Only 5 out of 41 factories of Ukrspyrt, a state-owned alcohol producing monopoly, are functioning as of now due to the ongoing war and overall economic crisis, said company head Roman Ivanyuk during the Jan. 21 news conference in Kyiv.
He hopes 17 more will start working by April. Previously a subject to the government’s privatization program, Ukrspyrt remains on the state’s balance sheet. Ivanyuk suggests that the enterprise should first have time to stand on its feet before it sells anything.
The 2014 ethanol production fell by 20 percent, down to 14.5 million decaliters. The country’s needs can be covered by as few as 8 factories, while the rest could be sold abroad. The state enterprise is actively looking for export contracts, however admits that it is difficult considering the enterprise’s unreliable business performance in the past.
Azerbaijan, Georgia, Kazakhstan and Turkmenistan look like attractive export destinations, according to Ivanyuk, while the EU market is a must-do. The 28-nation bloc has a quote of 27,000 tons per year on Ukrainian alcohol. By 2020 it should be increased to 100,000 tons, said Ivanyuk.
“In 2006-08, Ukraine exported a lot toward the West. Today, export to the West is 0 decaliters. We need to work with the Western consumers.”
He blamed the previous administration for doing absolutely nothing in regards to exports. Ivanyuk has been Ukrspyrt’s chief executive officer since Dec. 29, 2014. “The company was in a horrible condition.”
Previous CEO, Mykhaylo Labutin, is charged with tax evasion, estimated at $12.6 million, among other accusations and is placed on the Interpol’s wanted list.
Today the company has almost $50 million in debt, $3 million to wheat producers only.
The Jan. 1 excise tax increase on alcohol by 5% is not helping the industry to grow. ‘The main question is the excise tax. The alcohol beverage tax will not stimulate the producer and consumer,” said Ivanyuk.
He accented the importance of negotiating with tax authorities regarding such products as bio-ethanol. Last year Ukrspyrt produced 27,000 tons of bio-ethanol but the company head believes it can produce almost 10 times more.
However, The United Nations World Health Organization says that an excise tax on Ukrainian alcohol beverages is necessary in order to prevent diseases and death caused by alcoholism. That’s the reason why dropping the excise tax might not be a good idea. According to a 2009 Max Planck Institute for Demographic Research study on alcohol consumption in Ukraine, a large proportion of deaths in Ukraine can be associated with alcohol.
Kyiv Post staff writer Ilya Timtchenko can be reached at [email protected].
