Ukraine`s Grain Corp. not to use $1.5 bln in Chinese loan funds

Thursday, March 24, 2016 - 11:09 (EET) Section: Latest news

PJSC State Food and Grain Corporation of Ukraine does not plan to use $1.5 billion in a second tranche of a loan provided by the Export-Import Bank of China, as the Corporation`s liquidity is sufficient, according to Deputy Chairman of the Board Andriy Repko.
”Currently, there is no need to raise funds in view of excess liquidity,” Repko said adding that excess cash flows amounted to UAH 560 million at the end of 2015.
Repko also noted that a fee worth $200,000 for booking the second loan tranche at the Chinese bank, which was designated by the State Financial Inspection`s audit as the inefficient use of funds, was a one-time contribution.
”It was only paid once during the signing of the loan agreement,” Repko said, noting that the Corporation was not going to pay extra amounts for the booking of the loan.
At this, the board deputy head noted that the Corporation was considering the possibility of building a new grain terminal for large vessels shipping grain to China.
The construction is feasible if the company receives guarantees of sufficient purchases from its Chinese partners.
As UaPosition reported earlier, the Corporation posted negative financial results for several consecutive years. In particular, in 2014 the company`s loss amounted to UAH 3.5 billion, and last year it posted a loss of UAH 3.03 billion. According to Chief of the State Financial Inspection Lidia Havrylova, the main cause of the unprofitable operations was ineffective and inappropriate use of own and borrowed resources.
In particular, the company used a mere $500 million out of a $3 billion loan attracted from the Export-Import Bank of China in 2012, with another $1 billion being deposited in Ukreximbank. Additional $1.5 billion is booked at the Chinese bank, and the Ukrainian company has already paid $200,000 for it.
In 2012, the Ukrainian government negotiated with the Export-Import Bank of China a $3 billion loan to Ukraine against state guarantees for the implementation of agriculture projects. Under the agreement, part of the loan funds in the amount of $1.5 billion was provided to the Corporation in 2013 and allocated for the purchase of grain in the domestic market and its further export with a Chinese intermediary, Chinese corporation CCEC. The Ukrainian Corporation has committed to use the second tranche of the loan funds ($1.5 billion) on imports of agricultural equipment and technical resources from China within five years.
UNIAN memo. PJSC State Food and Grain Corporation of Ukraine is the national operator of Ukrainian grain market, the leader in storage, processing, shipping and export of grains.
Established in 2010, the State Food and Grain Corporation is the strongest, vertically integrated state-owned company in the agricultural sector. It owns about 10% of certified storage capacities while its port terminals can provide up to 12% of the average annual volumes of Ukrainian grain shipments for export.
The Corporation`s processing enterprises are capable of meeting up to 15% of Ukraine`s domestic market demand in flour, cereals and fodders.