The Higher Economic Court will consider an appeal by Container Terminal Ilyichevsk (CTI) against the termination of its cooperation agreement with the state-owned Ilyichevsk Commercial Seaport on 15 April. This was announced by CTI’s General Director Andrii Pavliutin, the CFTS portal’s correspondent reports. As the CFTS portal reported previously, the Ilyichevsk Commercial Seaport decided to terminate the agreement without negotiations with CTI, arguing that the agreement was unbeneficial to the port.

According to Pavliutin, these claims are unfounded because CTI paid the minimum guaranteed profit of UAH 74 million to the Ilyichevsk Commercial Seaport under the agreement in 2014 alone. At the same time, the net profit of the port itself amounted to UAH 117 million. Thus, according to Pavliutin, CTI provides 63% of the profits of the port.

The Odessa Economic Court of Appeal on March 4 upheld the Odessa Regional Economic Court’s decision to terminate the agreement on joint operations between the Ilyichevsk Commercial Seaport and Container Terminal Ilyichevsk dated 22 June 2005. The press service of the port said at the time that the court's decision had entered into force. The port also said that it was ready to provide employment to all employees of the container terminal, which would be returned to the Ilyichevsk Commercial Seaport, and that it was ready to fulfill all social guarantees under their terms of the collective agreement.

In addition, the container flow through the Ilyichevsk Commercial Seaport has fallen significantly because of court battles and scandals. "80% of cargoes have gone to the Ilyichevsk fishing port," said Pavliutin.

The Ilyichevsk fishing port is a private limited liability company that is rather closed in terms of provision of information. The ultimate owners of the port are unknown. However, Pavliutin believes that Ihor Kolomoiskyi owns the Ilyichevsk fishing port. Asked if he knew the owner of the Ilyichevsk fishing port, Pavliutin said, "Yes, I know. Kolomoiskyi."

According to Pavliutin, the Ilyichevsk Commercial Seaport’s demand to terminate the agreement on joint operations that was approved by Odessa courts directly violates state guarantees. "Such a development of events is beyond the comprehension of foreign investors," said Pavliutin.

According to him, a less favorable cooperation scheme is being imposed on the state instead of the agreement on joint operations.

"There is already a company, a contender for CTI’s berths. An agreement will be signed with this company, under which the state enterprise will receive a percentage of its profits rather than a lump sum payment, as is the case currently. At a time of economic crisis and fall of trade turnover, revenue into the state budget will fall. A reduction in container traffic is already being observed: 25,000 TEU was received in February 2014, 10,000 TEU was received in February 2015, and only 3,000 TEU will be processed in April," the head of CTI said. At the same time, Pavliutin could not name the company that will take over the berths.

Pavliutin claims that the terminal is proposing several ways out of the situation to the state: renegotiate the agreement on joint operations, conclude a lease agreement. At the same time, CTI does not intend to consider the prospect of granting concession on operation of the berths because it considers this procedure difficult and lengthy.

If it loses the court case, CTI intends to sue the government of Ukraine to secure recovery of its investment (USD 51 million) and lost profits until 2035. The total value of the lawsuit will be USD 590 million.

CTI is an enterprise with foreign investment: Siguler Guff & Company, the American private equity investment company, owns a 50% stake in CTI, German forwarding company SRR Deutschland 25%, and Pavliutin 25%.