A Cabinet of Ministers resolution dated January 9, 2014, amended the list of state assets for which concession contracts can be awarded by adding the state enterprise Administration of Seaports of Ukraine (ASU) to the list.
The document grants the right to award concession contracts for the facilities and properties of the ASU that were obtained through division of the properties of 18 seaports, as well as those of the Delta Lotsman and Kerch Ferry state enterprises.
According to the ASU’s head Yurii Vaskov, the addition of the ASU’s assets to the list of potential objects of concession was necessary for implementation of investment projects in the port industry as well as for creation of comfortable and clear conditions for attracting efficient stevedoring companies. He stressed that this does not apply to the entire ASU: concession contracts may be awarded for the port infrastructure specified in Article 23 of the Law on Seaports of Ukraine, namely berths, access roads and rail tracks (up to the first branching point outside a port), communication lines, heating, gas, water, and electricity supply facilities, and utility lines. However, all strategic assets (general-use port infrastructure, navigation systems, canals, water bodies, etc.) will remain in state ownership.
The law provides for the possibility of implementing concession projects involving state-owned port infrastructure and assets on the books of the Administration of Seaports of Ukraine. However, according to the Law of Ukraine on Concessions, implementation of such concession projects is possible only after the Cabinet of Ministers approves an item-by-item list (in this case, to include on the list state assets for which the Administration of Seaports of Ukraine can award concession contracts).
"For example, if we plan to award a concession contract for a sea terminal that operates through the use of a particular berth, then it is perfectly logical that it is appropriate for the concession contract for this sea terminal to include the berth. Of course, the berth remains in state ownership and the investor is responsible for maintaining it in good condition and upgrading it. On its part, the investor reduces its risks associated with investment and subsequent operations," said Vaskov. According to him, such an investment mechanism can be promising for both cargo and passenger port terminals.
As reported, the Administration of Seaports of Ukraine was created in accordance with the Law on Seaports of Ukraine, which entered into force on June 14, 2013, with the aim of maintaining and ensuring efficient use of the state property transferred to it for business use, including for modernization, renovation, reconstruction, and construction of hydraulic structures and other port infrastructure.
In November 2012, the Cabinet of Ministers adopted the resolution No. 1055 entitled "Certain Issues involving Award of Concession Contracts for State Property," according to which concession contracts may be awarded for properties of 18 Ukrainian seaports.