Business Update – March 26: PrivatBank freezes some loan repayments, Ukrnafta needs tax breaks

PrivatBank has introduced loan repayment holidays for small and medium sized businesses until the end of May, The state-owned bank said it had introduced the repayment holiday for SMEs with both performing and overdue loans. The move is one of the ways that PrivatBank is trying to alleviate some of the strain on Ukrainian businesses amid the COVID-19 outbreak. “PrivatBank… is implementing a wide range of measures for the Ukrainian economy in these challenging times,” deputy chairman of the supervisory board Artem Shevalev told the Kyiv Post in an earlier comment. 

Ukrnafta has asked the government to introduce urgent tax breaks, and change pricing mechanisms because of its overstock and the sharp decline in global oil prices. The state-owned oil and gas giant says the measures are needed to prevent its financial collapse, which could be caused by lower retail fuel sales, a sharp drop in oil prices and its overstock of unsold raw material. According to a company letter addressed to President of Ukraine Volodymyr Zelensky, seen by Interfax-Ukraine, Ukrnafta is facing a “killer” decrease in world oil prices and cannot sell 420,000 tonnes of oil and gas condensate that it produced in the last four months.

The Ukrainian and Swiss presidents have discussed an initiative to quickly ramp up production of lung ventilators in Ukraine. Volodymyr Zelensky and Simonetta Sommaruga spoke on the phone about the need to tackle COVID-19. Zelensky praised the steps taken by the Swiss side to provide evacuation opportunities for the citizens of Ukraine and Switzerland who wished to return home, the president’s press service stated. “The parties also discussed the possibility of supporting an initiative of Ukrainian and Swiss companies on the rapid establishment of the production of artificial lung ventilators in Ukraine.” 

Ukraine boosted electricity exports by 33.7% in January and February. They increased output by 362.5 million kWh year-over-year, to 1.438 billion kWh, the Energy and Environmental Protection Ministry of Ukraine has told Interfax-Ukraine. Electricity supplies to Hungary, Slovakia, and Romania rose by 56.6%, to 1.049 billion kWh.

At the same time, Ukraine reduced electricity consumption by 5.1% over the same two month period, the ministry also stated. Alex Ryabchyn, a deputy minister at the energy ministry who is directing a task force overseeing possible COVID-19 disruptions to energy supply, said the country is getting prepared for possible trouble with the power grid. “There is a lot of risk of disruptions,” he said, when asked by the Kyiv Post about power grid stability amid a pandemic. “We are working to be prepared,” he said, adding that power supply to hospitals was being inspected and revised, following a special order.  

Ukrainian banks received a needed cash dollar delivery. The money has already been injected into the banking system, the National Bank of Ukraine (NBU) said in a statement. On March 25, the NBU exchanged $130 million of these dollars for non-cash dollar assets at 11 out of 14 banks that have systemically important status in the country.

A decree signed by Russian President Vladimir Putin means only Russians can own land in Crimea.  The decree reinforces the need for international sanctions, the U.S. Embassy in Ukraine stated on March 26: “Russia’s new ‘decree’ granting ownership of most land in Crimea only to Russians simply reinforces the basis for international sanctions. Again we firmly reiterate: #CrimeaIsUkraine,” the American embassy wrote on Twitter.

Russian crews under protection of its navy ships are extracting gas from the Odessa shelf section off the Black Sea coast of Ukraine, the Ukrainian border guard service have reported. During scheduled patrolling and monitoring, a group of boats of the Maritime Border Guard of the State Border Guard Service of Ukraine inspected areas of gas Ukraine’s gas condensate fields, Interfax reported. “The self-elevating floating drilling rigs, renamed by the occupying authorities… and with flags of the aggressor country… there are signs of continued industrial activity,” the press service of the SBGS stated on Thursday. The report also states that its border guards recognized a missile cruiser of the Russian Black Sea Fleet, which was patrolling nearby and protecting the gas extraction.