Maidan

June 17, 2010

Principal risks related to imminent adoption of the tax code

Dear Ladies and Sirs!

In connection with the circumstance that the government has planned adoption of the tax code for the nearest future we would like to provide you with brief outline of the principal issues which trigger material risks for the business and introduce drastic changes to relations with tax authorities.

Information released following the December 10-11 session of the Ukraine-Kazakhstan Intergovernmental Commission on Economic Cooperation suggests that Russia has successfully forced an indefinite postponement of the Odessa-Brody-Plock oil transport project. Kazakh and U.S. companies in that country were to have been the oil suppliers and Poland the first among European Union consumer countries, once the pipeline would be extended to Plock in Poland under a EU-backed project.

Gazprom is moving rapidly to take over Ukraine’s gas transport system through its monopolist offshoots in Ukraine: RosUkrEnergo and UkrGazEnergo. The immediate target is Ukraine’s internal gas distribution network, although the transit system is being targeted as well.

A not-so-silent majority in Ukraine's Cabinet of Ministers, forces ranging from core Orange constituencies to the Party of Regions and groups as diverse as the liberal press and industrial interests, are waging rear-guard actions against the agreement signed on February 2 by Prime Minister Yuriy Yekhanurov with Gazprom's offshoot RosUkrEnergo. The agreement would create the company UkrGazEnergo...

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Ukraine finance chief quits over Russia gas deal

Ukraine’s finance minister has left the cabinet, adding to pressure on the government to reconsider its agreement to pay Russia more for gas.

After three long and eventful years, I have just completed a strategy plan for microeconomic development and poverty relief in Ukraine.  To be clear, that refers to  economic development at the level of individual citizens and families.  The proposal is specifically focused on poverty relief.  At least 25% of Ukrainian human beings suffer poverty -- being poor.  Very, very poor.  Hundreds of Ukrainians have died from cold during the past month because they simply couldn’t afford to be warm enough to survive.

Washington, DC. At 9:30am this morning, The Project on Transitional Democracies announced a bid for the shares of RosUkrEnergo held by Ukrainian investors. RosUkrEnergo is a Swiss-based joint venture between Ukraine and Russia which on January 4, 2006 signed an agreement with GAZPROM and the Government of Ukraine to supply Ukraine with gas on a temporary basis and to lease Ukrainian gas storage and pipelines through 2030.

"This expense of $5.3 billion for 56 billion m3 represents a gas price of $95 /thousand m3. Therefore, the statement that Ukraine will pay $95 /th m3 at the border is right."

The barely hidden stake has now surfaced in full view in the Russia-Ukraine confrontation over gas prices and transit. The main stake is ownership of Ukraine's transit pipelines that carry Russian gas to Europe. Moscow appears willing to accommodate Kyiv on the gas price if Kyiv accepts the understandings signed in 2002-2003 on turning Ukraine's transit system into a Russian-Ukrainian consortium, possibly with token German participation.

Some words about one of the advantages of the current “Orange regime”, compared with the former “Blue guard” together with Kuchma-ites.