KYIV POST APRIL 20TH, 2006
http://www.kyivpost.com
Parents opt for British schooling
V OL . 11 , I SSUE 16
Government likely to adopt hefty tariff hikes
By YULIANNA VILKOS
By JOHN MARONE By ROMAN OLEARCHYK
Nataliya Stryzhak of Dnipropet rovsk has ambitious plans for her only son, 11 year old Pavlo. According to her vision, in around 10 years, Pavlo will graduate from presti gious Oxford University, get a well paying job in London and stay in Great Britain for good. “What is there to do in Ukraine with an Oxford education,” Stryzhak asked rhetorically. To make her dream come true, the 45 year old wife of a well off Dnipropetrovsk businessman is ready to send her child to a private boarding school in England when he turns 14, paying about 20,000 British pounds (around $34,000) annually for three years, so that Pavlo is “all set for Oxford by the time he is 17.” It is this desire that inspired Stryzhak to come to a meeting in Kyiv with the headmasters of a dozen or so private British schools on April 15 and 16. The meeting was organized by the Kyiv based company Business Link. “I want to learn more about the British system of education and possi bly choose a school for my son,” explained Stryzhak, adding that it’s nearly impossible to get this kind of
see BRITISH, page 5
INSIDE
Ukraine’s government and parliament managed to forestall hefty tariff hikes on electricity, natural gas and railway trans portation for the public until after the March 26 parliamentary elections, but now the unpopular policy decision looks imminent. Top officials have in the past week announced plans to introduce stiff 25 percent tariff increases on electricity and natural gas for households. The increas es, expected to take effect next month, have recently been approved by Ukraine’s energy market regulator and registered by the country’s Justice Ministry, but they have yet to be given the green light by the Cabinet. Meanwhile, Ukraine’s state railway holding, Ukrzaliznytsya, recently anno unced that they plan on increasing tick ets for passengers by about 50 percent, starting in June. Long distance overnight railway tickets currently stand at between $7 and $20 one way, depend ing on which class one is traveling. A spokesperson for the railway told the Post on April 19 that the price hike is planned, but not yet approved by the government. Analysts said that tariff increases for gas are all the more necessary after the
price of gas shipments to Ukraine from Russia and Central Asia were almost doubled to $95 per 1,000 cubic meters in January. The price hikes have already made their mark on the Ukrainian mar ket, with debts between gas suppliers and consumers mounting to hundreds of millions of dollars in recent months, according to analysts. Some top government officials promised voters ahead of the elections that tariff hikes on electricity, gas and railway transportation would be avoid ed. Now that the elections have passed, essential tariff hikes appear unavoidable, according to experts. The government is
“THE CURRENT SITUATION EQUATES TO ECONOMIC AND SOCIAL NONSENSE.” – Viktor Skarshevsky, Economic advisor scheduled to approve, modify or deny the planned tariff hikes this month. Borys Bordiuh, an economist at Kyiv’s International Centre for Policy Studies, said the price increases are necessary and will likely be approved soon, adding,
however, that they may be modified a bit to soften the blow. “Without a doubt, these price increas es have to be implemented because the current tariffs are below market value and create large losses,” he said, adding that “prices have not been raised for a long time and do not reflect the value of services provided.” Viktor Skarshevsky, an advisor on economic issues to National Security Chief Anatoliy Kinakh, agrees. “The prices of electricity, gas and other services have not been raised for a long time, and they cause large losses for state companies and Ukraine’s budget,” he said. “It is important to raise them to a level that reflects the market value for such services. The government will raise them, it may change them a bit here or there from the current planned hikes, but prices must rise,” Skarshevsky added. According to Bordiuh, attempts to raise the prices earlier this year and last year were blocked by Parliament and stalled by some groups in the govern ment, both of which feared angering vot ers ahead of the parliamentary elections. “The elections are over and it looks likely that the government will approve
see PRICES, page 5
Home sweet home
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Hi-tech 3G technology put on hold
Former Japanese Imperial Army soldier Ishinosuke Uwano, 83, center, speaks to media as his son Anatoliy Zaychuk, right, listens upon Uwano’s arrival at Narita International Airport, east of Tokyo, on April 19. Uwano, who was last seen by his family when he went off to fight in World War II and later resurfaced in Ukraine, arrived in Tokyo to see his relatives for the first time in 60 years. The woman at left is an unidentified official of Japan’s Health, Labor and Welfare Ministry. (AP)
Mobile communications operators are eager to introduce the industry’s latest technology in Ukraine, but licenses are limited and the state’s privatization plans have hijacked the tender process. The demand for so called 3G, or Third Generation technology, which allows mobile phone users to transfer larger than ever amounts of information from computer databases and hold effec tive teleconferences from their handsets, is expected to continue growing region ally and globally. However, in Ukraine, state owned Ukrtelecom, a fixed line operator ear marked for privatization, is the only company that currently has a license to use the new technology. Ukraine’s Telecommunications Commission plans to announce tenders for the issuance of up to three more 3G licenses within a year or so, Commission head Oleh Hayduk told a round table in Kyiv on April 12. The problem is that these licenses entail the allocation of radio frequen cies, which are currently being used by Ukraine’s military, he added. “If we can come to a proper agreement to work together with the Ministry of Defense, then we can put up all three licenses,” Hayduk said. Conversion of the frequencies for commercial use could cost up to Hr 256 million (around $50 million), which, according to commission spokesman Andriy Bobrovitsky, is not covered by Ukraine’s state budget. Ukrtelecom, which boasts 11 million fixed line subscribers, but none of the country’s 33 million mobile users, received its license in December 2005 without having to take part in a tender. Leading mobile communications opera tors have criticized the Commission’s licensing decision. Yaryna Klyuchkovska, press secretary for Ukrainian Mobile Communications, which controls about 45 percent of Ukraine’s mobile communications mar ket, called the commission’s decision “politically motivated” and meant to increase the value of Ukrtelecom ahead of its planned privatization. The government of Prime Minister Yuriy Yekhanurov, which could be replaced as a result of last month’s par liamentary elections, has stepped up efforts to sell Ukrtelecom to ‘a strategic investor’. “Ukrtelecom has a fixed line network, but they will have to build a radio net work from scratch,” said Klyuchkovska. Even for companies that already have a mobile communications infrastructure, the switch to 3G is “significantly expen sive,” she added.
see TELECOM, page 7
The Week
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APRIL 20TH, 2006
UK boarding schools eager to attract more Ukrainian children BRITISH, continued from page 1 information in Dnipropetrovsk, where her family lives.
Growing trend The management at Business Link, which has consulted Ukrainians on edu cation in Great Britain since 1997, says that while the number of Ukrainian par ents sending their kids to boarding schools in Britain is still small, the trend is growing and will reach its peak in the next five years. Valerie Samborskaya, who heads the UK education department at Business Link, said her company started focusing on boarding schools in the UK only recently, seeing it as a very promising niche on the consulting services market in Ukraine. “The first wave of Ukrainian children going to private boarding schools in Britain coincided with the years that fol lowed independence, but then it ended,” said Samborskaya, referring to the eco nomic crisis of 1998. “It’s only now that people can afford to educate their children abroad again, after they have made money from small and medium sized businesses,” she said. And as the children of this new genera tion of Ukrainians, who appreciate the advantages of Western education grows, Samborskaya is confident the trend will only increase. Terry Sandell, director of the British Council Ukraine, agrees, saying that while there has been a definite upswing in the number of Ukrainians going to Great Britain for a higher education, with the figure doubling between 2004 and 2005, reaching 2,000 students a year, a growing interest in UK boarding schools has been evident as well. “It seems that people have started look ing at boarding schools as a great way to prepare children for a smooth entry into a British university,” said Sandell. According to him, there are about 500 private boarding schools in Britain, most of which have accepted international stu dents for centuries. Ukrainian children
A Ukrainian parent (left) speaks to a representative of a British boarding school at a fair held in Kyiv on April 15-16. The fair was organized by Business Link, a Kyiv-based company that consults on educational opportunities in the UK. (Courtesy photo)
are now slowly joining the trend, he said. Apart from better chances of getting into British universities, fluency in English and the all round development of a child were the motives cited by some of the people attending the fair, which host ed headmasters from some 15 private British schools and about 100 children and parents. And if the prestigous British boarding schools, such as Winchester and Eaton, weren’t present at the fair, it’s because “they do not really need the pro motion,” Samborskaya said. “I wouldn’t say British secondary edu cation is much better than a Ukrainian one,” noted Iryna Moskalyk, who came to the fair together with her husband and their 12 year old daughter. “But I want my daughter to learn the international business language, which is English, and make her feel comfortable in a foreign environment,” said Moskalyk, who plans to send her child to study in Britain in two years. Moskalyk wants her daughter to go for a higher education in Britain as well, but,
unlike Stryzhak, Moskalyk says she does not like the idea of her staying in the UK for good. “I see Ukraine as a place where it is now possible to make money and live nicely,” Moskalyk confided. “If we were able to make our money here, she will be able to as well.” Iryna Bar from Luhansk wandered from one school’s booth to another’s with her 13 year old son, busily picking up informational materials and conversing with the headmasters through translators. “I will have to put all of my savings and a considerable part of my current income into my son’s education in Britain, but investing in my son’s future is my only goal in life anyway,” said Bar about her financial commitments. Bar has around $100,000 in total to spend on the three years that her son will spend in a boarding school in the UK, she said.
Wanted: Ukrainian kids Meanwhile, the administrators of British boarding schools who arrived for
the fair said they were very eager to recruit Ukrainian students and hoped for a “long term relationship.” “We already have seven Ukrainian stu dents at our college, who are very good and well motivated and who came to us mainly to prepare for university,” said Gino Carminati, headmaster of Kent College in Canterbury, who came to Kyiv “to reach out and recruit more Ukrainians.” Carminati said it’s the improving eco nomic situation and progressive political changes in Eastern Europe that have enabled people to seek an education for their children in the West. But while Carminati’s school has had kids coming from Russia for some time, it’s only in the past couple of years that they have wel comed Ukrainians. “The parents are looking for their chil dren’s education in our schools, which are not only academic, but can provide the students with all kinds of sports, arts and drama activities on very compact premis es,” said Carminati. The schools, for their part, are interested in making their cam puses as internationally diverse as possi ble, he said. Sue Griffin, vice principal of Bosworth Independent College in Northampton, said that they get three Ukrainian stu dents on average every year, all of whom come with specific plans for their future. “They come to me and say: ‘I want to come to your school because I want to go to London School of Economics after wards,’ or something like that,” said Griffin. Griffin said it’s hard to comment on the academic performance of Ukrainians, as “it varies greatly,” but she did note that they tend to be more individualistic than other international students in her school. “We tend to find that Ukrainian stu dents are not afraid to voice their opin ions, they are challenging in terms of expectations, and they bring an exciting taste to the college fashion scene,” said Griffin, whose school, unlike many other traditional boarding schools in Britain, has no uniform dress code.
Matter of choice Stryzhak, whose son currently goes to a prestigious Ukrainian secondary school and studies both English and French, is already sketching out a plan of how to secure her son’s “good prospects in Great Britain.” “Since I am not ready to send my son to a full boarding school right now when he is only 11, I will send him to Britain for one month this summer, then for one semester next year, and for a full year when he is 14,” Stryzhak said. That way, the mother figures, her son will get used to the British system of education and won’t have to leave home for an extend ed period, so soon. Sandell of the British Council said that many Ukrainian parents still opt for short term stays in UK schools, con sidering their high costs. But Samborskaya of Business Link said it’s also a matter of a lack of infor mation. “Look at the costs of apartments in Kyiv and at the luxury cars on Kyiv streets,” Samborskaya said. “I think if people knew more about the opportuni ties, they would consider giving their children a good education over buying a new car,” she said. Iryna Bar from Luhansk said her decision to send her son to England was a lot about her desire for her child to develop in a multinational and child friendly atmosphere, which she believes British private boarding schools offer. “I don’t want him to have any psycho logical barriers, so I want my son to spend his adolescent years in an envi ronment, where teachers know how to love children,” said Bar. But this kind of environment doesn’t come cheaply. The least expensive boarding school represented at the fair was 7,000 British pounds a year (approximately $10,900). “Obviously, in both Britain and Ukraine, to be able to send a child to a private boarding school, one has to be rich,” said Gino Carminati.
Analysts: Electricity, gas and railway tariffs likely to be raised PRICES, continued from page 1 the tariff increases now, though they could be modified,” he added.
Painful, but badly needed reforms According to the National Electricity Regulation Council, Ukraine’s regulator of gas and electricity prices, the increased tariffs on electricity and gas will also affect heat and power supply companies. NERC officials told journalists earlier this month that they planned to raise electric ity and gas prices by an additional 25 per cent later in the year. Meanwhile, Ukrzaliznytsya General Director Vasyl Hladkikh told journal ists on April 18 that the long overdue increase on ticket prices will help the state railways generate more profits needed to improve services for travelers and modernize their aging Soviet built infrastructure. “What kind of service can we talk about if 1 kilometer of travel on a train costs 1 kopeck?” he asked. “We need to raise the price for passen ger travel because we currently incur loss es of Hr 2.4 billion ($478 million) annual ly,” as a result of the below market tariffs, he added. Hladkikh said that the railway, which has gradually modernized its infra structure in recent years, would need to triple the price to break even on passenger transportation services. Ukrainian household consumers of electricity and gas, as well as railway pas
sengers, are currently subsidized by the nation’s industry, which is charged more than twice as much. But, for the general public, government officials have repeat edly put off tariff increases for power, gas and railway transportation in recent years. In a report, Kyiv based investment bank Dragon Capital said the new tariffs envision electricity prices for residential consumers increasing to up to 3.9 cents per kilowatt hour. Gas prices for house holds and state funded enterprises would increase up to $47.5 per 1,000 cubic meters and $71 per 1,000 cubic meters of gas, respectively. Meanwhile, the gas tariff for heat producing companies would rise to $78 per 1,000 cubic meters.
“THE LONGER WE WAIT TO INCREASE PRICES, THE MORE PAINFUL IT WILL BE.” – Viktor Skarshevsky, Economic advisor In comparison, industry is charged in excess of $100 per 1,000 cubic meters of gas. Gas prices for households were last increased in 1999. Currently, monthly electricity and gas bills paid by those who receive no privileges can be $20 30, or much high
er, depending on consumption. The offi cial average monthly salary in February stood at about $179, though many Ukrainians and companies reveal only a portion of their payroll, using various schemes to minimize the amount of taxes they pay. Skarshevsky said that by raising the price for such services to market levels, Ukraine’s industry will be allowed to gradually stop subsidizing the population, making their products more competitive on the market. The result, he said, will equate to a healthier economy, where industry generates more profits and pays more taxes. The price hikes will also enable the government to provide better subsidies to those segments of the population that really need it, Skarshevsky said, adding that many privileges which provide reduced tariffs to a large share of the pop ulation will need to be reviewed. “The current situation equates to eco nomic and social nonsense,” Skarshevsky said. “By not raising prices, we will never implement real structural reforms, which entail liberalization of the market and the introduction of private capital to these markets. The longer we wait to increase prices, the more painful it will be to increase them in the future. Now is the time to do it, since there will be just over three years before the next presidential elections,” he added.
Viktor Skarshevsky, economic advisor to Ukraine’s National Security and Defense Council Chairman Anatoliy Kinakh, says that the government cannot wait longer to increase tariffs for electricity, gas and railway transportation for the public. (Serhiy Zavalnyuk)