Draft law No. 5113 on financial readjustment of Ukraine`s only producer of carrier rockets and satellites, state-run Yuzhny Machine-Building Plant named after Oleksandr Makarov” (Yuzhmash, or Pivdenmash) passed first reading in the Verkhovna Rada, Ukraine`s parliament.
Some 232 deputies voted for the bill with the required minimum being 226 votes.
The bailout plan involves the restructuring of the company`s debts, as well as the write-off of penalties estimated at UAH 82 million.
”This bill will save Yuzhmash by restructuring its principal debt owed to the state through extending the repayment period for a decade from 2020, as well as by writing off about UAH 82 million in fines. This will allow the company to operate normally,” head of the parliamentary committee on industrial policy and entrepreneurship Viktor Halasiuk said when presenting the draft law.
As of today, the plant has four contracts, which make it possible to start production, Ukrainian MP, deputy head of the above-mentioned committee Oleksandra Kuzhel said.
During debates on the document, an amendment was taken into account that the government needs to provide the plant with state defense orders, starting from 2017. This is expected to partially compensate for Yuzhmash`s losses from restricted access to the Russian space and defense market.
As noted in an explanatory note to the bill, its implementation will let Yuzhmash avoid bankruptcy, will create conditions for boosting production and for diversification and, as a result, will lead to enhancing Ukraine`s competitiveness in the world market of space engineering and armaments. It is also expect to increase employment and send more tax payments to the budgets.
The bill stipulates that Yuzhmash shall repay its debt to the state quarterly in equal installments within 10 years, starting from 2020, in accordance with the enterprise development plan approved by the Cabinet. In this case, no interest should be charged from the debt, and the accrued fines are subject to write-off.
Memo. Yuzhmash, or Pivdenmash, based in the city of Dnipro, was established in 1944. It is the only manufacturer of carrier rockets and satellites in Ukraine. This allows the state to provide 8-10% of launch services to international companies annually. In 2012, Yuzhmash joined the top five world leaders in terms of launching carrier rockets.
December 2, 2016, Ukrainian President Petro Poroshenko enacted a law on writing off Yuzhmash`s debts worth UAH 400 million for consumed electricity.