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Report Published: "Ukraine Infrastructure Report Q2 2013"

New Construction market report from Business Monitor International: "Ukraine Infrastructure Report Q2 2013"


Boston, MA -- (SBWIRE) -- 05/17/2013 -- BMI View: Our outlook for the Ukrainian construction sector has changed for the worse as weak government finances, uncertain macroeconomic environment, absence of private sector investments and completion of 2012 tournament-led projects impede infrastructure spending in the country. After an unimpressive 6.3% year-on-year (y-o-y) contraction in 2012, we are currently forecasting the construction industry growth to grow by a weak 1.5% y-o-y in real value terms in 2013. However, thanks to a number of small projects in the transport and energy sub-sectors, we see the sector maintaining an average growth rate of 3.3% y-o-y between 2014 and 2017.

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Official estimates indicate that the value of construction work carried out during the first three quarters of 2012 was nearly 6.1% lower - in real terms - compared with the same period in 2011. The blame goes to the ongoing slump in the residential and non-residential construction segment, which accounted for a hefty 58.7% of the construction industry value in 2012 and posted a 7.6% y-o-y decline during 2012. In line with our core view of the residential and non-residential sub-sector being a significant underperformer in the construction industry, we expect the infrastructure sub-sector to be the driving force for construction industry value during over the next five years.

The key developments that helped shape our outlook for the infrastructure sector include:

- Growth potential in the airports and ports sub-sectors will help the overall transport industry to maintain strong growth. The government aims to enhance the competitiveness of Ukrainian ports and upgrade infrastructure, towards which it has earmarked investments worth EUR20bn (US$24.4bn) to be spent between 2012 and 2022. Meanwhile, discussions are under way to seek investors for the operation and expansion of Ukraine's main international airport at Boryspil. The government will be looking to find an investor which could assume the airport's outstanding debt of UAH4.8bn and invest at least UAH2.3bn in the first two years.
- There is cautious optimism in the slow moving nuclear power segment in Ukraine. In February 2013, Russian State Nuclear Energy Company Rosatom revealed it is looking to start building two power units at Ukraine's Khmelnytsky Nuclear Power Plant from 2014.
- The electricity sector is also seeing an influx of renewable power investments, with solar and wind doing especially well. In October 2012, Czech Republic-based Ekotechnik Czech completed the construction of its first solar power plant with designed capacity of 5 MW in Yasenovka, Khmelnitskyi region. Meanwhile, plans are also underway to spend nearly EUR400mn towards the construction of similar plants in Khmelnytskyi oblast with an installed capacity of over 160MW.

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