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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Investment Policy the Melitopol Way

13 November, 2012 - 00:00

City executive committee puts up obstacles in the way of Melitopol’s Tavria Plant joining the AvtoZAZ-Daewoo joint venture.

Even the structure of the scheme for establishing AvtoZAZ Daewoo Motors has been confirmed, according to which the Melitopol plant would manufacture 110,000 engines for Tavrias annually and in immediate future 380,000 power aggregates under the Daewoo trademark. However, the Melitopol city authorities have claims on the plant and refuse to register the joint venture.

The conflict began in 1995 when the plant owed money for water and heat in its apartment buildings. The plant paid off the debt with three unfinished buildings but the city refused to take 21 multistoried houses, since Hr 8 million were needed to repair and maintain them. Without guaranteed subsidies, the city is taking no chances by accepting such an expensive gift.

The plant management argues that the city will get much more if the plant starts working. But the city head, now elected to Parliament, is staying in Kyiv and his deputies want no compromises.

“All this puts up obstacles to the financial activity of the plant,” said the AutoZAZ-Daewoo Deputy Executive Director Mykola Yevdokymenko, “and may lead to interruptions in the work of the engine plant and the whole joint venture. Plans to invest $100 million in the Melitopol plant become problematic. Financial aid to the Melitopol plant of auto aggregates is also suspended. Management is forced to place orders in Zaporizhzhia, Illichivsk, and other Ukrainian cities.

The Korean partners favor cooperation with the local authorities. But if the negative ambitions of the Melitopol city executive committee dominate, investments will go to other Ukrainian regions or maybe even abroad. Melitopol will lose not only orders, but also jobs and local budget revenues. Only social tension will increase.

 

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