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Ukrainian port industry is growing rapidly and the upcoming vote for concession legislation should only confirm this trend.
2019 became the year of Marvel’s masterpiece saga grand finale that was on screen for a decade. Together with a whole world Ukraine has been monitoring the “Avengers: Endgame” box office. And meanwhile we’ll try to find out if the term ‘Endgame’ corresponds to the Ukrainian port industry situation. And whether contemplating it still leaves some space for optimism.
So, Ukrainians got unavoidably stressed out in electing new President. Then they went to the cinema and got stressed once more in the second round. This way passed both May holidays and the parliamentarian year’s home stretch. So how was it beneficial to the port industry?
At first sight
At first sight business activities had predictably died down. Many investors were pretty straightforward saying they waited for the election campaign to end and put their current projects in stand-by. However, it is just the surface.
On second glance
However, if to consider the real situation more profoundly one cannot but pay attention to the whole scope of announced investments in the existing capacities. The scheduled development was reported by Brooklyn Kiev Port, CMA Terminals, Risoil and Delta Wilmar. A large investor i.e. a Korean company Posco Daewoo lately retitled Posco International has bargained for 75% of the grain terminal being erected in Mykolaiv port. The transaction amount is not divulged which can’t make us doubt of billion amounts.
What was managed to keep
As is known the old Law of Ukraine on Concessions was adopted in 1999 when there were several left wing parliamentary floor groups in the Ukrainian Verkhovna Rada. One such group leader headed the Parliament, another passed into the second stage of presidential elections, therefore the state powers were over-enforced while the concession mechanism got complicated and bureaucratised. Moving in the flow of reforms the present deputy membership worked out and adopted on first reading the market-based draught law last spring hoping to pass it as soon as the coming autumn.
In the time passed the draught burdened with numerous amendments and comments calmed down leaving behind the two loud stories:
A) The feasibility study development concerning Kherson and Olvia public stevedores’ concession pilot project by means of international consultants consortium (IFC, Castalia, MTBS Ukraine, EY etc.).
B) Loud probing of the Ukrainian market by an international giant Hutchison Port Holdings aiming at probable Chornomorsk container terminal concession.
Further on the draught became a temporary (as we hope) victim of political games.
And meanwhile the business has many expectations towards the future vital legislation act. Thus Odessa port private stevedores having invested millions for two decades not only in their own business but also in the leased public infrastructure are concerned with the absence of guarantees for their terminals.
Foreseeing the unavoidable for the post-election period ‘reset’ of the G2B relations it is worth to supervise the future distribution of power as well as the negotiation parties shifting.
So where is the optimism?
However, with the new President’s crew arrival there is still hope for fundamental changes of relations with foreign investors at Ukrainian harbours at minimum. The basis for such optimism is more than serious:
- Effectiveness review on public–private partnership (PPP) projects of Olvia and Kherson concession is approved by Ministry of Economic Development and Trade;
- USPA presented new Ukrainian port investment projects at the exhibition in Shanghai;
- Qatar operator QTerminal has expressed interest toward Ukrainian ports as well as the desire to work in this direction, along with China Harbour Engineering Company (CHEC);
- CHEC in its turn on winning the tender carried out a massive reconstruction of the navigation channel and the operational water area of the first basin at Chornomorsk Port;
- Ukrainian agro giant Kernel has negotiated the credit line with the European Investment Bank (EIB) for its production capacity expansion.
And this news was only for last December.
Finally, USPA signed a memo on collaboration with Antwerp port and its APEC training centre, in particular the SWOT-analysis of the situation in the Ukrainian ports concerning assistance in the national port development strategy.
The activity of Embassy of the Kingdom of the Netherlands in Ukraine that paid for the training of USPA staff by Maritime & Transport Business Solutions (under the brand MTBS Ukraine jointly with Interlegal) concerning port finances and concession is not fading away either.
Tender Committee on the Olvia and Kherson concession pilot project has been working since this March intending to finish the bidding documents procedure by the end of May. And already in June they are going to announce officially a tender to identify the concessionaire.
All these scattered actions can be considered as a single massive movement of the port industry to the unconditional civilised development which has only to be confirmed with the following voting for the concession bill.
Indeed, as it was noted by sir Winston Churchill: “The pessimist sees difficulty in every opportunity. The optimist sees the opportunity in every difficulty”.
Author: Arthur Nitsevych