Ukraine Energy:

Conditions Affecting U.S. Trade and Investment

GGD-92-129: Published: Aug 18, 1992. Publicly Released: Sep 21, 1992.

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Pursuant to a congressional request, GAO examined the conditions affecting potential future U.S. investment in Ukraine's energy sector, focusing on: (1) trends and problems related to Ukraine's energy imports and production; (2) Ukraine's energy needs; (3) factors that discourage U.S. trade with and investment in Ukraine's energy sector; and (4) U.S. government efforts to aid Ukraine's energy sector.

GAO found that: (1) Ukraine's fossil fuels production has declined due to inappropriate use of production equipment and technologies, improper maintenance, lack of modern equipment and capital investment; (2) Ukraine may lose nuclear power plants; (3) Ukraine's energy imports have not offset production declines due to recent political and economic conditions; (4) Ukraine is seeking substantial foreign investment and technology to increase its fossil fuel production; (5) Ukraine will lease the right to produce mineral resources to enterprises, including foreign ones; (6) the United States and Ukraine do not have a bilateral investment treaty or an adequate bilateral tax treaty; (7) both countries are interested in establishing bilateral tax and investment treaties; (8) the U.S. government is assisting Ukraine's energy sector in such areas as environmental monitoring and enhancing the safety of nuclear power plants; and (9) the Department of Commerce cosponsored a conference on the political, legal and business climate in Ukraine.