News (#01-02 January-February 2019)


Government Procurement

Its now possible to conclude procurement agreements for up to four years

A new type of procedure appeared called umbrella agreement procurements on 18 December 2018 in the ProZorro public procurement system. Customers can now pursue procurements of consumer goods and services and conclude an agreement (umbrella agreement) for up to four years. During this period an institution can, within the auspices of an agreement, perform procurement and payment of a small amount and only if needed.

Umbrella agreements can be applied to any goods and services (but not to works).

According to the procedure, the state customer signs an umbrella agreement with several supplier companies (at least three) at the same time, selected in the course of a transparent auction. The suppliers submit tender offers, pass preliminary qualification on non-price criteria, and then compete at an auction.

An umbrella agreement is then concluded with the winners (there will be several of them). The ProZorro system will immediately fix a pricefor each winner per unit of goods.

Furthermore, in the event of necessity of a certain part of the goods (from the total amount), with regard to which the umbrella agreement is concluded, the customer announces an auction. His signatories receive an invitation to take part in the auction automatically and update the price specified in the umbrella agreement. There is a choice: either to leave it unchanged or reduce it. The supplier who wins is the one who offered the lowest price.

A separate agreement on supply of part of goods is concluded with him. When the customer has a need for the next lot of goods, he announces an auction again, and the winner could be someone else.

The customer only needs to appoint an auction for each new procurement. There is no need to obtain references from participants, check their documents and reputation. The suppliers wont need to collect and submit all the documents again. All of this is done once, at the first stage, even though cooperation may last several years.


EUR 13 billion TEN-T Investment Action Plan set up for better connectivity with EU

The European Commission has, in unison with the World Bank, has developed a new Indicative trans-European Transport Network (TEN-T)Investment Action Planthat identifies priority projects inArmenia,Azerbaijan,Belarus,Georgia,Republic of MoldovaandUkraine.

There are almost 100 projects and in aggregate they amount to an investment of almost EUR 13 billion up till 2030 and envisage a total of 4,800 kilometres of road and rail, 6 ports, and 11 logistics centres. The agreement on the maps extending the TEN-T to countries of the Eastern Partnership came into force on 9 January.


Luxoft sold for USD 2 billion

DXC Technology (previously part of Hewlett Packard Enterprise business providing IT services to corporate clients merged with Computer Sciences Corp.) has signed an agreement on the purchase of Luxoft Holding Inc., a software developer.

The deal provides for payment of USD 59 per Luxoft share, which estimates the value of the entire company at around USD 2 billion. Written consent to the deal was given by owners of approximately 83% of Luxoft shares. This means that shareholder approval for the deal has been received. The deal is expected to close by June 2019 and depends on approvals at corporate and regulatory levels.

After the announcement, Luxoft shares quotes on the NYSE skyrocketed by 82%. Luxoft will retain its brand and will operate under the A DXC Technology Company brand.

A reminder that Luxoft has more than 12,700 employees and 40 offices in 22 countries.

DTEK bought big stake of Kyivoblenergo shares

The operating company responsible for oil and gas in the structure of the DTEK energy holding DTEK Oil&Gas is now the owner of a 24.99% stake of shares in Kyivoblenergo PrJSC, which belonged to VS Energy International Ukraine group.

According to the statement by Kyivoblenergo, VS Energy still retains a stake of 33.60788% in Kyivoblenergo.

At the beginning of 2019 DTEK expressed the intention to acquire a stake of 68.2949% in Odessaoblenergo JSC and 93.9978% in Kyivoblenergo, which belong to VS Energy group.


Samsung becomes research and development leader

The European Commission has drawn up a rating of companies that invested most in research and development (R&D) in 2018.

Out of the top five companies, only one is not from the IT sphere.

Samsung ranked first (EUR 13.4 billion worth of investment), Alphabet, the parent company of Google (same amount), ranked second. The fourth and fifth places are also taken by IT-brands Microsoft and Huawei, respectively. But the third ranked is v Volkswagen. It is interesting that Apple ranked only seventh.

Analysts note the growth of investment in R&D by Chinese companies. Huawei became the leader with its investment of EUR 11.3 billion, with Chinese companies spending a total of EUR 71.2 billion on research and development a rise of 20% on the previous year.

Trade Policy

Product labeling in Latin letters postponed until 2021

The Ministry of Economic Development and Trade of Ukraine has extended the transitional period for mandatory labeling of goods in Latin and Greek letters until 1 January 2021.

As is known, in 2015 Ukraine adopted the Units of Measurement Regulations in the implementation of the requirements of the Association Agreement signed with the European Union. Under the Regulations, from 1 January 2016 all manufacturers of consumer products are obliged to designate product using units of measurements according to the International System of Units SI (kilograms, centimeters, liters, etc.).

At the same time, under the Regulations, labeling of goods sold in Ukraine should include the international designation of units of measurement using the letters of the Latin and Greek alphabet. The Ukrainian designation of units of measurement could be also used on labeling (using letters of the Ukrainian alphabet). Such designations of units of measurement apply to the labeling of all consumer products, including labeling of medicines, medical devices, food products, dietary supplements, animal feed, seed packaging and plant-protecting agents, etc.

Natural Resources

Ukraine announced 12 tenders for development of hydrocarbon deposits

Ukraine announced 12 tenders for production sharing agreements (PSA) for hydrocarbon deposits development. On 5 January 2019 the relevant Resolution of the Cabinet of Ministers of 18 December 2018 was published.

Tenders include 12 sites: Grunevsky, Varvinsky, Rusanovsky, Akhtyrsky, Buzovsky, Zenkovsky, Ivanovsky, Ichniansky, Balakleysky, Sofievsky, Berestiansky and Ugnovsky.

The deposits are located in Ivano-Frankivsk, Lviv, Poltava, Chernihiv, Sumy and Kharkiv Regions.

A PSA lasts for 50 years. Tender applications are accepted within three months from the date of publication of the announcement on its holding. Its assumed that the state share in profitable products should be at least 11% of their total volume, the maximum investor share 70% of total production volume (until full reimbursement of the investors expenses).

At the first stage of the field infrastructure development (for five years), the minimum investment in the Varvinsky, Ichniansky, Sofievsky sites is UAH 1 billion, Grunevsky not less than UAH 0.85 billion, Rusanovsky, Ivanovsky, Balakleysky at least UAH 0.8 billion, Okhtyrsky, Buzovsky, Ugnovsky not less than UAH 0.6 billion, Zinkovsky not less than UAH 0.5 billion, Berestiansky UAH 0.45 billion.

Judicial Fees

Judicial fee rates set for 2019

Judicial fee rates for 2019 have been made public. From 1 January 2019 the minimum subsistence level for one able-bodied person is established in the amount of UAH 1,921.

For filing to court of general jurisdiction:

1) pecuniary complaint:

by a legal entity 1.5% of the amount of the claim, but not less than UAH 1,921 and not more than UAH 672,350;

by an individual or an individual entrepreneur 1% of the amount of the claim, but not less than UAH 768.4 and not more than UAH 9,605;

2) non-pecuniary complaint:

by a legal entity or an individual entrepreneur UAH 1,921;

by an individual UAH 768.40.

3) application on issue of judicial order UAH 192.1.

For filing to the administrative court:

1) administrative pecuniary complaint:

by a public body, a legal entity 1.5% of the amount of the claim, but not less than UAH 1,921 and not more than UAH 672,350;

by an individual or an individual entrepreneur 1% of the amount of the claim, but not less than UAH 768.4 and not more than UAH 9,605;

2) administrative non-pecuniary complaint:

by a public body, a legal entity or an individual entrepreneur UAH 1,921.00;

by an individual UAH 768.40.

For filing to a commercial court:

pecuniary complaint 1.5% of the amount of the claim, but not less than UAH 1,921 and not more than UAH 672,350;

non-pecuniary complaint UAH 1,921;

application on issue of judicial order UAH 192,1.

Product Recall

Ford recalls more than 950,000 automobiles across the world

The Ford Corporation has recalled 953,000 vehicles around the world, which are equipped with defective safety airbags manufactured by Japanese company Takata, which have allegedly already caused more than 20 deaths.

The vehicles subject to recall are also the crossovers Ford Edge and Lincoln MKX 2010 model, Ford Ranger pickups of 2010-2011 model years and Ford Mustang sedans of 2010-2014 model years.

More than 780,000 vehicles that were recalled were sold in the USA. Ford undertakes to install new airbags for free.

Takata was at the center of a scandal in 2014. As experts of the US regulatory authorities discovered, safety airbags manufactured by Takata may open incorrectly and explode or fire metal pieces.

Such incidents may have caused the deaths of least 23 people and injured several hundred. More than 100 million automobiles have already been recalled due to safety issues surrounding airbags made by Takata.

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