Agro Gas Trading LLC Continues to Meet its Financial Obligations to JSC Odessa Port Plant
In August 2019, despite all the risks and possible material losses, AGT LLC launched production at OPP JSC at its own expense after over a year and a half of downtime. This gave the plant a breath of hope for regaining its status as one of Ukraine's largest producers of mineral fertilizers as well as for improving its economic situation. During the two years of operation after the launch, we managed to achieve extraordinary results. In particular, we resumed the production and sale of carbamide and ammonia to domestic and foreign markets; debt settlements with Naftogaz were started; hundreds of qualified employees returned to the enterprise, with their salaries being gradually increased by more than 20%; repairs of major units were initiated, and several production records were beaten.
During all this time, AGT LLC has reliably fulfilled its obligations to supply OPP JSC with natural gas. During the period of joint operations, the cost of ammonia processing services increased from 36 US dollars per 1t to 43 US dollars per 1t (19.44% of the initial cost), and the price of processing into carbamide from 47 US dollars per 1t to 62 US dollars per 1t (31.91% of the initial cost), which provided additional cash inflows to OPP JSC. Also, an additional quarterly remuneration was introduced, which for the first quarter of operation, the second quarter of 2021, amounted to UAH 27 million. It was fully paid in favour of the plant, thus increasing the privatization value by several times. Besides, AGT LLC has always supported JSC OPP, even in critical moments, when the plant could be left without natural gas supplies. This made it possible to continue the plant's operation at the highest possible production levels.
Unfortunately, record growth in natural gas prices and decreased prices for mineral fertilizers led to compelling circumstances for AGT LLC, which made it impossible to continue supplying natural gas to JSC OPP. Also, a lack of a long-term contract between AGT LLC and OPP JSC influenced the termination of deliveries. The absence of the long-term contract made it impossible for our company to build a working model for the future.
Despite the termination of the contract, AGT LLC has been fully fulfilling its financial obligations to OPP JSC. Thus, since the shutdown of the plant's facilities, AGT LLC has paid more than UAH 134 million to OPP JSC.
A few months before the end of the processing contract between AGT LLC and OPP JSC, the plant completed the selection procedure for a new natural gas supplier and recognized the company DACHEX SHIPPING PTE. LTD. as the winner. A contract was planned to be concluded with this company from November 1, 2021, but, according to mass media, no contract has been made. Besides, the company DACHEX SHIPPING PTE. LTD. cannot conclude a contract at all due to a lack of a license to supply natural gas in Ukraine. Mykola Shchurikov, the first deputy head of OPP JSC, mentioned this on his official Facebook page and published a letter from DACHEX SHIPPING PTE LTD. to OPP JSC demanding to return the unjustifiably acquired property in the form of USD 100,000, which DACHEX SHIPPING PTE. LTD. paid as the bid security amount to participate in the competition.
AGT LLC is sincerely concerned over the lack of natural gas supplies to OPP JSC and the consequences that emerged as a result, in particular, employees started to work just 3 days a week, wages were cut, and payments have been delayed. Besides, if no decisive action is taken to restore the capacity of OPP JSC, Ukraine may finally lose its main employer of Odessa region and one of the largest enterprises in the production of mineral fertilizers.
08 November, 2021