Zelensky’s team is in power for a year, but what about the chemical industry?
Nikolay Shchurikov, the 1st Deputy Director of Odessa Port Plant
I will try to describe objectively and specifically. What is positive about the chemical industry today?
- Odessa Port Plant is operating successfully, in the conditions of ongoing litigation by creditors.
- The resumption of production in 2019 is an unconditional merit of Zelensky’s team, and more specifically, of Andrei Bogdan. This was vital, since a non-working plant lost qualified workers, which would take years to train.
- Over 250 days of work under an agreement with «Agro Gas Trading» the plant processed 445.4 million cubic meters of gas, which made it possible to produce 550 thousand tons of urea and 50 thousand tons of ammonia.
- Severodonetsk plant "Azot" is operating. In the 1st quarter of 2020, the company increased the production of nitrogen fertilizers by 729%, the production of ammonium nitrate increased 6.3 times, urea-ammonia mixture - 2.1 times, aqueous ammonia - 5.8 times. The plant produced 32.03 thousand tons of urea. This is good news.
- The entire Ukrainian chemical industry in the first quarter of this year produced 170 thousand tons more mineral fertilizers than in the same period in 2019. And in April, Ukrainian enterprises are expected to increase production. Production is currently in normal mode, except that the product prices are minimal.
- A start has been made to open the land market, which is expected to double the consumption of mineral fertilizers (relative to today) in the next five years (compared to today). This is definitely a chance for the development of the chemical industry.
But there are problems that require a systemic solution.
Uncontrolled importation: the growth of imported mineral fertilizers, including from the Russian Federation, remains the main problem of the Ukrainian chemical industry. A number of domestic companies import Russian fertilizers into Ukraine through other countries in order to avoid customs payments. And this is in addition to the fact that the industry is generally dependent on raw material prices. Today there is very little space for fertilizers made in Ukraine - the share of some imported fertilizers has exceeded 70 percent. But the authorities stubbornly do not see the scale of the problem. The government does not go further than discussions on this issue. We only hear declarations about the importance of the chemical industry for Ukraine, which provides 8-9% of GDP. There are no real actions and steps yet.
Great expectations and strong disappointment: the privatization of the chemical industry, including Odessa Port Plant, has again been postponed. The formal reason is the COVID-19 pandemic. But in fact, the State Property Fund does not take action to prepare the process. But the process is impossible without debt restructuring.
In addition, the old and illegal schemes of officials arranging for bribes or on the principle of friend-or-foe professionally unsuitable, but trusted people for industrial enterprises, are flourishing. For example, the “urgent” change of management at Odessa Port Plant on the eve of the tender for the selection of a new counterparty to work with the plant. And then the further cancellation of the tender and the development of its new conditions that would suit needed company.
Yes, Zelensky and his team made no campaign promises to the chemical industry. Therefore, it is not clear what to expect and when the turn of the authorities comes to the domestic chemical industry.