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Public Stevedoring Companies Olvia and Kherson Concession Pilot Project: how it came, how it did and what is now

27 июня : en 510 июля : en 214 августа : en 1 всего: 1327.01.19

Task

The very idea of the project came during the office of Minister of Infrastructure of Ukraine Andrii Pyvovarskyi back in 2016 and surfaced rather solid in early 2018 under the new Minister’s, namely Volodymyr Omelian, leadership with support on the part of Ministry of Economic Development and Trade (MEDT) and the Cabinet of Ministers. They managed to arouse the interest of World Bank which brought into action its structure International Financial Corporation (IFC) to fund a thorough Feasibility Study (FS) for would-be investors to have a more or less clear picture on hand. 

IFC in its turn chose the global Australian-based infrastructure development advisers Castalia as a general contractor to form an international consortium to elaborate the required FS, in particular:
• Maritime & Transport Business Solutions (MTBS) and Interlegal;
• Tebodin Consultants and Engineers;
• Gide Loyrette Nouel (Gide);
• Ernst & Young branch (EY Ukraine).
 

Solution search

The consortium members started to pursue their tasks accordingly in March. In the process, MTBS united its efforts with Interlegal to work under the sub brand MTBS Ukraine.  The Interlegal’s representative went to the field to assist employees of MTBS inspecting Kherson and Olvia (ex Oktiabrsk) sea ports where the project’s assets operate. 
 
Both assets had been deliberately selected due to the two reasons: the performance of Kherson Sea Trade Port (KSTP) and Stevedoring Company Olvia Port would likely continue to deteriorate in the absence of the concessions, yet there were still prospects of improvement to lure would-be investors.
 
In situ inspections identified the greenfield and brownfield areas and evaluated the state of assets in order to adequately estimate the future Capex and relevant investment amounts.
 
Further desktop activities focused on comprehensive market inquiries by MTBS with Interlegal providing all the necessary information along with USPA official data. This knowledge allowed to define core cargo flows for each venture and to propose various financial patterns. ‘Landlord Port’ and Concession patterns were compared in detail with both the existing mode and each other, forecasted cash flows shown for different periods of operation.
Particular attention deserved of course the grain market. To obtain a full-scale picture, specialists of Interlegal provided a lot of information on main ports of Ukraine handling grain cargoes, comparative features of the terminals both public and private, port dues calculations and cargo processing rates as well as inland delivery rates – both road and rail. 
 
Other food-related cargoes making remarkable share in the export numbers of Ukrainian ports were not overlooked too. The new regulations aimed at pushing oil seeds producers to extract oil instead of selling raw seeds abroad have been taken in consideration along with the growing rates of exporting edible oils, extraction by-products like meal and cake, bran, flour etc. Thus, Kherson was identified as a prospective by-products export hub while Olvia’s probable fate is seen in various realms of cargo.
 
By July 2018 the consolidated product was presented by Castalia to IFC, and upon its approval by General Contractor it was translated by early August into Ukrainian by specialists of Interlegal for the examination by the authorities from USPA to Cabinet of Ministers. By the end of the year Feasibility Study was finally approved by MEDT.
 
Prior to FS final approval in September MIU sponsored the project presentation conference meeting prospective concession bidders in Kyiv. The would-be investors number amounted to 25, two of them even visited both sites after the conference (QTerminals from Qatar and Nectar Group from the UK). 
 

Result

In February 2019 Tender Committees were established and in March both commenced functioning.
In late May 2019 in the course of International Port Forum in Odessa held by USPA the projects with their FS and corresponding tender procedures were presented to public at large.

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