Ukraine’s potential as manufacturing base

Low cost production platform

Proximity to key markets and visa free travel

Highly skilled human capital

Robust infrastructure for sustaining an export-oriented economy

More than 30 large enterprises with foreign capital are exporting to the EU market from Ukraine, seizing the advantages that Ukraine has to offer

1

2

3

4

5

6

Сore competences in aerospace, energy, transport, agricultural machine building

Industrial cooperation

More than 300

state owned entities subject to privatization - largest privatization

in years

Ukraine has a large industrial base with unique potential in aerospace, power, transport and agri

engineering

German businesses can play an

important role in the modernization of

Ukraine’s economy

Ukrainian companies are ready to partner with German leading companies integrated in the global supply chains

Today automotive components are the export from Ukraine to Germany

DCFTA supports such partnerships and investment in the manufacturing sector

#1

Elimination of import tariffs on

semi-finished and finished

goods produced in Ukraine

Gradual alignment

to EU standards

Program for replacement of the Russian origin products in industrial and defence sectors

Cooperation with Ukraine National Industrial Champions (Antonov aviation, Turboatom – Electrovazhmash energy machine building, Zorya-Machproject-Sumi NPO Frunze – gas turbines etc.)

Investments, technology and expertise in agri machinery building

Energy sector: Challenges

0,11 0,13 0,13

0,20

0,32

0,00

0,05

0,10

0,15

0,20

0,25

0,30

0,35

Germany Romania Poland China Ukraine

Energy intensity of GDP, 2014 Extremely high energy intensity of GDP

Only 60% of energy resources produced domestically

Households:

Household gas bills didn’t reflect modern reality

Part of utility bills based on normative, rather than actual consumption

Industry and infrastructure:

Obsolete equipment and technology

High losses in power lines, hot water and central heating Households Infrastructure Industry

Drivers of inefficiency

Gas tariffs increased to cut out waste and eliminate pressure on state finances

0,73 1,18

3,6/7,19

0

1

2

3

4

5

6

7

8

2010-Apr 2014 2014-Mar 2015 from Apr 2015

Household gas tariff evolution (UAH/m3)

11,90 10,80

7,20 6,20

0,65

0,51

0

5

10

15

20

25

Heating season

2013/2014

Heating season

2014/2015

Natural Gas Consumption For Heating (bcm)

Public entities

Heat-generating

Households

19.8 17.5 -12%

Market-based tariff schedule till 2017 adopted

New Electricity Market Law

Seeking competition and diversification

Privatization of regional power generation plants in 2016 (incl. Centrenergo 7,67 GWt)

Potential projects:

Reconstruction of Northern and Dnipro Energy transmission system (€150m KFW loan)

Construction of 6 Dnister hydropower stations with total capacity of 390 MWt

Construction of Kaniv hydropower plant

Power generation and transmission

6

45,24%

48,15%

5,66%

54,77%

39,43%

Power generation structure by source*

Coal & Gas

Nuclear

Hydro

Renewables 7M2015

7M2014

Renewables

11% of our energy mix by 2020

One of the highest green tariffs in Europe, fixed in €

Local component removed this year

Biomass capacity estimated at 26m ton p/a

High potential of bioethanol and biogas

3,80

10,00

12,40

0

2

4

6

8

10

12

14

Poland Germany Ukraine

Average biomass green tariff, eurocent/kWh

Renewables

Potential projects worth €16 bln

Plants for pellet production in Ukraine

Boilers production on biofuel

New generation bioethanol plants

Cogeneration on renewable sources

Waste recycling plants

Biomass Hydro

Wind Solar

Sources

LAYING THE GROUNDWORK FOR INVESTMENT

Large number of issues in the Ukrainian industrial sector being solved

Successful reform in the crucial gas sector

Beginning of reform in power generation market

Huge investment projects in energy transmission system

Opportunities in renewables sector