December 11, First Deputy Prime Minister/ Minister of Economic Development and Trade Stepan Kubiv together with Minister of Infrastructure Volodymyr Omelyan, Deputy Head of the EBRD in Ukraine Marina Petrov and Head of the International Finance Corporation Corporation in Ukraine Olena Voloshyna presented first two pilot projects for the concessioning of seaports. These projects were developed with the participation of the Ministry of Economic Development and Finance together with the Ministry of Infrastructure, the EBRD and IFC.
"The projects we are presenting today are planned for 30-35 years and, according to our calculations, will bring about UAH 85 billion as budget revenues. These are the largest projects that were created during the years of independence. In addition to modernizing, in fact, of infrastructure, these projects will greatly contribute to the development of the social sphere of the regions, the development of adjacent businesses, the creation of new jobs, and an increase in revenues to the budgets of all levels", said Stepan Kubiv.
Projects will be carried out in two seaports:
• The draft concession in the Olvia specialized seaport involves the leveraging of investments in the amount of UAH 17.3 billion with the implementation timeline of 35 years. The expected budget efficiency for the period of the project implementation is UAH 68.7 billion;
• The concession project at the Kherson seaport includes an investment worth UAH 1.4 billion. It is expected that over 30 years of implementing this project will provide about UAH 16.2 billion as budget revenues.
It is also expected that due to the concession in 2030, the volume of transshipment of cargoes in the aforementioned ports will increase by at least 130%.
Stepan Kubiv expressed confidence in the success of the implementation of the first concession project. "We already have several investors who are ready to compete for the opportunity to work with the Ukrainian side at the concessions. Among them, such companies as Louis Dreyfus Company, Nectar Group, QTerminals, Bunge, COFCO, POSCO, OREXIM, Nibulon, Ukrrichflot, and others. Starting with these two projects, we are able to successfully extend this practice not only to infrastructure objects, but also to education, medicine, and other fields", added the First Vice Prime Minister.
Minister of Infrastructure Volodymyr Omelyan said in his speech: "Today, we propose the implementation of concession projects for strategic infrastructure such as seaports that cannot be privatized, but they require investing significant funding in their development. We also see in the concession the opportunity to overcome the considerable corruption risks that arise in the process of the implementation of the current lease of manufacturing facilities in ports. The concession is a chance for Ukraine to get the necessary investments for the fast and sustainable growth of the world's leading companies. "
As is known, the new bill on concessions (No. 8125), initiated by the Ministry of Economic Development and Trade of Ukraine, is currently approved in the first reading.
"Together with our EBRD and IFC partners, we have done a great job in order to create a single efficient law harmonized with the EU norms from the current, overcomplicated and opaque concession legislation. It has already been approved by the Verkhovna Rada in the first reading. However, any law is just a rule. Investors are interested in projects. Given this circumstance, we did not wait for the Council to finally pass the law but started preparatory work on real projects and the search for investors for them. Qualitative preparation of such projects objectively takes months or even years, and we have already prepared at least two and a few more see the process of preparation", said Stepan Kubiv.
The bill, in particular, proposes a clear distinction between the regulation of concessions and other forms of public-private partnership implementation; the settlement of the issue of ownership on concession objects, in which it is provided that the transfer to the concessionaire of an existing concession object does not terminate the rights of state or communal ownership of these objects, as well as any property created or built in the framework of a concession agreement is a state or communal property; the only transparent procedure for initiating and deciding on the feasibility of a project under concession conditions and the determination of the powers of each body; the introduction of a transparent procedure for the selection of a concessionaire, only through a concession bidding, settlement of the issue of the involvement of advisers; the peculiarities of the concession in the markets being in a state of natural monopoly, as well as on the construction and operation of highways; settlement of land allocation issues for the implementation of projects under concession conditions; additional guarantees for concessionaires and creditors, in particular, stipulated by the concession agreement of the concessionaire's right to another concessionaire; the possibility of considering disputes in investment and international arbitration courts; establishment of a clear list of essential conditions of the concession agreement.