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Working group determines priority measures for restructuring debt of State Food and Grain Corporation to China

KYIV. Oct 13 (Interfax-Ukraine) – The interdepartmental working group has determined an action plan to overcome the financial problems of JSC State Food and Grain Corporation of Ukraine associated with its state-guaranteed debt obligations to the Export-Import Bank of China and unfulfilled grain supplies for the China National Machinery Industry Corporation (CCEC) and general contractors.

The results of a first meeting of the working group, which was attended by representatives of the Cabinet of Ministers, the Verkhovna Rada, Ukrainian Ministries of Economy, Finance, Foreign Affairs, Agrarian Policy and Food, the National Bank of Ukraine, JSC State Export-Import Bank of Ukraine and CCEC, were reported by the Ministry of Economy on the website on Wednesday.

"Despite the fact that the loan agreements between the State Food and Grain Corporation of Ukraine and the Export-Import Bank of China were concluded in 2012, now we need to look for ways and coordinate joint actions in order to ensure the fulfillment of corporation’s financial obligations. This issue obviously demanded a solution much earlier, however was not addressed," First Deputy Prime Minister, Minister of Economy Oleksiy Liubchenko is cited in the report, who serves as the chairman of this working group.

According to the Ministry of Economics, Ukraine is forced to quickly resolve the issue of the debt of the State Food and Grain Corporation of Ukraine, since the next deadline for the payment of obligatory fees by it falls on January 2022, and money available on corporation’s accounts is not enough to pay them.

During the meeting, Vasyl Kovalenko, acting chairman of the State Food and Grain Corporation of Ukraine, proposed priority measures to ensure financial and economic activities of the state corporation and possible options for debt restructuring. According to him, the most effective model for the functioning of the State Food and Grain Corporation of Ukraine as a full-cycle company can be created by modernizing its existing infrastructure.

Following the results of the meeting, the interdepartmental working group determined the action plan to overcome financial problems, among which were consultations and preparation of draft amendments to agreements between JSC State Food and Grain Corporation of Ukraine and the Export-Import Bank of China and CCEC.

As reported, JSC State Food and Grain Corporation of Ukraine in 2012 entered into agreements for obtaining two loans from the Export-Import Bank of China to finance the purchase of grain in Ukraine for their export to China. Under the first loan agreement, the withdrawal of funds was made in full at the end of 2012, the second loan was not opened.

The State Food and Grain Corporation of Ukraine in June 2021 discussed with CCEC representatives a possible delivery in 2021/2022 MY of 2 million tonnes of early grain and 3 million tonnes of corn. The corporation clarified that it had completed a complex of preparatory work at port facilities in Odesa and Mykolaiv, and also, at the request of the Chinese side, reached agreements with partners on the possibility of transshipment of an additional 1 million tonnes of grain at Chornomorsk seaport (Odesa region).

As a result of the negotiations, the Ukrainian and Chinese sides agreed to create two working groups to coordinate financial cooperation and grain exports.

Law enforcement agencies, in the course of investigating the actions of the previous management of the state corporation, established cases of export of agricultural crops by the state company to nonresident companies at low prices, which led to losses in the amount of about UAH 1 billion in 2021.

The Ministry of Economy, in the course of analyzing the corporation’s activities after this incident, established that the poor quality of work of the corporation’s management complicates the fulfillment of its obligations under contracts, and therefore initiated the creation of a working group to transform the corporation into a transparent and efficient company.