Interview: Ukrainian Ports Aim to Become Deeper and Greener
Seaports have great importance for the economy of Ukraine. In the last year, the total income generated by Ukrainian seaport service markets amounted to about USD 1.7 billion or 2% of the country’s GDP.
Ukrainian Sea Ports Authority (USPA), which unites 13 Ukrainian ports, was created for the integrated development of the port infrastructure of Ukraine. In line with its mission USPA launched development plans for each of the 13 seaports, which are currently at different stages of realization.
As part of these plans, USPA is working on a new concept under the working title “Ukrainian ports are going green”, through which the authority would increase the technological capabilities of the onshore power supply of vessels, Raivis Veckagans, Head of USPA, said in an interview with World Maritime News.
The onshore power project would reduce the level of harmful emissions and water pollution, as well as help reduce noise and vibration in the ports, that will have a positive effect on both the population of the port cities and the marine ecosystem.
Aside to environmental initiatives, USPA also wants to tap into the potential of the existing possibilities of cargo handling in the Black Sea basin. The authority is currently working on a large-scale infrastructure project for the creation of one of the deepest ports in the Black Sea, namely, the Port of Yuzhny. Scheduled to be completed in two years, the project would increase the port’s depth to 21 meters allowing it to welcome Capesize vessels and fully utilize the possibilities of the Bosphorus Strait for delivering cargo through Ukrainian ports.
“As for containerships, we are limited in some way by the navigation rules established on the existing Bosphorus Strait rules. In the Bosphorus, there is a restriction on the passage of vessels over a certain length, therefore containerships of 20,000 TEUs cannot pass through the Bosphorus to the Black Sea. It means that ships of such size cannot get to our ports.”
Talking about large-scale changes in the port industry, Veckagans said that the Government of Ukraine plans to transfer state stevedoring companies to private investors via concession arrangements, adding that each of the 13 ports now has state stevedores. Specifically, in accordance with the transport strategy of Ukraine until 2030, the state intends to go out from the stevedoring business using Public-Private Partnerships (PPP) and concessions.
With the support of the World Bank and the European Bank for Reconstruction and Development (EBRD) in May 2017, the development of preliminary feasibility studies of pilot concession projects was successfully completed, which showed the expedient of further detailed development of feasibility studies. The Ministry of infrastructure of Ukraine officially launched the pilot concession projects in the ports of Olvia and Kherson in March 2018.
Veckagans explained that the final stage of the plan is preparation for the implementation of pilot projects for concessions in these ports. According to the results of the tender, a consortium of consultants was selected to prepare the feasibility study for these projects. USPA expects that the contest for the transfer of property of state enterprises, namely, Stevedoring company Olvia and Kherson Sea Trading Port, would be announced at the beginning of 2019.
“The experience of the implementation of pilot projects will be extremely useful in the concession of state awards in such large ports as the Yuzhniy and Chernomorsk, the preparation for which will be conducted next year.”
Ukrainian ports’ potential
Ports of Ukraine provide transshipment of more than 40% of international cargoes traveling to or out of the country. The greatest potential of the ports lies in the transshipment of agricultural products, iron ore raw materials and metal products.
In 2017, these groups of goods accounted for over 60% of cargo turnover in the seaports of Ukraine. At the same time, starting from 2015, grain cargo in terms of transshipment volumes took the first place, displacing iron ore raw materials.
Speaking about future developments on the Ukrainian ports, Veckagans believes that, in the medium term, one of the main trends in the port industry of Ukraine will be the state’s exit from the stevedoring business and the active transfer of property of state stevedores.
“This will allow attracting strategic investors in the development of port infrastructure and will contribute to the introduction of new technologies, automation of processes and attraction of new cargo flows,” Veckagans continued.
“Our goal is to become one of the parties of concession agreement, participate in shaping terms of the agreement, control the development of ports, the investor’s fulfillment of obligations, coordinate our investments with the concessionaire’s plans and receive our share of the concession payment.”
Furthermore, USPA expressed its view that great potential lies in the development of transit opportunities not only for seaports, but also for Ukraine, as a cargo hub between the countries of Europe, Asia and Africa.
“For its development, we need to be competitive not only in the Black Sea-Azov basin, but also globally, for the purpose that international shipping and container lines include Ukrainian ports in their logistics chains,” he added.
Therefore, in early 2018, port charges were cut by 20%. In addition, such projects as dredging, modernization of the berth and terminal infrastructure using PPP mechanisms are being undertaken with the aim of revealing the potential of Ukrainian seaports.
Since the second half of the year, Ukrainian seaports managed not only to reduce the 3% lag in transshipment volumes of the previous year figures, but also to exceed it by 0.6% or by 767 thousand tons in the end of November.
By the end of next year, USPA plans to bring the depths in the ports of Berdiansk and Mariupol to the passport depths. Also, in Mariupol, the investment project on the reconstruction of the berth No. 4 and the construction of a new grain terminal is continuing.