Ukrainian state-owned ports in hand of private investors: for good or bad?

25.10.2016

The issue of state-owned ports assignment to private investors has been discussed in Ukraine for several years, but it was not clear which pattern of interrelation with private investors the state will choose – privatization or concession, or perhaps something else. However, it was clear that something had to be done.

According to UkrAgroConsult, many market participants tend to conclude that concession is the most advantageous pattern of state-owned assets transfer to investors. After all, concession is reasonable for both the state, as this pattern allows recalling assets in case of dishonest fulfillment of obligations, and for investors, who will decide themselves on development or financing of particular objects. As a reminder, earlier private capital was represented in the management of state-owned port assets only in the form of lease arrangements.

And after numerous disputes and discussions the Ministry of Infrastructure of Ukraine in cooperation with international financial organizations has started preparation of a project for transfer of two Ukrainian sea ports to concession.

A specialized sea port "Oktyabrsk" in Mykolaiv region (since October 17 the official name of the port is "Olvia"), and Kherson Commercial Sea Port will be the first pilot project for transfer of state-owned port enterprises to concession.

Further development of river transportation capacity and creation of a transshipment center, modernization and technical re-equipment of production capacities of the port, possible increase in turnover, positive effect on the budget, as well as strengthening of a competitive power are the key benefits of Kherson Commercial Sea Port.

As for the second project, currently “Oktyabrsk” Sea Port remains misappreciated by investors and needs to be promoted.

UkrAgroConsult believes that at the first stage large export-oriented agricultural market operators or foreign companies, which already have an experience of making business in Ukraine, may take a great interest in these ports.

Nevertheless, most likely it will take much time before investors run the risk and join this project. Especially considering that it’s only a pilot project, which requires huge efforts, beginning from feasibility study development to creation of an appropriate legislative framework.

 

UkrAgroConsult

Readers choice: TOP-5 articles of the month by UkrAgroConsult