Tenders on the pilot projects for stevedoring company concessions in the ports of Olvia and Kherson announced

On Thursday, September 12th, 2019tenders on the pilot projects for stevedoring company concessions in the ports of Olvia and Kherson were officially announced. The potential investors are supposed to submit the applications to take part in the concession tenders within 60 days following the second publication in the “Golos Ukrainy” newspaper. The winners of the concession tenders may be announced before the start of 2020. “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. The expected volumes of investments in the development of stevedoring companies of Olvia and Kherson are more than $ 65 million. USPA will become one of the parties to the concession agreements to coordinate the implementation of projects within the framework of the systemic development of the port infrastructure,” — Mr. Raivis Veckagans, Head of USPA, said. The assets of the state stevedoring company in the port of Olvia are to be transferred into concession for a period of 35 years, and in the port of Kherson — for 30 years. At the same time, they will 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. 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. “We are grateful to our international partners and the expert team who in collaboration with the USPA representatives participated in preparing the concession projects, as well as to the President, the Cabinet of Ministers and the Ministry of Infrastructure for the support and for the decision which is important to the port industry,” — Raivis Veckagans said. Please find the details for the conditions of the concession tenders here: Olvia, Kherson

USPA and Kherson Regional State Administration invite investors to discuss the Skadovsk port development

On September 11th, 2019 in the city of Skadovsk representatives of the Kherson region authorities and of State Enterprise “Ukrainian Sea Ports Authority”plan to meetprivate businesses to discuss the opportunities for the Skadovsk port development. The open-dialogue format meeting is intended to address the prospects for the engagement of potential investors in implementing infrastructure projects in the sea port of Skadovsk. The potential investors will be provided with up-to-date information on the current performance of the port, strategic plans for its further development, prospects for involving the public-private partnership mechanism (lease, concession, joint venture) for the implementation of investment projects. The meeting will also consider the issues which may affect activities of the private businesses, in particular, land titles formalizing, state property leasing, etc. Mr. Yuriy Gusev, Head of the Kherson Regional State Administration, Mr. Raivis Veckagans, Head ofSE “USPA”, Mr. Olexandr Kugut, Head of the SkadovskBranch of SE “USPA”, and Mr. Olexandr Lytvyenko, Director of SE “Skadovsk Sea Trade Port”will participate at the meeting. USPA invites potential investors to discuss the prospects for fruitful cooperation over investing in the maritime industry of Ukraine, in particular, in the development of the Skadovsk seaport. For more information on investments and / or participation at the meeting, please contact Mr. Olexandr Kugut, Head of the Skadovsk Branch of SE “USPA”by phones (055 37) 54 588 or (055 37) 53 120.

UPF-2019: Competitiveness of Ukraine's MMC complexes depends on increasing depths and modernization of specialized terminals in ports

Cargoes of the mining and metallurgical complex remain one of the main nomenclatures in the sea ports of Ukraine. Now they are confidently second only to agrarian ones. Last year more than 52 million tons of MMC products were handled. In the framework of the Ukrainian Ports Forum-2019, international experts have emphasized that Ukrainian cargo owners and ports should be prepared to increase the number of ship calls of large vessels of Newcastlemax type. This will increase the vessel’s batch, reduce the cost of logistics and make Ukrainian exports less vulnerable to fluctuations in world prices. Among the main problems in the field of handling of industrial cargoes in Ukraine, representatives of leading companies from the USA, Germany, Italy, UAE, Bulgaria, Ukraine, Croatia and other countries noted the need for deep-sea ports, the development of specialized terminals equipped with modern equipment for the processing of mining and metallurgical cargoes, as well as ensuring the stable operation of Ukrainian ports in the Azov Sea. President of the global logistics company Clarksons Platou (Italy) Massimo Dentice at the Forum in Odessa noted the worldwide trend of increasing the fleet of Newcastlemax class vessels, which is over 41% of the total number of new vessels that are now ordered by ship-owners in the world. «The transition to modern large vessels will significantly improve the economic situation for both ship-owners and port operators. Therefore, it is now necessary to bring the depths of Ukrainian ports to the level appropriate for such vessels in order to remain competitive in world markets» – the expert noted. In Ukraine, there is only one port, which is close to have the required depths. This port is Pivdennyi. Ukrainian Sea Ports Authority is completing the next stage of dredging. «The USPA has already practically ensured bringing the depths of the approach channel, maneuver zones and operational aquatoria of the individual berths of the Pivdennyi port up to 20 m. In this project more than half a billion UAH were invested, and the volume of dredging works was 2.7 million m3» the head of the USPA, Raivis Veckagans commented on the implementation of a large-scale project in the port. Another issue, which was discussed at the Forum in Odessa, is the need to provide freedom of navigation in the Azov Sea. Due to problems encountered at the end of last year with the passage of vessels through the Kerch-Yenikalsky Canal, cargo owners were forced to reorient some of the cargoes to the Ukrainian ports in the Black Sea. But the technical equipment of the terminals did not always allow to process the corresponding volumes in the necessary time. Now the situation in the Kerch Strait has somewhat stabilized, besides, the USPA managed to attract a contractor to restore passport depths in the ports of Mariupol and Berdyansk and on the approach channels to them. The volume of investments of USPA in these projects is almost 725 million UAH. In addition, it was recently announced that JSC Ukrzaliznytsya intends to provide a 20% discount on the delivery of goods to Ukrainian ports in the Azov Sea. All this allows us to hope for an increase of competitiveness of cargo handling through the ports of Mariupol and Berdyansk. However, the state and businesses should intensify their interaction in order to develop specialized terminal facilities in Ukrainian ports. The optimal format for this is public-private partnership projects, in particular concessions, which, for example, allowed Bulgaria, over 4 years to attract more than 127 million euros for the development of the port of Burgas and increase the volume of in it by almost 5 times. Currently, pilot concession projects of state stevedores in Olvia and Kherson ports are being implemented in Ukraine, prepared by the Ministry of Infrastructure, a team of international consultants and specialists from USPA. Tender contests are to be announced in June-July 2019. For more details, see the link below. As previously reported, the next possible concessions in the Ukrainian port sector are projects for the development of specialized terminals in the ports of Pivdennyi and Chornomorsk.

USPA and Kernel invest more than UAH 3 billion in the Chornomorsk port development

On September 5th, 2019 State Enterprise “Ukrainian Sea Ports Authority” and the Kernel Company signed an agreement on cooperation providing for investments in the development of the infrastructure in the port of Chornomorsk amounting to over UAH 3 billion. By the end of 2020, dredging near the four berths is expected to be carried out in the port and a new grain terminal to be built to increase transshipment volumes up to 6 million tons.  “The agreement between USPA and Kernel is a great example of public-private partnership representing one more step in the systemic development of the Chornomorsk port which is managed by USPA. This year we have completed a large-scale capital dredging project at the approach channel of the port and the area of ​​ 1st basinof Sukhyi Lyman and immediately proceed to ensure the necessary-to-business depths near berths No. 14–17. The Kernel Company, for its part, committed to guarantee the cargo flow volumes of at least 6 million tons per year. This will contribute to the quick payback of the USPA’s capital investments,” — USPA Head Mr. Raivis Veckagans said. He also added that the implementation of the project would help improve the conditions for exporting Ukrainian products, increase cargo transportation and create almost 250 new jobs in the port of Chornomorsk. Mr. Yevgen Osypov, CEO of the Kernel Company, noted that agribusiness has been the engine of the Ukrainian economy. Since 2011 the agro-industrial complex has shown a steady increase in the volumes of agricultural deliveries to the world markets, which reached the 40% share in the structure of Ukrainian exports in 2018. Revenues from export operations generate foreign exchange earnings coming to Ukraine’s budget, contribute to GDP growth and ensure the country’s well-being. “Our strategic goal for 2020 is to increase export of grains to 8.8 million tons by launching a new terminal at the port of Chornomorsk. That is why we are focused now on the Transgrainterminal construction. The next step is to concentrate on its effective loading. However, implementation of such large-scale investment projects is not possible without the state endorsement. Today, we feel the support from USPA, which helps achieve strategic goals to both the state and businesses by means of specific technical solutions, ” — Yevgen Osypov, CEO of the Kernel Company, commented on the signing of the agreement. According to the document, by the end of 2020 USPA commits to reconstruct the operating water area of the 1st basin of the port’s Sukhyi Lyman (the 5th construction phase) to 15 metres and ensure dredging along the berthsNo. 14–17, where terminals of Kernel Holding S. A. have been operating. The depths of the operating area near the docks will be increased to 14–15 metres. Kernel, in turn, undertakes to build a new grain terminal (Transgrainterminal LLC) at the port of Chornomorsk in 2019–2020. This will helpto ensure that the annual volumes of transshipment of agricultural products is at least 6 million tons of cargo, starting from 2021 to be increased up to 7 million tons in the future. Investments to the public-private partnership project by USPA will amount to almost UAH 230 million with the cost of construction of the terminal by Kernel amounting to almost UAH 3 billion. Information: Kernel is the world’s largest producer and exporter of sunflower oil, a key supplier of agricultural products from the Black Sea region to the world markets. The company accounts for about 8% of the world's sunflower oil production. Kernel exports its products to more than 80 countries. In the marketing year of 2018–2019, the company first exported 6.1 million tons of grain, which is an absolute record among Ukrainian agricultural companies.

UPF 2019: The winners of the pilot tenders for the concession of state stevedores in the ports of Olvia and Kherson will register individual companies in Ukraine for the implementation of projects

In the framework of the Ukrainian Ports Forum 2019, a round table on public-private partnership projects in Ukrainian seaports was held on May 31, 2019. Consultants from the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD) informed investors about the latest changes that have been made to concession projects during preparation for the tenders, as a result of consultations with business and government representatives. As the Minister of Infrastructure of Ukraine Volodymyr Omelyan noted, the main task of the pilot projects is to attract the best international practices and technologies to the Ukrainian ports. Therefore, a team of the Ministry and international experts is making every effort to ensure that pilot projects for the concession of state stevedores in the ports of Olvia and Kherson to be implemented soon. It is planned that concession competitions will be announced in June-July 2019. The tender documentation has already been developed and sent for approval to the Cabinet of Ministers of Ukraine. The current legislation gives a little more than three months to conduct the tender and determine the winner. Contracts will be signed with the winners, the parties to which will be: the Ministry of Infrastructure of Ukraine, the Ukrainian Sea Ports Authority, the company winner of the tender, as well as the company, which will be established and registered in Ukraine by the winner of the tender for the project. Oleg Kudashov, IFC Senior Investment Advisor, recommended that investors who are planning to take part in the tender begin preparing applications now. “Many investors noted that 60 days for submitting applications is too short period, but since the new law on the concession has not yet been adopted, we have such a framework. Therefore, preparation should start now, the representative of the IFC said. Also, the developers of the pilot projects informed investors that while preparing for the tender, the recommendations of business representatives and the USPA should be taken into account. “A concession project should be beneficial for all participants and a team of international consultants ensures ongoing dialogue with all parties. The Ukrainian Sea Ports Authority will transfer berths and other infrastructure to the concessionaire. For us, it is important that the future investor fulfills obligations for current and capital repairs throughout the entire project implementation period, as well as plans to increase cargo traffic through these ports.” said Raivis Veckagans, head of Ukraine Sea Ports Authority. In accordance with the views of potential participants in the framework of the IFC so-called market sounding to increase the number of potential bidders, the need for experience in cargo handling in the port industry has been expanded to include the entire range of cargoes into acceptable experience. Also, as part of the implementation of the concession project, a transition period of up to two years is expected during which the concessionaire will be able to prepare and approve an investment project directly, obtain licenses and other necessary permits, and take an inventory of the property transferred to the concession. The main conditions of the pilot concession projects remained unchanged: mandatory investments in the development of both ports in the amount of about $ 60 million for the project in Olvia and $ 8 million for the project in Kherson, allocation of funds in the amount of not less than 5% of the volume of capital investments (CapEx) for the development of transport infrastructure of cities where ports are located and, of course, compliance with social obligations to employees of enterprises that are transferred to the concession. In addition to that, a significant increase in cargo traffic and increases in payments to local budgets are expected.



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