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Ukraine Infrastructure Report Q1 2011
Business Monitor International, Jan 2011, Pages: 96
The Ukraine Infrastructure Report provides industry professionals and strategists, corporate analysts, infrastructure associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Ukraine's infrastructure industry.
New data has improved the outlook for Ukraine’s construction industry although the forecast remains bleak. BMI's new data series shows that the rate of decline in Ukraine’s infrastructure industry slowed in 2010. Activity in the sector should be much stronger, however, given that the country is preparing to host the UEFA 2012 European Football Championships.
Key developments included:
- The announcement by the European Bank for Reconstruction and Development to supply a EUR175mn (US$244.4mn) credit line for power line construction in southern Ukraine is expected to boost growth in the sector. The lines will run between Zaporizhia nuclear power plant and the Kakhovka substation. The credit interest rate is Libor plus 1% and the funds are issued for 15 years.
- The negative growth of Ukraine's construction value slowed in 2010. The country reported a 12.6% drop to UAH26.785bn (US$3.7bn), between January and September 2010 less steep than a 52.4% drop during the same period in 2009, reports Kyiv Post. The volume of total construction work fell during the nine months, with the smallest report decline in construction site preparation at 0.3% and the highest in construction completion at 17.5%. Five regions reported growth in construction volumes, ranging from 2.8% to 14.2%.
- Construction of a new retail park was announced in September 2010. International developer Adama Holding Public's subsidiary Adama Ukraine will start building the Vladimirsky retail park in Dnepropetrovsk, Ukraine. The retail park will have a grocery hypermarket, a DIY hypermarket and major stores selling sportswear, household goods, consumer electronics, furniture and other goods.
The International Monetary Fund (IMF)'s approval of a roughly US$15.15bn stand-by arrangement in July 2010 has afforded the government greater budgetary freedom in 2010 and 2011, which will filter through to construction and infrastructure spending. The country's construction sector is in desperate need of revival after seeing its value slashed by 46% in 2009 to UAH22.11bn (US$2.75bn) according to BMI calculations. Indeed, we expect to see Ukraine's construction industry stagnate in 2010 as it lags behind an upturn in economic growth, landing around UAH21.9bn (US$2.8bn) in 2010.
The country continues to score very poorly for both Business Environment and Project Finance. With a score of just 47.3, Ukraine ranks 15th out of 16 in BMI’s Business Environment ratings, only a little ahead of last place Bosnia. This reflects Ukraine’s doubtful growth in the infrastructure market in the near term. A clouded political outlook has not helped the situation as government policy has swung back to align more closely with Russian interests. While this has brought undoubted benefits in the opening of Russian credit markets it has left many investors dubious over the downside risks and unclear over longer term goals in the sector.
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