"Ukrspirt" has developed a program for the development of the industry until 2011

The Ukrspirt State Concern has found a way to make the work of its member enterprises profitable. The concern has developed a program for the development of the alcohol industry until 2011, which involves increasing Ukrspirt's revenue by 1 billion UAH per year due to the production of biofuel at distilleries. Experts believe that the implementation of the program is possible only if government subsidies are allocated.

Kommersant has obtained a draft program for the development of the alcohol industry for 2007-2011, developed by the Ukrspirt state concern. The concern calculated that through the implementation of the project they will be able to increase revenue from UAH 1.53 billion to UAH 2.57 billion per year. “Due to incomplete utilization of the production capacity of alcohol factories, the financial and economic activities of a third of enterprises in recent years have been unprofitable,” the document notes. Last year, according to the concern, only 55.1% of the capacity of its enterprises was used.

The Ukrspirt State Concern unites 77 distilleries with a total production capacity of 61.2 million decaliters per year. In 2006, the enterprises produced 33.2 million decaliters of ethyl alcohol, 2.15 million decaliters of vodka and alcoholic beverages, 2.45 million decaliters of technical products, 6.5 thousand tons of yeast and 1.1 thousand tons of brewing malt . The total volume of commercial products at comparable prices amounted to UAH 1.36 billion.

The concern expects to increase its revenue by organizing biofuel production at 12 distilleries, biogas at 15, and bioethanol at 3. For this purpose, it is proposed to allocate UAH 134.05 million from the state budget by 2011. It is expected that as a result, the production capacity of Ukrspirt by 2011 will be: 52.3 million cubic meters of biogas (less than 1% of total natural gas consumption in Ukraine), 139.5 thousand tons of biofuel, 42 thousand tons of bioethanol. The program also provides for the reorganization and liquidation of ten distilleries.

Deputy Minister of Agricultural Policy Yaroslav Gadzalo told Kommersant that the department will recommend that the Cabinet of Ministers approve the program for the development of the alcohol industry. “This year we will ask for UAH 17 million from the budget for the implementation of the program,” Nina Garkavaya, first deputy chairman of the Ukrspirt concern, told Kommersant.

According to Vladimir Konovalchuk, an expert at the Institute for Economic Research and Policy Consulting of the German-Ukrainian Agrarian Dialogue, by selling the declared volume of biofuel and biogas, the concern can earn about UAH 900 million and UAH 25 million, respectively. However, for this it is necessary to find a sales market. “The European Union has a directive prohibiting the import of biofuel,” the expert notes. “And in Brazil and the United States, they produce enough of their own biofuel, the cost of which is lower than Ukrainian.” If the products are sold on the domestic market, the concern will compete with traditional fuel, which is only possible with government subsidies. “Until now, no one in Ukraine has been able to produce biofuel cheaper than gasoline - costing less than 5 UAH,” says Mr. Konovalchuk.

Alena Kommersant-Golubeva

Alcohol will be diluted with biofuel