TNK-BP Plans to Invest c. $400 Million in Ukrainian Business Development by 2011

The Russian-British company TNK-BP plans to invest about $ 400 million in its operational and marketing assets development in Ukraine during the period of 2007-2010. This information was provided to the Interfax-Ukraine agency by TNK-BP Executive Director German Khan.

According to Mr. Khan, investments scope and dynamics directly depend on the Ukrainian investments environment, which is determined by the country's authorities and legislation. "Despite the fact that we have spent about half a year now holding rather detailed consultations with the authorities and discussing simple and clear-cut issues related to refining investment climate improvement, there has been little progress in this area so far", he was quoted as saying.

G. Khan believes that the country's political environment diverts the government's attention from dealing with serious matters required to establish a favorable business environment.

Besides, according to Mr. Khan, TNK-BP claims that Ukraine has VAT of $ 64.4 million in arrears with respect to the Group companies, in particular, LLC "TNK-BP Commerce" and CJSC "LINIK".

"Today, $ 80.4 million has been withdrawn from our budget: $ 64.4 million within the framework of VAT liabilities, and $ 16 million of unrecovered advance corporation tax. And we don't know when refund can be expected", said G. Khan.

Meanwhile, Mr. Khan pointed out that Ukraine had an accurate mechanism of VAT recovery within set timeframes. "There is no reason for non repayment", stressed G. Khan.

This may serve as a warning for the company pointing to the fact that Ukrainian economy and budget have certain pending issues, and the state is trying to use the situation to "get loaned up charge-free", said G. Khan. "It is certainly not a way to solve economic problems but will instead aggravate the crisis", he was quoted as saying.

In G. Khan's opinion, "the issue of bad VAT administration is a real obstacle hampering investment climate improvement in Ukraine".

LINIK operates and owns refining capacities, and forms part of the TNK-BP international holding group.

As it has already been mentioned, the TNK-BP investment program will increase by 30% in 2007 (y-o-y) thus reaching the amount of $ 3.4 billion.

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Posted 05/04/07

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