[Intl-tobacco] Ukraine: Unclear developments - new state monopoly?

[Robert Weissman]

Ukrainian New Agency
http://www.ukranews.com/cgi-bin/openarticle.pl?lang=3Deng&id=3D306253


              12/28/2002 / 21:55  |  UPDATE Kuchma Introduces State
Monopoly In Alcohol And Tobacco
              Industries

                   (The story updated with comments of the State
Foodstuffs Department and concern
              "Ukrspirt" and with measures foreseen by the decree)
President Leonid Kuchma has
              signed a decree introducing state monopoly in the alcohol
and tobacco industries.
                   Kuchma announced this in Chernigov while addressing
the region's leaders.
                   "We will establish order," Kuchma said.
                   Kuchma commissioned the Cabinet of Ministers to
establish order of determining
              spirit producers and consumers, who have a right to order,
produce and use it under
              obligatory registration.
                   The Cabinet also should introduce timely annual
submission of orders for spirit
              purchase by consumers with explanation of need for it,
direction and ways of its
              consumption, as well as submission of orders by spirit
producers for its production in
              the following year with explanation of foreseen volumes of
spirit production, proved by
              existing production capacities, documents for attestation
of production and
              certification of their produce.
                   The Cabinet also should distribute by competition
quotas of spirit production basing
              on submitted orders of producers considering state of
their payments to the state
              budget, Pension Fund and state of accounts for wages payment.
                   The government also should introduce though
numeration of holographic
              documentary stamps for alcohol and tobacco with the index
of a region of production.
                   Within three months the Cabinet should also approve
the program for development of
              spirit producing industry, alcohol beverage industry and
wine industry of Ukraine in
              2003-2007.
                   According to Kuchma, the decree does not threaten
with immediate nationalization of
              private enterprises of those industries.
                   "It stipulates that the state has its hands on the
pulse," Kuchma said.
                   Head of the State Foodstuffs Department Yuri
Zhikharev told Ukrainian News, that most
              probably it is all about monopoly on the wholesale and
retail market of alcohol and
              tobacco products.
                   "We have discussed the problem with (the First Deputy
of the Head of President
              Administration) Oleg Diomin.
                   There were different versions.
                   Most probably, they decided something about the
wholesales", said Zhikharev.
                   At the same time he has confidently stated that the
state monopoly on the alcohol and
              tobacco market foresees no reprivatization of private
enterprises.
                   "No reprivatization, definitely", said Zhikharev.
                   The head of the state-owned concern "Ukrspirt" Ivan
Zholner told Ukrainian News that
              the decision of introducing monopoly could be motivated by
high ratio of illegal vodka
              on the market.
                   According to the information of the State Foodstuffs
Department, 15 private tobacco
              producers operate now in Ukraine.
                   Enterprises producing spirit and alcoholic beverages
are state-owned, but most of
              the alcohol producers are now leased enterprises and no
more than 10 are owned by
              the state completely.
                   According to the Ukrspirt, the taxation agencies
issued 260 licenses for bottling
              alcoholic beverages.
                   Specialists estimate the annual size of the Ukrainian
alcohol market at 30-35 million
              decaliters and the annual size of the Ukrainian tobacco
market at 75 million cigarettes.






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