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IFC Helps Identify Opportunities for Growth in Ukraine’s Pulp and Paper Industry


In Moscow:
Ilya Sverdlov
Phone: +7495-411-7555
E-mail: isverdlov@ifc.org

In Kyiv:
Tatyana Korzhovskaya
Phone: +380-44-490-6400
E-mail: tkorzhovskaya@ifc.org


Kyiv, Ukraine, May 29, 2007—IFC, the private sector arm of the World Bank Group, jointly hosted a seminar on key results of a strategic development plan for Ukraine’s pulp and paper industry, which helps identify opportunities for growth.  The project was financed by IFC, the Association of Ukrainian Enterprises of Pulp and Paper Industry (known as UkrPapir), and the Ministry of Foreign Affairs of Finland.

The study, conducted and presented by Finland’s Poyry Forest Industry Consulting, addresses the current state and future development potential of the industry in Ukraine, the availability of raw materials, energy issues and potential savings, investment opportunities, and legal and regulatory issues. It also provides an implementation plan.

“The forest industry is a key pillar of Ukraine’s economy. It also represents over 20 percent of Finland’s exports, and our government is happy to promote and support this important study.  This will lead to new opportunities for cooperation between the Finnish and Ukrainian governments and the private sector,” said Lauri Pullola, First Secretary at the Embassy of Finland in Ukraine.

Consumption of paper and board in Ukraine is about 28 kilograms per capita (1.4 million tons), compared to 40 kilograms in Russia and 100 in Poland.  Thus there is great potential for market growth in the country.  The study projects 5 percent GDP growth in Ukraine by 2020, and paper consumption is expected to reach 3 million tons per year.

“This is an exciting period of growth and development for Ukraine’s pulp and paper industry.  We believe the industry has the skills and commitment to achieve its full potential, but there are still significant improvements needed in the regulatory environment to aid this development. The strategic development plan is an important basis for planning and implementing the investment to meet future needs,” said Ian Luyt, IFC Senior Operations Manager for Europe and Central Asia.

Ukraine is an importer of all main paper grades except for tissue paper, with consumption growing faster than production.  As a result, the import gap widened to 700,000 tons per year in 2005, and local production must more than double by 2020 to keep pace with demand.

Environmental implications are also significant.  According to the study, several mills operate high-quality wastewater treatment systems, some more advanced than the normal environmental levels in Western Europe. The pulp industry in Ukraine is based largely on recycled paper, which significantly reduces the volumes of solid wastes in the country.  With proper forest management, wood pulp production could be increased easily without endangering the forests. Also, by using wood waste from sawmills, the pulp industry would create additional environmental benefits.

“We have a long and challenging road ahead to develop a robust and profitable domestic market for pulp and paper in Ukraine.  The collaboration between IFC, UkrPapir, and the government of Finland to create this strategic plan is an important step in this direction,” said Evgeny Lobanov, UkrPapir’s Chairman.

The event in Kyiv was attended by key players in Ukraine’s paper and pulp industry. Speakers included Pavlo Shinkarenko, Deputy Minister for the Ministry of Industrial Policy of Ukraine; Lauri Pullola, First Secretary for the Embassy of Finland in Ukraine; and Evgeny Lobanov, Presidium Chairman of UkrPapir. Representatives from IFC included Elena Voloshina, head of operations in Ukraine, and Ian Luyt, Senior Operations Manager for IFC Advisory Services, Eastern Europe and Central Asia.

About IFC
IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries.  IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit www.ifc.org.

About Ukrpapir
UkrPapir, an association of pulp and paper manufacturers and traders in Ukraine, was formed in 2003.  The association represents about 85 percent of installed manufacturing capacity in the country and functions as a representative body for the industry.

About the Ministry of Foreign Affairs of Finland
Since the early 1990s, the Ministry of Foreign Affairs of Finland has promoted economic and social development in Eastern Europe and northwest Russia.  It works in close cooperation with other Finnish government departments, nongovernmental organizations, private industry, and educational institutions.  Its key values include respect for democracy, human rights, and the rule of law. Its purpose is to enhance relationships between neighbors and promote regional stability and balanced economic and social development.  Priorities include the environment, agriculture and forestry, social welfare and health, the judiciary, energy, transport, education, and nuclear safety.