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

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).

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).

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 project preliminary feasibility study is being prepared.

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

Current status: Under development.

Law of Ukraine “On Concession”