– What is Ukraine facing under the new authorities?
– Ukraine’s condition is very complicated. A lot of time has passed since the Revolution of Dignity and changes in the authorities. People were hoping for radical changes, quick reforms, and better living conditions. Unfortunately, this did not happen taking into account subjective and objective reasons. The state is involved in improving its defence capacity as well as struggling against the aggressor, and it is obvious. Ukraine makes efforts to win this struggle. Both the state, people and business are united in their desire to protect Ukraine.
The Ukrainian President is personally involved in it. This topic is constantly discussed at the international negotiations, and it is right. But at the same time the Ukrainian economy has practically stopped developing itself; the government pays little attention to it. People are living worse; unemployment is increasing; investments are reducing; banks are closing; international commercial banks are leaving Ukraine because of the war and risks connected with it. The international banks working under the guarantees of their states and financing industrial companies to supply modern equipment, including Ukraine, practically stopped their activity in August last year.
– Why?
– Because of the war; because the country may face default. There is a risk of never getting money back. Western banks are private ones, and they do not risk. At present, the European Bank for Reconstruction and Development is still on the Ukrainian financial market, and the International Finance Corporation provides some loans. Thus, business structures do not have any working assets influencing their business activity negatively. Due to the inflation, the Ukrainian banks have raised loan interest charges; a loan on easy terms comprises 12% in the foreign currency and 22-25% in hryvna currently. These loans are not available for everyone. Thus, it is impossible to invest in the economy as well as to conduct business.
What are the results? Workplaces have been reduced; people’s income has decreased because of inflation; the construction sector is not developing itself; new companies are not created within the whole of Ukraine.
If the situation does not change in the near future, Ukraine won’t stand it. Patriotism is a great thing, but people need to support their families, bring up children and to pay off loans. Finally, the war against the Russian aggressor requires much money; we need resources to support the army. Our soldiers must know that their families do not hunger at homes. I think the best way to demonstrate patriotism is to struggle for economy. We have made the Revolution of Dignity, and now we need the welfare revolution.
In addition, the impoverishment and absence of reforms have considerable ideological impact on our citizens. They say, “You assured us to focus on Europe, but our living conditions are getting worse.” And people are right.
In addition, we do not feel any support from Europe. We see how Europe is supporting Greece. Europe wants the conflict to be stopped diplomatically in order to keep business relations with Russia and not to bother the nuclear state headed by the unpredictable president. Europe does not want to risk.
On the other hand, the President and the financial department of the Cabinet of Ministers of Ukraine achieved foreign debt restructuring and financial aid for Ukraine. We understand that all these funds given to Ukraine are directed to pay off its external debt only. Thus, we must realize that our problems are only our problems, and we should not hope for someone. We must count on ourselves. The quicker we realize that we are alone with the aggressor and economic crisis, the better will be. We are losing time because of useless hopes.
Today we must realize that the economic crisis and impoverishment are our second front. Overcoming these problems will make Ukraine free and independent.
Meeting with Ukrainian Ministers and ambassadors from foreign countries at the international conferences and forums, I often stressed that Ukrainians would see positive changes in case the countries who had assumed the duty of guaranteeing our national security would perform their duties. If they fail to do it, they must allocate funds, at least several billions of dollars, to help Ukraine to develop its economy. I think it would be honest, if these countries-guarantors allocated their funds to create new companies in Ukraine as well as new workplaces, thereby improving social standards of Ukrainians. They are obliged to do it through Ukrainian non-state companies doing business transparently and without corruption schemes; these companies have pure credit history. There are not so many such companies in Ukraine, but they exist. Let the countries-guarantors allocate funds, and banks themselves, not influenced by the Ukrainian authorities, would choose Ukrainian companies that meet European standards, to which they could allocate these funds for implementing certain investment projects.
For example, the U.S. Export-Import Bank allocates funds to NIBULON; we invite the U.S. Ambassador, demonstrate our project and construct facility rapidly. The Ambassador can say that the USA cares about Ukrainian problems, because our credit funds helped to construct this facility. These are your workplaces, your future, and your social guarantees. And Ukraine obtains taxes, people receive welfare and the economy develops itself. Such projects can be implemented in every region.
– Taking into account the bureaucracy, our authorities will spend from 3 to 5 years to decide what project should be implemented in the region.
– I do not agree. Everything can be done very quickly. And the principal point is that the state structures must participate in this process only at the stage of permit issuance so that companies-participants may be chosen transparently without state institutions.
There are many perspective ideas, in particular in the processing industry sector. We have a lot of agricultural raw material, but we are lack of modern technologies. In this way, we will manage to create not only new workplaces, but also we can achieve a new technological level and improve our competitiveness to enter the European product markets. The Ukrainian authorities are to demonstrate their political wish to implement this idea. Thus, I address myself to the President, the Prime-Minister, the Ambassadors of France, Great Britain, Germany, Italy, the USA, Japan and Canada to Ukraine Mr. Alain Remy, Simon Smith, Christoph Weil, Fabrizio Romano, Jeffrey Payet, Shigeki Sumi, and Mr. Roman Vashchuk, asking to let transparent Ukrainian business join western investment loans. Ask foreign states to become guarantors of crediting of Ukrainian business structures. You will get rid of many problems, because honest business is morally ready to invest in Ukraine’s economy, but it is not capable of developing itself, improving and investing now without the government’s support.
I want to stress that neither the Cabinet of Ministers nor other state structures should receive this money and decide to whom allocate it. The state should not influence this process. It would be possible to adopt such projects at the level of the Cabinet of Ministers of Ukraine and Verkhovna Rada. Business will decide itself where to allocate money to make it work without state control. The state must only ensure quick performance of permissive procedures. If the funds are allocated through the central authorities, we will face corruption and misuse again, and the process will be dragging on for tens of years.
– What would you construct if you had such an opportunity?
– I have presented our possible project at the agrarian conference in the United States. The Prime Minister as well as core ministers are aware of it. It is a project of infrastructure development in Ukraine. It concerns fleet construction – certainly, not only for NIBULON. The project provides for the fleet construction from Ukrainian metal. We plan to involve all three Mykolayiv shipyards. This will enable to preserve thousands on workplaces and to create new ones not only in the shipbuilding, mining and metallurgical complex but also in the allied sectors of the economy. In addition, new logistic facilities along the Dnipro and the Southern Bug will be constructed, thereby promoting agribusiness and agrarian sector development. It will be possible to obtain about USD 500 million annually, and not only by NIBULON.
We are ready to implement this project within three years. The main point is that Mykolayiv shipyards will start to operate, and people will receive hope, confidence and stable wage.
– What vessels are you talking about?
– We plan to construct vessels up to 7 thousand tons. If a loan guarantee issue is solved at the interstate level, we will participate in such a program, and the company will be able to invest not USD 35-40 million in the Ukrainian economy as it does now, but USD 100-150 million per year. NIBULON is not the only company, there are many such companies in Ukraine, engaged in different activity areas.
– How is this project connected with the project to revive the Dnipro and the Southern Bug as transport arteries? How does the Minister of Infrastructure react towards the river navigation revival?
– By the example of the project to dredge the Dnipro and the Southern Bug, we may see the way our authorities have changed after the Revolution of Dignity. NIBULON is less inspected; the authorities became closer to people; we can discuss problems with them. It is good. But, unfortunately, despite declarations, the government does not do enough to bring certain results for business.
At the same time, I can say that the Minister of Infrastructure Andriy Pyvovarskyy is the most approachable among all the ministers in this sector for the past 10 years. He is the youngest one. We have high hopes for his youth and desire to reform the Ukrainian infrastructure. Unfortunately, he does not have a team of reformers. There are no new people in the departments and other structures. Protégés of business groups work there; they continue to work the same way they did under the former authorities. There is a great opposition inside the ministry.
– Does the Minister see this threat?
– It is difficult to say. For example, at the beginning, the project to dredge the Dnipro was supported, then there were no actions, then we received a letter saying the navigation revival along the Dnipro is necessary only for NIBULON, and the Ministry doubts the expediency of work performance and cannot allocate money to satisfy one business structure. This demonstrates how the Minister’s team distorts his ideas. Concerning marine and economic sector, river transport, we have sent about 190 requests. We have participated in about 30 meetings in the Ministry of Infrastructure. None of the issues is still solved, including the dredging of the Dnipro and the Southern Bug.
I am surprised to hear from the Minister saying he has done everything depended on him – he prepared all the documents and gave them to other ministries and departments doing nothing, and this ministry does not do anything as well, because the officials think they have already done everything. I tell him, “When NIBULON’s department approves the documents, it must give them to other department and coordinate all the issues. If something is wrong, they address themselves to NIBULON’s Deputy General Director or General Director. This means that if the ministries cannot cooperate with each other, they must address themselves to the Prime Minister. Today the bureaucracy still exists. There is no sense in counting on the central authorities’ efficiency.
Nothing has changed, the bureaucracy even increases. An official does not change his mind, if he was against this project three years ago, representing certain business circles. He still occupies the same position and stands up for certain business circles
I am sure that problems in Mykolayiv marine and economic complex, dredging of the Dnipro and the Southern Bug are still unsolved, because it is very disadvantageous for those who are lobbying the development of Odesa ports. Thus, the competitiveness and development of Mykolayiv region is consciously restricted. The Ministry of Infrastructure have many protégés of business circles who are interested in restricting the capabilities of Mykolayiv ports for the benefit of Odesa Ports. Mykolayiv ports, Mykolayiv business and Mykolayiv agrarians are subsidizing the development of Odesa ports due to the overpriced rates for canal dues and the absence of investments in the development of the Bug-Dnipro-Lyman Channel. For example, due to the overpriced rates for canal dues to pass through the Bug-Dnipro-Lyman Channel, collected by the Administration of Sea Ports of Ukraine, SE, Yuzhnyy port is actively developing itself.
– Last week the Minister of Infrastructure Andriy Pyvovarskyy announced that the state and not NIBULON would be engaged in dredging the Dnipro, and according to your information, the navigation revival along the Dnipro costs USD 500 million.
– I think autumn will come soon; weather conditions will change, and the Minister will say that dredging will be performed next year. And the beginning of the next year is time for spawning prohibiting dredging till the middle of July. Then autumn will come again. The same situation will be repeated during the next years. If actions spoke louder than words, we would trust the Ministry.
– We are trying to understand the decision-making philosophy. On the one hand, in Mykolayiv everyone knows that dredging is works the amount of which is impossible to control: how much soil is taken, where it is removed. On the other hand, NIBULON planning to transport its cargoes along the Dnipro and the Southern Bug is interested in performing dredging work according to the project, without machinations, money-laundering, etc., because we need real depths and not the reports. Why does the state take this function and even declare the readiness to invest money in it, though it is possible to perform dredging without involving state funds?
– There are several reasons for this. Firstly, Ukraine has people and structures being aware of how to make money on dredging. And they are ready to do everything not to lose such a chance. Consequently, when NIBULON announced its readiness to perform dredging, we were immediately blamed for “laundering” money. And we are really concerned with real depths, because we are pioneers and want to transport not only grain by water but also to transport other cargoes and develop passenger transportation. Today Ukraine must ensure at least those depths declared at the international level. The Dnipro is a navigable waterway of international importance. Every country having a certain area of international navigable path guarantees its certain depth to other countries. In 2009, Ukraine joined the European Agreement on the Main Inland Waterways of International Importance (AGN). According to this Agreement, a 3.65 m depth must be maintained along the entire navigable path of the Dnipro. In fact, there are areas with the depth of less than 3.4 m. At the meetings, I often heard from different officials that there was no need to dredge and everything was supposedly fine there. Thus, they want to demonstrate their work; but business needs real depths and not reports.
Concerning expenses, in order to ensure depths declared, it is required only USD 2-3 million to make river navigable in any season. USD 500 million are required to expand and modernize a navigable path, increase depths at least up to 4 m, reconstruct locks and to perform many other works. At the first stage, it is possible to achieve the required depth level along the Dnipro, spending less money.
I have an impression that the state is not interested in river navigation at all. In August, we were ready to start dredging of the Southern Bug at our own expense in order to transport grain from Nova Odesa and Voznesensk by water. Mykolayiv animal protector Muza Makhova addressed herself to the Presidential Secretariat, claiming that the state ecological expertise of the project was not performed according to the law. NIBULON was inspected again.
I can understand many things. When people tell about clearer air and more fish earlier, I always answer that the Southern Bug’s depth was 2.9 m and it was constantly maintained 20 years ago. At present, this depth comprises 1.65 m. Thus, a duck will cross the river soon.
– Concerning grain transportation expenses and procedures to cheap this process, weighting complexes have been discussed in Mykolayiv recently. Civil activists stress that it is possible to keep our roads from complete destruction and to maintain the repaired ones by restricting the movement of trucks along Mykolayiv streets. At the same time, NIBULON is blamed for being interested in the movement of trucks to its terminal, and the company is supposedly against weighting complexes.
– Let us determine the main problem. The main problem is a terrible road condition. Thus, out of 10 worst roads entering the rating “Ukraine’s worst roads”, 4 roads are in Mykolayiv region. Are trucks driving only by roads in Mykolayiv region? No, they are not. They are driving in Kherson, Kirovograd, Odesa and other regions of Ukraine. The roads are in satisfying conditions there, despite the same traffic load.
The second myth is that most trucks are driving to NIBULON. I do not want to disappoint you, but transnational companies such as Bunge and Nobel are actively constructing their terminals in Mykolayiv Sea Trade Port that transport much more grain by road transport in comparison with NIBULON. It is absurd to blame our company for destroying roads. There are also Nika-Tera and other ports. One should not forget that Mykolayiv is a transit unit through which many cargoes are transported, in particular to Odesa ports. Taking into account these facts, NIBULON’s share comprises 1-2%.
Thus, Mykolayiv road condition is a national problem. And I do not understand why Mykolayiv Regional State Administration has not yet invited the Prime Minister, the Minister of Finance and other officials to show the terrible roads in our transit region.
As about NIBULON, we are focusing to minimize cargo transportation by roads and to transport cargo along the Dnipro and the Southern Bug.
Despite this, the road problem is definitely exists, but let us analyze it objectively. Trucks destroy already bad roads. Being heavier as specified in the standards, they must pay in addition, must not they?
– Yes, they must. These funds are to be directed for repairing roads.
– Fine, there arise three questions, namely about road standards, truck classification and motivation of those who install weighting complexes. The Internet has a lot of information and examples on truck movement along the USA roads with a maximum truck weight of 40 tons with cargo. People read and believe. I cannot say that it is untrue. Those who publish this information consciously or because of lack of competence do not pay attention that this data was of current importance in the 50’s. In particular, the Ministry of Infrastructure constantly uses road test data performed in the USA more than 60 years ago, which results were not checked in Ukraine and are not agreed with the current standards in the road transport sector and are not accepted officially. Can you imagine the difference? Logically we must go back to the post-war period and transport grain by a 30-hundred-weight truck. The progress never stops, and the infrastructure must adjust itself to the progress. We use Boings and do not want to use soviet agricultural aircraft; though, the requirements for the runway intended for these planes are qualitatively different. We are constructing new airports that are capable of receiving different planes.
The same situation is with trucks. Today the entire world is focusing on new trucks with a weight of 25 tons without cargo. They are certified in Ukraine; thus, there are no grounds to restrict their movement along the country. But I cannot say that these trucks are know-how of our time. During the Soviet era, the TV program “Vremya” (Time) persuaded people to use road trains that transported up to 100 tons of grain during mass harvesting: by the same roads, according to the same standards and with the help of Ukrainian KRAZ.
I want to say that it is unreasonable to avoid using products of technical progress. Our infrastructure must meet the current requirements; the entire world is moving this way. If the current standards do not meet modern requirements, they must be changed, and at the same time road construction and road repair technologies must be changed. By the way, concrete roads are cheaper and more efficient.
Concerning money to repair roads, NIBULON constantly supports the idea that carriers should pay additionally for transporting heavy cargoes by roads. Let us analyze all payments we make: an excise tax on oil products implemented in 2001 – Euro 100 per one ton of diesel fuel and Euro 200 per petroleum. The explanatory note to this law states that this tax is directed for road construction. Thus, the agrarian complex in Mykolayiv region paid Euro 10 million per year. It is about UAH 250 million that might have been directed to repair roads or a 30 km road built per year due to the tax on fuel used by the agrarian sector. In addition, our region has 314 thousand cars, 50 thousand trucks, and 13 thousand buses. How much fuel excise duties did they pay?
The agrarian companies, which tractors and grain harvesters work in the fields and do not use highways within Ukraine, pay about Euro 180 million of the excise duty on oil products to repair railway roads. But these funds are not used appropriately. On the other hand, the formal compliance with the current standards will require to reduce the number of cargo transported per one cargo trip, resulting in an increase of the transportation costs to be paid by a farmer. According to the carriers, the price can reach UAH 400 per one ton (200-250 km). Did anyone ask agrarians whether they are ready for such additional expenses?
At the same time, carriers lose much time and money to repair their vehicles driving along the roads. They as well as NIBULON are ready to pay reasonable price for road repair in our region. If every large truck pays UAH 10 thousand per year, Ukraine will receive UAH 602 million additionally for roads.
But nobody discusses it with carriers. The Regional State Administration does not hold meetings involving persons concerned. The opinion of carriers, traders and other market participants is of no interest. Why? Because the Road Fund will have to allocate money for road repair transparently and openly; contractors will be chosen the same way. Our local authorities are probably against it.
We have calculated that if all motorists – buses, trucks, motor cars will pay reasonable price, our region can receive UAH 1 billion 600 million annually. It is the very price the motorists are ready to pay provided that money is used as intended. UAH 10 thousand from a truck per year is not much, taking into consideration that its wheel costs the same. Let alone spare parts. These roads destroy our cars.
On the other hand, why nobody is not interested in the Regional Road Agency of Ukraine despite all the changes declared? This very organization is responsible for bad condition of our roads. This situation is different in Kherson and Kirovograd. What is the difference between us? Odesa has more ports, but the roads are better there. Why do we have worse roads?
Nobody wants to blindfold. The Ministry of Infrastructure is developing a Draft Law covering the restrictions for trucks and buses. The road transport of up to 12 tons with cargo or passengers can use highways free, and heavier vehicles will pay. And this is called “compensation of damage caused to roads”. In fact, even medium freight trucks will have to pay.
If this law is accepted, the passenger buses of more than 12 tons will be subjected to it.
This means that people who develop such documents and who must improve the sector know absolutely nothing about it. They are behind the development of the Ukrainian economy, as large companies that deliver or receive cargoes have already modernized their facilities and transshipment equipment for a 60-ton truck. The existing weight restrictions for road transport make the Ukrainian economy go back to the last century, and they must be reconsidered.
I have an impression that someone is just lobbying Ukrzaliznytsya’s interests in the Ministry of Infrastructure, doing everything to make cargo transportation by roads extremely expensive and problematic and to prevent water transport development.
At present river carriers pay the state, state structures and companies about 15 different obligatory payments, dues and taxes, and it is more than 16 % of the total prime cost of transportation. I am ready to provide the Minister of Finance Natalya Yaresko with all the calculations and explanations. Probably, she will hear us. Annually NIBULON pays the government more than UAH 60 million of different payments for using river waterways. This makes river transportation noncompetitive compared to foreign one, even despite lower fuel consumption rate.
Thus, for example, due to the excessive payments for the use of river waterways, the transportation of one ton of grain from Kremenchuk along the Dnipro River costs by a third more than by railroad. Frankly speaking, today cargo transportation by river is not profitable in Ukraine. Despite this, the Minister of Infrastructure has developed the Draft Law of Ukraine “On Inland Water Transport” that provides for the introduction of another obligatory payment, the so-called river tax which amount is still unknown. This will completely ruin the river transport economy and make it noncompetitive.
In addition, People’s Deputies from different groups in the Verkhovna Rada have registered several alternative draft laws, but they are all based on a river tax. This means that the state is not interested in making river transportation economically attractive and reorienting cargo carriage towards water. This will enable to reduce traffic load on highways. The above-mentioned information may be a hint for foreign technical experts who are, at the invitation of foreign governmental institutions, involved in developing recommendations to improve the Ukrainian economy infrastructure.
There is another example of the authorities’ indifference towards people’s needs. NIBULON has an elevator located in the village without road. We have decided to build a concrete road there. Since March we have been trying to obtain a permit. By the way, constructing concrete roads is twice as cheaper than asphalt ones.
Let us return to weighting complexes implemented by the State Inspection of Ukraine on Land Transport Safety that is considered impractical by the Cabinet of Ministers. It also concerns the State Agency of Roads in Ukraine as well. According to the Government’s decision, these state structures are liquidated. One should not forget that weight control cannot be legal, as the state has not approved technological regulations to control weight and dimensions as well as the requirements for technical equipment to control weight and dimensions; the authorities have not approved weighting procedures to be followed by the officials at the State Inspection of Ukraine on Land Transport Safety, etc. The lawyers have also reasonable doubts concerning penalties for weight parameter excess calculated by the State Inspection of Ukraine on Land Transport Safety that is liquidated. Thus, the legality to install and use weighting complexes on roads by the State Inspection of Ukraine on Land Transport Safety and the State Agency of Roads of Ukraine must be subjected to the prosecutor’s inspection. Should we advance the interests of the state beyond the law?
– What solution would be suitable for all sides?
– If the local authorities really want to collect money to repair and reconstruct roads, they should negotiate with all market participants but not with separate “suitable” community representatives who call on people to resist haulers. The very carriers, traders and usual motorists want to stop this terrible situation on roads as quickly as possible.
By the way, we were not invited to participate in the meeting on weighting complexes yesterday; this evening they planned to install a weighting complex. You know, it is strange when certain actions are held on Friday evening or at weekend. Yesterday social networks called to block roads, and this situation can provoke mass riots. Why do central mass media constantly mention our region because of different scandals? Who needs this? Who provokes people to do illegal things? Why are our authorities, instead of finding additional financing for road construction and repair, being acceptable for all market participants, involved themselves in an artificial conflict?
I stress that all carriers are concerned with qualitative roads in our region and absence of corruption schemes. Both NIBULON and other carriers are ready to allocate money for this, but we will not allow others to steal it.
– Thank you for an interview.
