Port industry reawakens with Law on Sea Ports

• Shipping
• Ports and Terminals

On June 14 2013 the Law on Sea Ports came into force, providing new opportunities for the Ukrainian port industry and firing the starting gun for port reform. The main implementation measures of the law have been assigned to the Ukrainian Sea Port Authority (USPA), which began operations on June 13 2013. This state enterprise, with registered capital of about $5 million and more than 10,000 employees, consists of a headquarters in Kiev, 18 branches at Ukrainian sea ports and one special pilotage and dredging branch.

The main task of USPA is to ensure that all stakeholders (of state, private and other forms of property) have equal access to strategic port infrastructure. USPA branches will act directly as the maintenance and operation divisions for port infrastructure. They will also be responsible for the implementation of port development and financial plans and the observance of safety standards, among other duties.

However, despite the commencement of port reform, the strategy plan for the development of ports has not yet been approved. The strategy plan was slated for adoption in February 2013, but is still under discussion. This plan should contain the essence of the reform, while the law itself is assumed to be the tool for realising the strategy. It has now emerged that the reform must be based on the strategy adopted in 2008. The draft strategy plan covers the next 25 years and is intended to attract more than $3.25 billion of private investment in order to create more than 15,000 additional jobs and ensure an annual state revenue from the port sector of $700 million.

The plan envisages the development of the industry on the basis of 18 state-owned ports – not including sea fishing ports, which also engage in transshipment of cargo such as steel, grains and coal, thus creating some competition. The cargo turnover of private terminals and river ports is also not taken into account, even though private terminals may overtake the traditional industry leaders over the next decade.

The first stage of reform entails the reorganisation of port structures and reassignment of authorities; therefore, certain increased risks may arise during this period which require detailed assessment and competent legal advice.

Andrey Perepelitsa for internationallawoffice.com