Turkish construction firm stays put after 15 years
Although originally from Turkey, Emre Karaahmetoglu may know Ukraine better than many Ukrainians.
As the regional director for construction company Onur, Karaahmetoglu has been in Ukraine for 15 years and remain happy to have stayed in business. The Lviv resident also oversees operations in Belarus and Moldova.
Onur entered Ukraine just as it was facing the 2004 Orange Revolution that overturned a rigged election and brought President Viktor Yushchenko to power.
The company successfully completed its first test project in Odesa Oblast despite the turmoil. A year later, in 2005, it started another project in Lviv, winning a tender held by the European Bank for Reconstruction and Development to construct 90 kilometers of the Brody-Lviv highway.
Now, Onur has about 20–25 projects in its pipeline, keeping Karaahmetoglu traveling all over the nation.
Eastablished in 1981, Onur Group is Karaahmetoglu’s family business. It was launched by his uncle and since then has operated in 10 countries.
And although Onur Group also offers services in airport and dam construction projects, it mainly concentrates on road construction and maintenance in Ukraine. It owns sand and limestone quarries as well as a concrete business in Lviv Oblast and an aggregate quarry in Vinnitsa Region. And recently it also invested in the agriculture sector, buying the rights to lease up to 5,000 hectares of land near Lviv.
Altogether, Onur employs 3,500 full-time employees and is expecting to bring that number up to 4,000 this year. With subcontractors, the figure can reach 5,000 workers. And of the roughly 4,500 fleet that the group owns, a third is in Ukraine.
Right now Onur is preparing its equipment and organizing its team to make sure it hits the ground running at the end of March, when the new construction season begins.
The company saw one of the peak periods in Ukraine in the runup to the 2012 UEFA European Championship as the country prepared its infrastructure for Western guests. But soon the EuroMaidan Revolution hit the country, ousting Kremlin-backed President Viktor Yanukovych in 2014.
Onur was hit hard by the economic recession that followed the revolution and the start of Russia's war.
“After that for two years there were no infrastructure projects,” Karaahmetoglu said.
Most international companies were considering whether or not they should stay.
Onur bet on staying. The bet paid off, and now the company has more projects lined up than before the revolution.
In Ukraine alone, the company’s revenues for 2018 were Hr 7 billion, compared to Hr 5 billion in 2017.
“We didn’t give up, we tried to keep all of (our colleagues and workers), and then after 2014, stepby-step, we started projects in the country.”
Ukraine’s newfound course towards European integration has driven the rise in business: after its association agreement with the EU came into force in 2017, Ukraine decided to improve its roads to EU levels.
“The government started to allocate higher budgets for infrastructure projects,” Karaahmetoglu said. “Until 2014 we were working in just three regions — in Lviv, Kyiv and Poltava oblasts. Most of the projects were connected to international contracts, financed by the loans from the European Bank for Reconstruction and Development and World Bank. But after 2014, we started to participate in local budget-funded projects as well, and started to expand our business all over in the country.”
And even though Onur is now considering entering the Polish market, it is cautious about expanding into other countries and, after 15 years in Ukraine, finds it has a competitive advantage.
“At the moment we’re very happy to work in Ukraine, we don’t want to work in many countries,” Karaahmetoglu said. “We want to work in a few countries where we feel comfortable and can have big volumes.”
There’s plenty of work to be done in Ukraine. Altogether, Ukraine has about 160,000 kilometers of roads, and more than 90 percent of them are out of shape. Ukraine has repaired up to 10 percent of the roads in the last three years.
“If Ukraine wants to attract investors to the country, they have to invest first in infrastructure. But the (infrastructure) budget size is still low compared to other countries,” he said.
It helps that Ukraine is decentralizing its system of government — more powers are being allocated to the regional and municipal levels, and more money too.
“Starting from last year the regions started to locate some small amounts of money… and this year the budget is almost double what it was last year, thanks to decentralization,” Karaahmetoglu said.
Most Ukrainians still associate the road construction industry with corruption and non-transparency. In the past, it was typical for contractors to steal money from a project by not completing it or doing it poorly.
But Karaahmetoglu says this more difficult to do.
Ukraine’s Infrastructure Ministry has brought in two independent organizations to oversee road construction. The first is the Construction Sector Transparency Initiative, established with the help of the British government and the United Nations, while the second is the International Federation of Consulting Engineers, or FIDIC, an internationally recognized association of independent engineers.
Each company that wins a tender now has to hire a FIDIC engineer to oversee the construction and take responsibility for the road’s quality.
Another helpful tool has been the ProZorro public e-procurement system, which makes the bidding procedure for government contracts much more transparent.
And a third significant improvement has been the reform of Ukravtodor, Ukraine’s state roads agency, which is now run by Slawomir Novak, Poland’s former infrastructure minister.
There are still other headaches, such as the highly bureaucratic process of receiving permits to exploit deposits of raw materials.
"Sometimes we have difficulty getting quarry permits, and it can take a lot of time compared to the terms of contract,” Karaahmetoglu said. “We ask the government to get involved and help with such problems, because in the end it’s a government project and we’re just trying to finish it on time.”
But overall, “things are going good” in Ukraine for Onur, Karaahmetoglu said. “I cross my fingers that it will continue like this.” is
Workers of road construction company Onur Group repair a road in central Kyiv on May 5, 2017. (Kostyantyn Chernichkin)
Emre Karaahmetoglu, general coordinator at Onur Group