Concessions in Sea Ports

Concessions in Sea Ports

The international practice of sea ports management has proved that concession is the most proficient instrument for attracting investments among the sources for financing, modernization and development of the port infrastructure. Concession provides for the implementation of socially significant projects, with the private management of the concession assets of a temporary nature (from 3 to 50 years).

On September 12, 2019, tenders on the pilot projects for stevedoring company concessions in the port industry were officially announced.

The assets of the state stevedoring company in the port of Olvia are transferred into concession for a period of 35 years, and in the port of Kherson – for 30 years. At the same time, they remain in state ownership to be transferred to the state together with all the facilities to be built or modernized by the investing company during its tenure upon completion of the concession agreements.

«The launch of the pilot concession tenders is of particular importance to the port industry of Ukraine. Since now, the opportunities for public-private partnerships in the ports have increased with the concession mechanism being highly recognized in Europe and worldwide»

Head of USPA
Mr. Raivis Veckagans

The feasibility studies for the pilot projects were conducted by a consortium of international consultants formed by EBRD and IFC.

«Public-private partnerships under proper investments structuring are all about fair allocation of risks and remunirations»

International Financial Corporation (IFC) Regional Manager in Ukraine, Belarus and Moldova
Mr. Jason Brett Pellmar

While preparing the feasibility study, a systematic analysis of the market along with financial, technical, environmental and legal expertise were carried out. In addition, meetings with potential domestic and foreign private partners were held in order to take into account their suggestions on the implementation of projects.

International Experience

Antwerp (the Netherlands),
Piraeus (Greece),
Constanța (Romania),
Burgas (Bulgaria),
Barcelona (Spain),
Samsun (Turkey)

Concession in the Port of Olvia

On October 18, 2019, accepting applications to take part in the concession tender of the “Olvia Stevedoring Company” and of selected assets of the “USPA” SE has started. The corresponding announcement was published in the “Golos Ukrainy” newspaper (the official publication of the Verkhovna Rada of Ukraine).

«The concession of the state stevedoring company in the port of Olvia is a more large-scale project than the one in the port of Kherson, which provides for not only the modernization of the available assets but also the construction of a new grain terminal. The investments to be raised within the framework of the project amount to more than USD 57 million and will support the expansion of the port facilities. This is fully in line with the Government’s agenda for the next five years towards increasing the cargo handling volumes by maritime transport»

Head of USPA
Mr. Raivis Veckagans

Graphically

The progress of the concession tender looks as follows:
– The applications to take part in the tender will be accepted from October 18, 2019 until December 16, 2019;
– The amendments to the tender bids will be allowed from December 16, 2019 until January 20, 2020;
– The assessment of the tender bids will be carried out from January 20, 2019 until January 30, 2020;
– The decision on the tender winning company can be made by the Ministry of Infrastructure of Ukraine as early as the first half of February 2020 (depending on the number and quality of the bids submitted);
– The tender results are supposed to be published as early as the second half of February 2020.

Following that, the Ministry of Infrastructure proceeds to negotiations and signing the agreement with the tender winning company. The agreement is expected to be signed in early May 2020.

Useful links:
https://mtu.gov.ua/en/content/proekt-koncesii-u-portu-olviya.html

Concession in the Port of Kherson

On October 8, 2019, the Tender Board which was established by the Ministry of Infrastructure of Ukraine has started accepting applications to take part in the concession tender for the transfer of the assets of the state stevedoring company and of the assets of the “USPA” SE in the sea port of Kherson in concession. The corresponding announcement was published in the “Golos Ukrainy” newspaper (the official publication of the Verkhovna Rada of Ukraine).

«The list of documents required for potential investors to take part in the tender is available in the Data Room. The companies, whose applications will be preliminarily approved and admitted to take part in the tender, will be provided access to the package of confidential information related to the activities of the state stevedoring company. USPA, as one of the parties to the future concession agreement, invites foreign and Ukrainian investors to take part in the concession tender»

Head of USPA
Mr. Raivis Veckagans

Graphically

The timeline of the concession tender looks as follows:
– The applications to take part in the tender will be accepted from October 8, 2019 until December 6, 2019;
– The processing of the applications to be admitted to take part in the tender will take 14 days;
– The amendments to the tender bids will be allowed from December 6, 2019 until January 10, 2020;
– The assessment of the tender bids will be carried out from January 10, 2019 until January 20, 2020;
– The decision on the tender winning company can be made by the Ministry of Infrastructure of Ukraine as early as the second half of January 2020 (depending on the number and quality of the bids submitted);
– The tender results are supposed to be published approximately in the beginning of February 2020.

Following that, the Ministry of Infrastructure proceeds to negotiations and signing the agreement with the tender winning company. The agreement is expected to be signed in early May 2020.

Useful links:
https://mtu.gov.ua/en/content/proekt-koncesii-u-portu-herson.html

Roadshow on the Pilot Concession Projects in the ports of Olvia and Kherson

On October 1, 2019, the Roadshow on the Pilot Concession Projects in the ports of Olvia and Kherson took place in Odessa. The event generated wide interest among the representatives of businesses. More than 46 companies – potential concession tender bidders – participated at the Roadshow to represent 11 countries (Ukraine, Turkey, Belgium, the Netherlands, Singapore, Great Britain, Denmark, the USA, Qatar, Georgia, and Germany).

The Minister of Infrastructure of Ukraine Vladyslav Kriklii and the Chairman of the Committee on Transport and Infrastructure of the Verkhovna Rada of Ukraine Yuri Kissel assured the potential investors that all the branches of government in Ukraine do support the implementation of concession projects in the ports. Moreover, the potential investors may count on that alongside the implementation of their projects in the port industry, the state will develop road and transport infrastructure. It will allow to improve logistics throughout the country and to introduce new facilities in the ports.

According to the Head of the Ukrainian Sea Ports Authority Raivis Veckagans, carrying out the pilot concession projects in the ports of Olvia and Kherson opens the new opportunities for the Ukrainian port industry towards attraction of private investments into the development of port infrastructure, which is being widely practiced in the EU countries. “My experience in the port industry of Europe as well as the detailed analysis of the concession projects which are now being implemented in the ports of the EU and worldwide, do demonstrate high potential as a mechanism of public-private partnership for the development of a port industry of a country. By means of concession agreements, such ports as Antwerp (Netherlands), Piraeus (Greece), Constanta (Romania), Burgas (Bulgaria), Barcelona (Spain), Samsun (Turkey) managed to engage top international companies and shipping lines as well as essentially increase their capacities and cargo turnover”, – Raivis Veckagans noted.

Anticipated Concession Projects

Concession of the railway-ferry complex “Chornomorsk Commercial Sea Port” SE

Current status: The project concept note has been approved by the corresponding Order of the Ministry of Infrastructure of Ukraine dated 02.01.2018.

More details at: http://investinports.com/en/invest-projects/chornomorsk/

Concession of the assets of the “Yuzhnyi” STP” SE and of the “USPA” SE in the Pivdennyi port

Current status: The preliminary feasibility study of the concession of the assets of the “Yuzhnyi” STP” SE has been prepared; the concept note of the concession of the assets of the “Yuzhnyi” STP” SE has been prepared and being currently considered by the central government bodies.

Concession of the “Berdyansk sea trade port” SE assets

Current status: The terms of reference on the project preliminary feasibility study have been submitted for endorsement by representatives of the EU Delegation to Ukraine.

Law of Ukraine “On Concession”