February 27 2014, 12:00 Source: APK-Inform Views: 3134

China to sue or no Ukraine for default in performance of the contract for grain supply?

Hennadiy Moskal, People's Deputy of Ukraine, 1st Deputy Chairman of the Committee to combat organized crime and corruption of the Verkhovna Rada, informed that China complained to the London Court of International Arbitration (LCIA) on Ukraine for damages at the sum of 3 bln USD, which were provided to PJSC State Food and Grain Corporation of Ukraine for purchasing of grains with their further delivery to China.

According to him, the company sold grains to China at the sum of 153 mln USD only. H.Moskal said that State Food and Grain Corporation of Ukraine realized grain purchases in Ukraine to perform the Sino-Ukrainian contract, but not the Chinese company or its listed enterprises became the final recipients of grain cargoes. At the same time, the Chinese company-operator ССЕС which should receive the grain cargoes according to the credit agreement, received 180 thsd tonnes only.

But PJSC State Food and Grain Corporation of Ukraine denies the information that China plans to sue Ukraine on execution of the credit agreements, declared the press-service of the Corporation on February 26.

The press-service announced that according to the credit agreements with Eximbank of the People's Republic of China, State Food and Grain Corporation of Ukraine attracted 1.5 bln USD (but not 3 bln USD as stated in the mass media reports) in order to purchase and export Ukrainian grains. These funds are used within the tranches and in compliance with all the control procedures of both Ukrainian and Chinese parties stipulated to such level of agreements. The other part of PRC credit at the sum of 1.5 bln USD, which is stipulated for imports of the products and services produced in China, has not been received yet.

The state corporation has not bypassed and is not bypassing the credit and trade agreements with PRC. Pursuant to the agreement with the Chinese operator CCEC, the state corporation can carry out the grain export deliveries directly to PRC and to other countries as well.

State Food and Grain Corporation of Ukraine has not received any claims of the London Court of International Arbitration, and has no reason for their submission. Grain deliveries to other countries do not contradict the bilateral agreements and are stipulated by the objective reasons. Until December 2013, only such grain crop as maize could be imported to PRC market from Ukraine, as its import is regulated in the country in terms of volumes and quotas.

According to the announcement, State Food and Grain Corporation of Ukraine fulfills all its obligations on the credit service as well as on keeping to the grain exports schedule promptly and fully. Thus, in 2013/2014 MY (from July 1, 2013 to July 1, 2014) it is planned to export 4 mln tonnes of grains and, as of February 25, 2014, the Corporation actually shipped 2.6 mln tonnes according to the trade agreements with PRC, including over 0.3 mln tonnes shipped directly on China's domestic market. Having obtained the phytosanitary protocols for barley and soybean exports from Ukraine, grains deliveries of State Food and Grain Corporation of Ukraine to China will increase in 2014.

So, there is no reason to talk about the risks of non-fulfilment of the credit and trade agreements with China by the Ukrainian party. The Corporation highly appreciates the strategic cooperation with the Chinese partners and will do everything possible for its successful implementation in the future.


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