UKRAINIAN INFRASTRUCTURE:

OPEN FOR INVESTORS

MINISTRY OF INFRASTRUCTURE OF UKRAINE

October 2016

U k r a i n eKyiv

ATTRACTIVE GEOGRAFICAL LOCATION: UKRAINE CONNECTS EUROPE AND ASIA

5 Pan European transport corridors

18 EU routes

Geographical center of Europe

Ideal trade hub between EU, Middle East and Asia

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UKRAINE:COMFORT FOR INVESTORS

SIMPLIFIEDCOMPANY

REGISTRATIONPROCESS

BAN ON REPATRIATION OF DIVIDENDS

LIFTED

VAT REIMBURASMENT

PROBLEM SOLVED

EFFICIENT & CHEAP LABORFORCE

BEST TIMETO ENTER THE

MARKET

POLITICAL WILL AT ALL

LEVELS

INVESTMENT PROMOTION OFFICE IS IN

PLACE

INFRASTRACTURE: KEY PRIORITIES

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CAPEX in Ukrainian POST

PPP/ Concession of SEAPORTS

Private Operators on RIVERS PORTS

PRIVATIZATION of SOEs

RAILWAYS Private Operators

CAPEX in MOTORWAYS

PPP/ Concession of AIRPORTS

New Law on Privatization is in process

Law on Railways

New Law on Concession is to be voted in 2017

PPP Project Office is established

Law on Inland Waterwaysis in process

REFORMS TARGETS LEGISLATION

State road fund is established

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5 out of 10 European transport corridors run through Ukrainian territory

Ukraine has the most extensive railroad networks in Europe handling a substantial part of passenger and freight traffic

Ukraine’s road network is no less extensive, it covers the country’s entire territory and makes possible deliveries to any point of destination

The upcoming reconstruction of river waterways will help river transport become a worthy alternative to its rail and road counterparts

50%

28%

13%

8%

Railway Roads Water Avia other

INFRASTRUCTURE: HUGE GROWTH POTENTIAL

Ukraine cargo transportation structure,2015

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42%

33%

11%

6%

Russia Ukraine Romania Bulgaria Georgia Turkey

452 mln. tons

13 seaports*

Ukraine position in worldwide trade volumes:

# 1 Sunflower oil

# 3 Grains following whole EU and USA

# 4 Iron ore following Australia, Brazil and South Africa

Ukraine handles every 3rd ton of cargo in the Black Sea region, 2015

UKRAINIAN SEAPORTS – KEY IN THE BLACK SEA REGION

Yuzhny

Odessa

Mukolaiv

Chornom

orsk

Mariupol

Olvia (ex O

ktiabrs

k)

Izmail

Berdyansk

Kherson

Others

29.6

18.616.0

11.6

5.8 4.3 4.1 2.9 2.7 1.1

Cargo turnover by sea ports, Mt9m2016

Total 96.7 Mt

* Not included Crimea

Chornomorsk

Olvia

(ex Oktyabrsk)

28%

27%13%

31%

Grains, Iron ore, Black iron - 68% of ports turnover in 9m 2016

Grain

Iron ore

Black iron

other

⇒Government initiates new concession legislation

⇒Big4 audit of all state stevedores

⇒Further deregulation: in 2015 vessels waiting time decreased by 14x times. Current vessel clearance procedure is15 minutes

Investments in Ukraine

OPPORTUNITIES IN SEAPORTS

97 mln tons

Grain becomes main product for seaports in 2016:• 27.4 mln tons for 9m2016• +6% vs 2015 and +20% vs 2014 Huge potential for grain logistics growth• 90% of grain export is transported

through seaports• Up to 50% of grains cargo supplied by

multinational companies

ALREADY 2017E

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Key points:

5,5 km quay lineUp to 19.0 m max draftOre, coal, grain, chemicals – core products

Vessel types: Capesize, Panamax

9m 2016 results:

29.61 mln tons turnover61`580 TEU

53%

18%

9%

7%

9% Ore

Grain

Coal

Chemicals

Other

Fertilizers

Yuzhnyy harbour turnover, 9m 2016

YUZHNYI HARBOUR - #3 IN THE BLACK SEA REGION

29.6 mln tons

Yuzhnyy seaport view 8

STATE STEVEDORING COMPANY “YUZHNYI CSP”

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1,000 ths tons storage capacity

40k t / day loading intensity

7 berths14.3-19.0 m draft

41 cranes 7 port fleet

650 railcars/ day loading intensity

16.8 mln tons cargo in 2015

Balk cargo, steel

Largest iron ore and coal terminal Maximum draft in Ukraine&

31% of cargo in Yuzhnyi Harbour

Chornomorsk seaport view

Key points:6 km quay lineUp to 13.5m max draftGrain, ores, containers– core products

Vessel types: Panamax

9m 2016 statistics:

11.61 mln tons turnover18`160 TEU

47%

19%

16%

8%7%

Grain

Ore

Containers

Seeds oil

Other

Constructions materials

Chernomorsk harbour turnover, 9m 2016

CHERNOMORSK HARBOUR

11.6 mln tons

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Chornomorsk seaport view

STATE STEVEDORING COMPANY “CHORNOMORSK”

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30.3 mln tons annual capacity

13 tags 63 handling equipment

11-13.5 m draft

11.9 mln tons cargo in 2015

grain, iron ore, autos

254k auto vehicles

incl. 1`150k TEU

Yuzhniy

Odesa

Illichivsk

Olvia

Kherson

Mariupol

Berdyansk

Kerch

Feodosiya

Yalta

Yevpatoria

SEAPORT CONCESSION: PILOT PROJECTS

agricultural Southern region location

OLVIA SEAPORT (EX-OKTIABYRSK)

Azov Sea

Black Sea

178.8 ha area

vessels < 230 m long, < 80k tons DW

1.53 km length 10.3 m depth

capacity is 2.57 mln tons per year

318k sq. m storage

located between river Dnipro and sea

16 ha area

vessels < 200 m long, < 15k tons DW

1.26 km length 7.6 m depth

capacity is 3.25 mln tons per year

sand pit facilities

KHERSON SEAPORT

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PRIVATIZATION OF UKRAINIAN DANUBE SHIPPING COMPANY

TOP national transportation operator on the Danube

2.7m tons of cargo per year

Revenue $55m

EBITDA $2m

20% of all Danube shipping

469 units of fleet

Danube basin

Romania

Moldova

Bulgaria

Serbia

Croatia

Hungary

Slovakia

Austria

Germany

Ukraine

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3

KEY PROJECTS ON ROADS RECONSTRUCTION SEE MAP

Lviv – Krakovets (85 km, 1 cat),Odesa – Mykolaiv – Kherson (190 km, 1 cat),Dubno – Ternopil – Ivano-Frankivsk (220 km, cat 1),Rivne – Lutsk (65 km, cat 1),Poltava – Kharkiv (140 km, 1 cat),Zhytomyr – Vinnytsya (120 km, cat 1),Odesa – Palanki – Monashi (84 km, cat 2),Terebovlya – Chernivtsi (138 km, 2 cat).

$4,5bn required level of investments

ROADS: KEY INVESTMENT PROJECTS

EXPECTED RESULTS

• Realization will boost the economy of Ukraine

• Improve quality of roads according to the international standards

• Provide safer road infrastructure. Decrease ‘death on roads ratio’

4 years timeline

925 km roads length

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+ 15% of annual traffic growth stimulates provides the need for construction of new roads and bridges

• Length: overall – 214.6 km, new direction – 148.4 km, existing road – 66.2 km

• Category: 1A• Lane: 4• Width: 3.75 m• Bridges across the Dnipro river:

• North crossing 8200 m• South crossing 4823 m

• Bridge across the Desna river - 1505 m• Overpass: 7 pcs., 8910 m

• Pipelines: 78 pcs.• Interchange of two levels: 35 pcs.• Land allocation: 1415 ha• Landwork volume: 21 840 thousand m3• Pavement area: 3.6 million m2

THE PROJECT WILL:

• unload city of Kyiv from freight transit transport• develop infrastructure of Kyiv region• improve roads safety

4 years timeline

151.6 km roads length

CONSTRUCTION OF KYIV RING ROAD

3 large bridges

72 small bridges

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RAILWAY INFRASTRUCTURE: NEEDS FOR INVESTMENTS

Corporatization is done: Supervisory Board and new professional management team since mid 2016

Serious shortage of hoppers - railway reform is to open market for private operators

International partners are needed: GE, Bombardier and others, to facilitate JV’s with Ukrainian producers

Requirements for renewal of hoppers in Ukraine, units

2015 2016 2017 2018 2019 20200

2000

4000

6000

8000

10000

12000

63677300

82269150

1009511000

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Reform targets in 2016-2017

350 m tones of

cargo per year

UKRZALIZNYTSYA TODAY

22 000 km of railway network

4 000 locomotives and 123 000

hoppers

Largest employer

in Ukraine

Requirements for renewal of hoppers in Ukraine, units

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Key points:

19 airports: 2 SOEs, 2 PPP, 15 municipal

10.7 mln passengers

120.7k aircrafts served

Boryspil makes 60% of passengers flow

Open Sky implemented for Odessa and Lviv

Key functioning airports locations

AIRPORTS DEVELOPMENT

Strategy highlights:

Governmental program of airports development till 2023 approved in 2016 with targets:

• to create single state company to manage

airports infrastructure• to reach 2x times passengers flow

increase till 2023

Ongoing reforms:

Harmonization of legislation and technical regulations with the EU

Open Sky agreement with the EU is negotiated

Realization of 2023 airports development program

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BORYSPIL: OPEN FOR INVESTORS

Cargo terminal8 mln passengers

per year

33 airlines 76 regular

flights

2 runways and new terminal

Revenue $100 m2016E

Area 14 580 m2 Warehouses 5 072 m2

Capacity 2 686 pallets, 805 tons per day

KEY FACTORS INVESTMENT PROJECT

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LVIV AIRPORT: OPEN FOR INVESTORS

556k passengers in 9m2016

32 regular flights

new terminal

KEY FACTORS

2`000 PAX/hour capacity

+25% in 9m2016 vs 9m2015

KEY FIGURES

6`571 flights in 9m2016

FACILITIES

up to - 80% discount

for new regular flights

47`233 m2 terminal area

3`305 m runway

9 departure gates

1`125 parking places

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• 11500 branches with 1.3 mln sq m of real estate

• 3rd largest employer in the country

• 28 mln clients out of 44 million population

• # 1 company in parcels and letters

• $ 1B of communal payments

• $ 4B of retirement payments

• Over +20% growth in parcels

from China• +30% annual growth of

e-commerce market• Exclusive opportunity to reach

over 50% of population with financial services

Looking for strategic partners and investors to become the core of

the new Ukrainian economy and transit hub for Asian trade

flows

NATIONAL POSTAL OPERATOR UKRPOSHTA – GROWTH STORY FOR PARTNERS AND INVESTORS

• Only 21% of branches are

computerized• Average age of truck fleet

over 10 years• Over 30 large manual

sorting centers country

• $ 12-15M in computerization of the network

• $ 70-100M in new car and truck fleet

• $ 2-5M in transport

management systems• $ 120-150M in 5 new

sorting centers around the country

UKRPOSHTA TODAY …FACES CHALLENGES …REQUIRES INVESTMENTS

…PRESENTS GROWTH OPPORTUNITY

THANK YOU FOR ATTENTION!

Detailed information is available on our investment data: www.mtu.gov.ua/inv

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