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 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

Port of Samsun, Turkey

In 2008, Ceynak Group, a Turkish logistics company, won tender offering USD 125.2 mln upfront payment for 36-year deal to assume the operation rights of a Samsun port (Turkey), a multipurpose port, which belonged to Turkish State Railways.

Investment obligation was to construct a green-field container terminal.

Port of Burgas, Bulgaria

Private BMF Port Burgas in 2013 entered into a concession agreement with the Ministry of Transport of the country to operate all 3 terminals of Port of Burgas, including bulk and general cargo.

According to the agreement, which was concluded for 35 years, the company invested EUR 127 mln in equipment, facilities and modernization.

Port of Barcelona, Spain

In 2006, the Port Authority of Barcelona awarded the concession contract to the bid submitted jointly by Hutchison Port Holdings and Grupo Mestre for the development of container terminal BEST (Barcelona Europe South Terminal).

The volume of investments in container terminal BEST since the signing of the concession agreement amounted to EUR 500 mln.

Port of Constanta, Romania

DP World in 2003 obtained the right to construct Constanta South Container Terminal, a long-term concession, which became one of the largest on the Black Sea and serves as a link for feeder traffic between Ukraine, Russia, Georgia and Moldova.

In 2019 DP World Constanta signed 30-year extension contract with expected investments around of USD 100 mln.

Concession in the Port of Olvia

QTerminals, the leading port operator of the State of Qatar, became a winner of the concession tender in the sea port of Olvia. This will allow:

• attract UAH 3.4 bln of foreign direct investment in the development of the sea port of Olvia;

• receive at least UAH 82.0 mln of annual concession payments;

• attract UAH 80.0 mln for the development of the infrastructure of the city of Mykolaiv.

Concession in the Port of Kherson

Company “Risoil-Kherson” – a consortium of LLC “Petr Oil and Chemicals” – 60% (part of the Georgian Industrial Group, GIG) and the Ukrainian port operator JSC RISOIL S.A. (Switzerland) – 40%), became a winner of the concession tender in the sea port of Kherson. This will allow:

• attract about UAH 300.0 mln of direct investment in the development of the sea port of Kherson;

• receive at least UAH 12.0 mln of annual concession payments;

• attract UAH 18.0 mln for the development of the infrastructure of the city of Kherson.

Anticipated concession projects

To elaborate the potential concession projects, working groups will be set up with the participation of representatives of the relevant state stevedoring companies, USPA, the SPILNO project office under the Ministry of Infrastructure and the support team for reform (RST) at the Ministry of Infrastructure.

Concession of the railway-ferry complex of the “Chornomorsk” STP” SE and of the property of the “USPA” SE in the sea port of Chornomorsk

chornomorsk-project-1-slide

Current status: The concept note has been approved by the order of the Ministry of Infrastructure No. 3 dated 02.01.18

Project coordinator: SPILNO project office under the Ministry of Infrastructure

Concession of the passenger complex of the Odesa sea port including the Odesa hotel complex

Hotel_Odessa

Current status: Analysis of the opportunities for financing the elaboration of the preliminary feasibility study by a private investor is ongoing

Project coordinator: The support team for reform (RST) at the Ministry of Infrastructure

Concession of the “Berdiansk sea trade port” SE property and of the “USPA” SE property in the sea port of Berdiansk

con-project-3

Current status: The preliminary feasibility study of the projects is being elaborated by the consultant (EGIS)

Project coordinator: The support team for reform (RST) at the Ministry of Infrastructure

Concession of the 1st and the container terminals of the “Chornomorsk” STP” SE and of the property of the “USPA” SE (berths No. 1-6) in the sea port of Chornomorsk

chornomorsk-project-2-slide

Project coordinator: SPILNO project office under the Ministry of Infrastructure

Concession of handling capacities in the adjacent territory to the “Ukraine” Shipyard of the “Odesa” STP” SE and the property of the “USPA” SE (expansion of the container terminal) in the sea port of Odesa

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Current status:  Upon the initiative of a private investor, preparations of the preliminary feasibility study and the concept note with the  justification of expediency of carrying out the project on concession basis have been launched

Project coordinator: The support team for reform (RST) at the Ministry of Infrastructure

Law of Ukraine “On Concession”

https://zakon.rada.gov.ua/laws/show/155-20?lang=en