Ukraine open concession tender of strategic ports

Port of OktyabrskUkrainian government will open concession tender of country’s strategic ports in the beginning of 2017. The local authorities will list the Port of Oktyabrsk and Kherson Marine Trade Port for private investors, trying to replenish the budget and start massive privatization program in maritime sector. Ukrainian government plans to prepare appropriate documentation until the end of the year and to open the tender for concession, attracting the private investors. The privatization will be headed by the Ministry of Infrastructure, under the consult of international financial organizations. The additional information about transaction, duration of the concession and finance details are still under negotiation and will be considered according to the current market conditions.

However, according to the specialists and analysts, despite of the willingness of the local government, the privatization probably will meet bureaucratic barriers regarding outstanding owners. Some of the owners of the both ports are not able to prove themselves, while others simply can not pay its part of that is going to give the government. All these processes probably will cause time and might affect the tender opening and bidding. Moreover, the unclear situation and corruption, unstable political conditions may cause additional risks for the potential investors.

The Port of Oktyabrsk is strategically important for the Ukrainian military and security, used for export of arms and munitions. This is additional barrier, which might discourage additional the buyers. Even if the government steps ahead with concession, the new operator will be obliged to continue transportation of arms and military equipment , which might cause restrictions for the new owners.

Also the both ports suffer relatively low turnover, accumulating totally 8% from the freight traffic of the country. To improve traffic flows, the new operators will need seriously to upgrade the infrastructure, building new, more spacious storage, larger berths and acquisition of higher capacity cranes.

The government of Ukraine can not develop these ports, since the budget is out of money with big deficit. Therefore, they are happy to give concession to the ports to private investor and attract private investors, but the future will show if the tender will be successful.