The attention of private capital to the Ukrainian port industry is a hot topic today, given the economic and, especially, political situation in the country. That notwithstanding, experts remain optimistic. "We must give credit to investors: their interest in ports is not falling, at least for now. We are hoping that the situation in the country will be corrected faster than they change their minds," the first deputy head of the Administration of Seaports of Ukraine (ASU), Yurii Vaskov, stressed during an interview with the Center for Transport Strategies.
Interest of businesses in major ports at a time of reform of the industry is not a secret. It is also clear that investors will pay attention to smaller ports only after considering the tastiest ports with large handling capacities and stable cargo traffic.
Development plans The plan for development of the Belgorod-Dnestrovsky port, which the ASU approved in late January this year, provides for construction of transshipment facilities, reconstruction of berths and hydraulic engineering installations, and construction of railway and road infrastructure in the short-, medium-, and long-term future (by 2038). In the immediate short term (by 2018), only construction of the berth No. 1 at the port’s Bugaz port station and introduction of a Port Community Information System are planned. No investors have been specified for any of these stages of the plan. The relevant work still has to be done.
Investors "Today, there is interest in this port from several companies. We are talking about the opportunity to operate it as an integrated complex - the main territory of the port and the Bugaz port station. We are currently determining the format of our relationship - whether it will be a lease or a concession. We want to make the preliminary calculations and determine what will be more interesting to the state,” Viacheslav Voronyi, the head of the strategic development service at the Antimonopoly Committee of Ukraine, told the CFTS portal without naming the interested parties.
However, businesses are unlikely to come to the port with its current water depth. “The Belgorod-Dnestrovsky port has not been dredged in a long time. The water depth there is already less than three meters. Only the operations of the ASU, which accumulates all port charges specifically for targeted use, allows for the possibility of dredging at this port. The first stage - dredging to 3.5 meters - will be implemented this year, approximately in the third or fourth quarter," said Voronyi. According to him, decisions regarding the next stages will be made in the future if there is a tendency toward an increase in the number of ship calls following the increase of its water depth.
"We will look at its financial viability and the confirmed plans. By the way, the next stages of dredging, apart from the one planned this year, depend on the identity of the investor and the investor’s development plans. Handling of timber requires certain water depths, but the approach will be completely different if, for example, an investor wants to build a grain terminal," said the head of the Antimonopoly Committee’s strategic development service.
Constraining factors The Belgorod-Dnestrovsky port station of the Ilyichevsk port, which later became the Bugaz seaport before being finally transformed into the Belgorod-Dnestrovsky port seaport, was built in the Dniester estuary (Odessa region) in the 1960s to meet the specific needs of the Soviet economy. Today, as in the past two decades, the port has been left with a whole set of negative factors affecting the potential for its development: the closed nature of the Dniester estuary, the port’s small water depth, and its narrow transshipment specialization.
"Handling of timber requires certain water depths, but the approach will be completely different if, for example, an investor wants to build a grain terminal"
"A railway bridge and a sufficiently long channel can be included in the complicating factors, since the estuary part of the port has a very high level of sediment accumulation," said Vaskov.
Nomenclature of goods “Ninety percent of the goods it handles are round timber and the rest are building materials and some other types of products. Accordingly, any fluctuations on the markets of these goods results in the port experiencing financial problems," Vaskov said.
It is necessary to effectively develop other types of cargo handling at the port in order to minimize these risks, said the first deputy head of the ASU. "The situation involving the Belgorod-Dnestrovsky port necessitates an active search for an efficient investor and creation of conditions for the investor to develop the stevedoring part of the port,” he said.
According to the Ukrport association, the Belgorod-Dnestrovsky port handled up to 2.7 million tons at the best of times (1980). As a rule, the volume of cargo handling at the Belgorod-Dnestrovsky port has been at the level of 1 million tons since the 1990s. The figure was 608,000 tons in 1999, reaching 1.1 million tons in 2010. The Belgorod-Dnestrovsky port ended last year with about 670,000 tons.
Transshipment volumes Even then, it has not been able to avoid problems. Its transshipment volumes reduced by 26.5% or 182,000 tons in the first eight months of 2013, with timber accounting for most of the reduction (179,000 tons), because of the unstable political situation in Turkey and the situation on its market. Later, in September, the state enterprise temporarily switched its employees to a short working week because of a significant reduction in cargo turnover.
It was able to get out of this difficult situation only in the first quarter of 2014, resuming full operation on March 1. "In accordance with the agreements previously reached by employees and management of the enterprise, the need for a shorter working week will be eliminated when cargo transshipment exceeds 50,000 tons,” the state enterprise’s Director Serhii Sechkin told employees.