Home MOREBUSINESS & ECONOMY Vitaly Kropachov: “Austria’s sixth place in the structure of investments in Ukraine is a good example how our business can cooperate after the war is over”

Vitaly Kropachov: “Austria’s sixth place in the structure of investments in Ukraine is a good example how our business can cooperate after the war is over”

Interview with Vitaly Kropachov, Ukrainian businessman and owner of the Ukrdoninvest group of companies.

by gary cartwright
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Journalist: I thank you for taking the time for this interview. The topic of our conversation is the post-war reconstruction of Ukraine. How does Ukrainian business feel today? Especially business that is not limited to one enterprise or one field of activity.

Vitaliy Kropachov: Because of the war and the processes accompanying it, we clearly see a decrease in the pace of economic development. It has become virtually impossible to make plans for development, which are usually made by any business. A large number of large industrial enterprises have stopped.  Companies do not have enough electricity, gas or water. Added to this is the problem with the outflow of people, which is especially acute in areas where there are active combat operations or which border such territories. Many Ukrainian companies are afraid to invest in reconstruction and development of their businesses. But how long this trend will last depends solely on the duration of the war. When the war is over, businesses will have a chance to reconsider their development plans, and economic growth will begin. 

– What happens to your enterprises today? Do they remain idle?

Some businesses are standing, some are in occupied territory. For example, in Kreminna, we were developing a gas production enterprise, but today Kreminna is in an active combat zone. 

– To what extent can you today, as an entrepreneur, plan the operation of your enterprises after the war?

Theoretically it is possible. Knowing our assets, the degree of destruction of our enterprises and general trends in our industry, we understand how much additional investment we need to make in order to bring them to the pre-war level. I still see a more serious problem, which many companies are facing today, not in investments, but in the labor outflow. A lot of people have left Ukraine, and the government will have a serious task to stimulate their return. And in general, in terms of investment, we have not stopped for a minute, because the industries in which we work require constant development – if we stop today, then in a year we will not start.

– Are you talking about coal mining now? 

The coal industry is one of them. We have projects that we cannot stop technically. Although they are close to the active combat zone. But in any case, investing is a long process.

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– If we talk about the Ukrainian economy as a whole, where should we start its recovery?

If we talk about the economy as a whole, the first thing that will be necessary is to start with a cheap financial resource. A cheap European resource. By this I mean the rules, the discount rates, the interest rates on loans that exist in European countries today. Then, there is the need to restore infrastructure. Starting with energy infrastructure, which is under the threat of destruction every day. Even right now, as we speak, an air alert has been declared throughout Ukraine. And the targets of the attack could once again be infrastructure. There is a great shortage of energy resources today. And it will be necessary to create a new form, a new system of distribution and energy production in Ukraine. It’s unequivocal. And the next step is to increase domestic production of gas and oil. It’s the need for a new government approach to changing the tariff rates, the rules of the credit facilities. In Ukraine, there are large proven reserves of gas, and the Ukrainian economy can provide itself with them in full. There are also large undeveloped or, shall we say, not quite correctly developed oil reserves.

– In other words, one of the tasks of economic recovery is the independence from energy imports, in particular on the gas market, where so far Russia has been an important supplier?

Yes, you are right, and we see the same situation in the oil products market. Last year we had a shortage of gasoline and diesel fuel. There were huge queues. But then we managed to increase the supply of petroleum products from other countries and the situation became somewhat normalized. We even received petroleum products from Austria, which had never happened before. And many other countries of Europe gave us their transit capacity and began to supply petroleum products to Ukraine for the first time.