containers, sunflower oil, oil products and fertilizers are handled by private terminals. 19% 144.5 mln. tons 26% 29% Iron ore Grains Black iron Other Up to 50% of grains cargo supplied by multinational companies. Already invested in Ukraine: 6
Ukrainian railway renovation through opening to the private sector Implementation of government initiative to allow locomotives private owners to perform transportation will lead to considerable investments into Ukrainian rw sector. Electrical locomotives 1720 Require replacement 345 mln. tons 8% 10% 14% 14% 19% 26% 2015 data 90% Require replace ment RW cargo structure Diesel locomotives 2152 Require replacement oil and producrs scrap metal fertilisers woods cement coke black metals grains building materials other coal ore 5 th largest rw network in Europe. 15 th worldwide. 20 948 km railways length. Covers all regions of the country. 100% state owned, managed by Ukrzaliznytsya (UZ). 116 000 state owned wagons 86 000 privately owned wagons Current government initiatives highlights: Public Joint Stock Company UZ creation completed. Performed by merging State Administration for Railway Transport of Ukraine with 49 state owned companies of railway sectors. PJSC structure will make UZ more client oriented, providing possibility for joint rw policy implementation for all state owned rw assets. New, reforms oriented executives hire. For e.g. Mr. Wojciech Balczun was appointed head of UZ. Previously he successfully managed Polish railways, making them profitable and performing their IPO afterwards. Increasing competitiveness of rw transport by allowing locomotives private owners to perform rw transporting operations. Depicted in a new law on rw transport, prepared by Ministry of infrastructure. 7
Roads concession - to fill financing gap Developed road network. 159 463 km total length. 916 mln. tons transported in 2015. Concession mechanism to be improved. Provision of guarantees to investors, removal of roads from strategic assets list to give the green light for concessions. Current government initiatives highlights: Required 2016 2015 2014 International roads National roads Actual financing of roads maintenance funds increase year-byyear. However, no adequate concession mechanism developed to cover shortfall for complete roads recovery. 210 370 776 min. 2000 mln. USD 5% of duties gained from oil products retail trade flow to local budgets for road maintenance. Implemented in 2015. 50% of customs over plan earnings transferred into roads repair funds. Initiative already implemented into 4 regions (Odessa, Lviv, Chernovtsy, Volyn ) and for 6 months allowed to earn additional 38 mln. USD for roads maintenance. Increase penalties for overweighed (>40 tons) trucks. Special purpose government organization Ukrtransbezpeka to control trucks cargo load via mobile weighing systems. 8
Ukraine in 2023 top tourists destination and leading transit country 31 airlines. 20 airports. 10,7 mln. passengers. 120,7 th. aircrafts served. Current government initiatives highlights: Open Sky system implemented for Odessa and Lviv airports. Largest aircraft in the world Antonov -225 was made in Ukraine. Governmental program on airports development till 2023 approved in 2016. According to the program the following steps will be performed: Single government company to manage airports development to be created. Transfer of all airports terminals under the private companies management via concession mechanism. This will allow to make terminal operations self-funded and finance runways reconstruction. Key functioning airports locations These measures are aimed to bring airport international terminals managing companies and new airlines to the country. This, in turn, is expected to lead to 2x times passengers flow increase till 2023. 9
TIS Group of terminals leading port in Ukraine The largest port in Ukraine. Located in port Yuzhny. TIS turnover, th. tons Completely private. Established in 1994. 500 mln. USD - total amount of direct investments. 5 Terminals form the Group: TIS Grain, TIS Fertilizers, TIS Ore, TIS-Coal and TIS Container terminal. Focused on «Panamax» and «Capesize» vessels. 2 455 best in class professionals make up TIS team. Currently jointly with Cargill implement grain terminal project with 4 mln. tons turnover capacity. Cooperate with EBRD on project financing. Terminal to be launched in 1Q 2018. 2015 2014 2013 2012 2011 2010 2009 2008 8,393 12,263 12,020 18,840 17,166 21,417 26,578 25,867 CAGR 15,5% 632 vessels 346 187 wagons 72 248 trucks View on TIS terminals 10
Thank you for your attention! Andrey Stavnitser General manager TIS Group of Marine Terminals Ukraine, port Yuzhny www.tis.ua E-mail: mail@tis.ua Tel. +38 (0482) 300 711