GERMAN AMBASSADOR SUBMITS ULTIMATUM
The German government demanded Ukraine pay off the loan granted the Oriana Concern in Kalush by March 31
German ambassador for Ukraine Eberhard Haiken declared at a meeting with head of Ukrainian Agency for Development and European Integration Roman Shpek that if the German government has to pay off the debt of the Ukrainian enterprise to the bank which granted the loan, Germany will be forced to suspend the international credit line it opened for Ukraine.
According to Interfax-Ukraine, Shpek suggested restructuring the debt, according to the same scheme as was used for Lysychansk Oil Refinery. However, the ambassador insisted on paying off the loan by March 31, 1998.
This demand is understandable. In 1992 United Bayern Bank granted a loan to Oriana totaling DM212.5 million to build a complex for polyethylene production. The loan was secured by Cabinet of Ministers guarantees and insured by Germany's Hermes Company. Then Oriana took out another loan, this time with no guarantees, totaling DM 31 million. The first two payment deadlines have passed and the enterprise failed to pay: it lacks the money to pay off the debt, which totals DM 46 million.
The chief expert of the Ministry of Industrial Policy Zinaida Lypetska painted for The Day Oriana's sad credit history. According to her, back in 1992, when Oriana took out the loan, it was a very profitable enterprise and no one could even think that it might fail to fulfill its цobligations. But then the situation changed and the trade war between Ukraine and Russia started, when both countries introduced VAT on the other's products. The cost of the diesel fuel Oriana purchased in Russia also went up, decreasing the competitiveness of Oriana's products. But it was Ukrainian government which demolished the concern by introducing an excise tax on imported oil products, including diesel. As a result, Oriana was forced to refrain from buying it and resort to barter operations, which turned out to be unprofitable for it.
Lypetska said the loan agreement stipulated simultaneous government investment totaling Hr 90 million for erection of the complex. However, the plant was only granted Hr 1.7 million and another Hr 10 million as a loan at 20% annual interest. Huge penalty fees were stipulated for failing to meet construction deadlines, so Oriana had to invest its own turnover funds (over Hr 40 million). The concern was also forced to take another loan from the German bank.
According to Lypetska, Oriana, supported by the Ministry of Industrial Policy, has been unsuccessfully fighting the economic bloc of the government since last August. They demand cancellation of the excise tax, but the Ministry of the Economy disagrees.
At the same time, the excise tax is not paid on barter fuel. The state budget does not also receive any taxes from Oriana, because it cannot be profitable under such conditions.
And now Oriana's debt will be paid by taxpayers. To compensate the budget losses, the government failed to think of anything better than better selling the concern, a superb enterprise with the most modern equipment. According to Lypetska, the plant will be sold for next to nothing. It was estimated at $800 million, when only polyethylene production complex, launched last year, cost $300 million and this is only one out of 12 plants, which constitute the concern.
People say a miser pays twice. The Ukrainian government seems to be ready to pay thrice, each time getting the money from taxpayers.
