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Resumption of concessions, privatization tenders, lease agreements, and M&A–the investment “menu” in the port industry was quite diverse last year. In fact, this is a good sign that port assets are the subject of special attention from both domestic and international investors despite the high war-related risks and the partial blockade of civilian shipping (and thus the ability to generate revenues fully) in Ukraine’s Black Sea ports. While the latter's interest in 2023 was rather hypothetical, Ukrainian companies announced plans and signed concrete agreements. In particular, the Kernel agricultural holding, which is already the main market maker in the market for the maritime transshipment of agricultural cargo, has invested more than USD 44 million in the expansion of its sunflower oil export capacity in the ports of Reni and Chornomorsk.

Attempts to privatize state-owned stevedoring assets in the port of Bilhorod-Dnistrovskyi and the port of Ust-Danube were less successful but no less exciting. Despite their declared interest, private companies are in no hurry to invest real money. For example, in early 2023, it was announced that the privatization tender for the port of Ust-Danube (Kiliia) had been completed. However, it was later reported that the first port privatization in Ukraine was in danger of failing because the winner of the privatization auction could not take control and start operating the facility due to the unprofessional actions of the State Property Fund of Ukraine during the preparation of the facility for privatization. According to reports, the State Property Fund of Ukraine auctioned off a facility for which it did not have full ownership rights. This led to lawsuits and even criminal proceedings.

The privatization of another port, the Bilhorod-Dnistrovskyi Commercial Seaport, failed. There were no applications to participate in the first auction in March last year. The second auction was held, but the winner did not pay for the lot and lost its deposit of UAH 18.7 million and the right to take part in further auctions. There were no bidders at several subsequent auctions.


Having failed to achieve its goals in the privatization of port assets, the State Property Fund tried to compensate for this failure by leasing them. This was not without success, as the State Property Fund generated about UAH 250 million from the lease of port infrastructure in the Odesa region in 2023. This is more than one-third of the total revenues from the lease of state property in the country.

Return to Chornomorsk


The Chornomorsk port concession is the one that has attracted the most attention from investors, not only for financial gain but also for the development of the industry. The preparation of the terminals of this commercial seaport (including its container and ferry terminals) for concession tenders began even before Russia's full-scale invasion of Ukraine. The announcement of the concession tenders was planned for 2022, but it did not happen due to the war. The relevant ministry resumed the process in the spring of 2023. The first stage was the preparation of a feasibility study, followed by a tender. At that time, the ministry announced the preparation of tenders for the concession of the Chornomorsk seaport’s terminal No. 1, container terminal, and terminal No. 5.

Today, we see a clear and confirmed interest in this concession tender from international investors. In particular, A.P. Moller-Maersk is interested. According to Deputy Prime Minister and Minister of Development of Communities, Territories, and Infrastructure Oleksandr Kubrakov, at least five major companies have shown interest in PPP projects in the Chornomorsk seaport.

The concession tenders are expected to be announced this year. According to Taras Boichuk, the head of the Project Office for the Development of Public-Private Partnerships in Infrastructure, the feasibility study will be completed in early 2024, after which the internal approval procedures in the Ministry of Development of Communities, Territories, and Infrastructure and the Ministry of Economy will begin.

However, the issue is not only about the fact that these facilities are in a deep-water port and are of interest to international container lines, but also about the nature of public-private partnerships (PPP) themselves. Concession is indeed the most progressive form of investment in port projects and is widely used around the world. Unlike privatization, when a concession agreement expires, the facility is returned to the state and the local community along with the property created by the concessionaire under the agreement. Such agreements provide much more control over the fulfillment of investment obligations than privatization agreements. A concession has a more advanced legal framework than a lease. Again, it allows for better regulation of project obligations (including investment obligations) through a contract.

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Why a concession?

The concession model has repeatedly proven its effectiveness around the world. Port operators are developing many terminals in the European Union under concession terms. Concession agreements for Mexican ports in the 1990s helped the ports compete with southern U.S. ports and capture some of their cargo flows. The Turkish ports that followed this model became the leaders in the Black Sea region in terms of volumes handled and financial performance. Turkey granted concessions for the operation of the ports for 36–49 years. The most important concession tenders took place in the mid-2000s.

Another example is the Malta Freeport, for which a concession agreement was signed in 2004. Initially signed for 30 years, the concession was extended to 65 years in 2008 when the port's annual container throughput increased more than 1.5 times from 1.5 to 2.3 million TEUs. Today, Malta Freeport Terminals is one of the top ten ports in the world in terms of percentage growth, according to Lloyds List. Last year, Malta Freeport Terminals signed an agreement with the government of Malta to expand its facilities, which will enable the Freeport to accommodate larger liquefied natural gas (LNG)-powered mega container ships carrying 23,000 TEU. The investment in this project will take the total investment in the facility since privatization above EUR 400 million (Malta Freeport Terminals has already invested EUR 320 million).

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There is a global trend towards extending concession agreements with existing operators, according to Drewry, a global maritime consultancy. Drewry reviewed 27 concessions that were renewed, extended, or expired over the past three years and found that 21 of the 27 were awarded to the incumbent operator by renewing or extending the original concession, while six were allowed to expire.

Although the main "waves of concession" in the port industry occurred a long time ago, global operators are nevertheless monitoring the relevant legislative changes in developing countries and looking for new opportunities.

Even during the war, concessions can bring into Ukraine major investors with international experience, for whom this investment format is acceptable and understandable.

On the whole, concessionaires face the risk that their investment projects will not be implemented in a given region, even in the absence of military operations. We are talking about political risks, especially when the concessions are in "third world" countries. One example is the Doraleh container terminal, for which the government of Djibouti signed a concession agreement with DP World in 2006, then terminated the agreement and nationalized the container terminal in 2018. The Emirati company challenged the Djibouti government's decision in international courts. However, the government was stubborn, and a lot of time was lost. Potential concessionaires take such risks into account when making investment decisions. Political risks can be even higher than war-related risks.

The next steps

The involvement of international financial institutions such as the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD), which support the preparation of projects, contact potential investors, and facilitate political support from the authorities, should facilitate the successful holding of concession tenders, particularly for the Chornomorsk seaport’s terminals. The fact that these international financial institutions have not lost interest in port concessions speaks volumes, as they always weigh the risks associated with such projects.

Changes in Ukrainian legislation should also help attract major investors: the Ukrainian parliament is awaiting the second reading of the draft law No. 7508 on the reform of public-private partnerships. "It should solve the problems we had while preparing various PPP projects... The amendments are aimed at reducing risks for investors. For example, it provides for the possibility of mixing the sources of funds for compensating investors for their investments," Boichuk said.

Ultimately, any concession is aimed at the sustainable and long-term development of a terminal. For major international players, it is important to enter a promising market in time before someone else does. This is especially true in the container business. International lines determine logistics, the main directions of cargo flows, and the choice of a port (terminal) as a transshipment base and an "entry point" into a country and region. The participation of such companies in the project for the concession of the Chornomorsk container terminal provides a clear and strong competitive advantage over terminals in other countries in the region.

For its part, Ukraine is now politically interested in real projects with the participation of leading investors. This is proof of the country's investment attractiveness even during the war. There is no doubt that the first such projects will attract special attention from both the international political and business communities.