Ukraine is oriented both towards the European Union and Russia, sometimes playing them off and trying to take advantage of its position on the crossroads. On the one hand, Ukraine has land borders with the EU Member States of Poland, Hungary, Slovakia and Romania. And, on the other, it has border crossings with developing Eastern European economies, namely Russia, Belarus and Moldova. Finally, Ukraine is a shipping country as well and some 20 years ago Blasco was the largest shipping company in the world!


The country has two rivers open for navigation – Dnepr and the Danube which enters the Black Sea in Ukraine. There are short sea links with Turkey, Russia, Georgia, Bulgaria, Romania and Greece along with direct rail links to Central Europe, the Baltic States, the Russian Far East and Central Asia. Although having all this, Ukraine has failed to launch real reforms across its transportation sector (no investment and no concession) after obtaining independence in 1991. But, fortunately, we still have a good potential for development. And certain changes and amendments were recently introduced.


The manual says: investors engaged in port and terminal activities are generally found among professional operators, cargo owners and shipping lines. At the moment, throughout 18 Ukrainian seaports and 11 river ports, it is hardly possible to find a global port operator. As for cargo owners, the picture is much better. Ukraine is a leading exporter of commodities; therefore, international traders and local financial-industrial groups have already constructed a number of dedicated terminals in Ukrainian ports. 


What is the reason for such a poor ratio of terminal investments? The answer is pure and simple – it is the post-socialist regime’s way of attracting investors. Too many public authorities are involved in a transaction, which is coupled with unclear bidding requirements. Authorities can continuously demand additional documentation, causing significant delays and transaction costs. Sometimes, even after final negotiations, authorities can still alter the contents of an agreement, change contractual arrangements, adding another brick to the wall of uncertainty and stretching the way of delay. In other words, such an unworkable transaction process makes the institutional framework weak.


The reform’s main tools are privatization and concession of ports and terminals. Land in ports may be held in any form of ownership permitted by the laws of Ukraine. So, it may be either state-owned or privately-owned which can be treated as a revolutionary move. This creates opportunities for financing the construction of new cargo terminals and ensuring a return on investments.


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