The TIS company’s terminal (Yuzhny port) is crowded. Everything around suggests that a large-scale construction project was performed here recently. A huge green loader, to which three shunting locomotive decorated with balloons are driven, clearly stands out against this backdrop. Their ceremonial horn heralds the beginning of the ceremonial launch of a new railway infrastructure.

New railway capacities are being launched into operation here for the third time in the past five years. The Odessa Railway’s head Hryhorii Boiko said that the throughput capacity of the Black Sea-Beregovaya railway segment had always been a problem and that cooperation between TIS (the largest private port operator in Ukraine) and the Odessa Railway began in 2011.

At that time, a private business invested in the construction of tracks in the 18-24 kilometer segment, which increased the capacity of the entire segment from 18 to 33 pairs of trains per day. The "12 Kilometer" branch was built in 2013 with money from TIS (which increased the capacity from 33 to 44 pairs of trains). The third and latest phase of the project increased this figure to 52 pairs of trains. Simultaneously, two receiving and departure tracks were built at the "24 Kilometer" station (the investor in this part of the project was the private operator Borivage). Investments by TIS amounted to UAH 60 million while investments by Borivage amounted UAH 13 million.

"In 2000, all businesses adjacent to the Malaya Adzhalyk estuary unloaded an average of 430 railcars per day. At the end of 2014 and first nine months of 2015, 1,450 railcars were unloaded. Implementation of the project will allow transportation of an additional 10 million tons of cargo per year in this direction," the head of the Odessa Railway said.

Ukraine’s Minister of Infrastructure Andrii Pyvovarskyi arrives on the Motrise, which is a special train used for transporting the leadership of Ukrzaliznytsia. A specially erected stage and red tape are already waiting for him. In his speech, he promises to do everything possible to make life easier for port workers and businesses in ports.

What next. The head of the TIS company, Oleg Kutateladze, talks about the company’s plans. "I hope we will build the Vostochnaya station and then the Yuzhnaya railway yard. We intend to invest USD 58 million in construction of the Vostochny Park alone, and we have already started investing. This will allow resolution of an issue that is important to the railway - the issue of formation of trains in the opposite direction. Then we will turn into a major transport hub in Ukraine," he said.

According to Hryhorii Boiko, several similar projects will be launched next year. The Odessa Railway’s financial plan for 2016 provides for attraction of investments totaling UAH 106 million. "This is for construction of a second track in the 5-12 kilometer segment. Construction of roadbed is already underway there, agreement has already been reached with the Promtekhinnovatsiya company, and a package of documents is being prepared. Considering the assistance that TIS and Borivage are providing to us, we will start the work after approval of our financial plan," he said.

In addition, the Green Terminal company will invest in development of the Chernomorskaya station: construction of a receiving and departure yard and one receiving and departure track is planned. "We see prospects for development of the Yuzhny port, and we plan to reach an export volume of 22 million tons and an import volume of 10 million tons. Therefore, construction of another receiving and departure yard at the Beregovaya station and four receiving and departure tracks is planned. There are also plans to develop the station yard of the Beregovaya station with the participation of the Prichaly Kominterna company, develop the ‘30 Kilometer’ checkpoint, and construct a second track from "30 Kilometer" to Beregovaya with the participation of the Black Sea Gate Terminal company.

Construction of a second track from ‘30 Kilometer’ to the TIS terminal is also envisaged. Our development plans fit completely into the strategy for development of the Yuzhny port, the transshipment volumes of which should increase to 85 million tons," Boiko said.

There are also plans to develop the station yard at the Beregovaya station with the participation of the Prichaly Kominterna company, develop the "30 Kilometer" checkpoint, and construct a second track from "30 Kilometer" to Beregovaya

No recovery of investment. The issue of recovery of investment and the source of financial resources was the stumbling block to implementation of similar projects in the past. The problem here is not so much about money: according to Pyvovarskyi, about UAH 3 billion had accumulated in the accounts of Ukrzaliznytsia as of the end of October. The traditional delays in approving the financial plan – the financial plan for 2015 was adopted only in October – do not allow investment of these funds in renewal of infrastructure. Private operators had no choice but to finance the project with their own funds.

The legal framework in Ukraine is such that a business investing in rail infrastructure not only does not gain ownership of the object of its investment, but it also has no opportunity to manage it because the infrastructure is immediately transferred onto the books of Ukrzaliznytsia. However, in exchange, it is possible to obtain discounts on tariffs from Ukrzaliznytsia, which will allow investment to be recouped, although this will take a long time. However, there were other arrangements for this project.

In comments to the CFTS portal, Kutateladze said that the project did not provide for recovery of investment. "We are investing our funds in order to increase the throughput capacity in our direction. Therefore, we initially had such an agreement with the ministry and Ukrzaliznytsia: we are investing funds in exchange for elimination of the existing shortage of trains. This is specifically what is important to us today," the head of TIS said.

In turn, the minister of infrastructure acknowledged that what investors formally gain is only an increase in the railway’s throughput capacity in their direction. However, in reality, the investments benefit the entire port. “Ukrzaliznytsia will be able to transport more cargo and the Administration of Seaports will collect more fees from ship calls and accumulate more money for dredging operations and other forms of development of the port, which will make the port and all companies involved more competitive," Pyvovarskyi said.

According to Pyvovarskyi, this is the only possible mechanism in this situation. "It is necessary to take the economic situation in the country and at Ukrzaliznytsia into account... Theoretically, Ukrzaliznytsia should perform this work itself, but it currently has no money, However, it has very high-quality workers and the technology and technical potential exist. Therefore, there is agreement with a group of private investors that is already operating at the Yuzhny port and not just TIS. The agreement is that Ukrzaliznytsia will prepare a project for expansion of the ‘bottleneck’ while private investors will finance all the work and transfer it onto the books of Ukrzaliznytsia free of charge. The only thing they receive in exchange is that more pairs of trains can now reach them at the terminal. That is all. Nothing more," Pyvovarskyi said.