Concession being a key to solve port infrastructure problems, the people’s deputies (Ukrainian MPs) have to pass Law on Concession the soonest, announced Minister of Infrastructure of Ukraine Volodymyr Omelian today on 11 December 2018 during his joint briefing with First Vice Prime Minister – Minister of Economic Development and Trade Stepan Kubiv.
Minister of Infrastructure pointed out that concession as public-private partnership (PPP) machinery is an efficacious instrument for involving private investments to develop port infrastructure sites: “When we came to the ministry in 2014, we clearly realised that in the case of public ownership objects there would always be risk of inefficient management. So we defined the two key issues: first was privatization of all objects that could be privatized, and second – transferring to concession of the objects of strategic importance for the state. This concerns the sea ports as well as further on airports, other infrastructure sites. The logic is very simple: lease of state property leads to numerous misuses. In fact, budgets of all levels receive hundreds of millions and billions of UAH less. In case of concession these cash receipts should grow minimum 2.5 – 3 times, state property would be employed by world leading companies concerned in investing their own funds in order to develop the production base, create new jobs, therefore gaining more profits. Eventually the state enjoys enormous effect from involvement of leading companies. That’s why we consider that the deputies should immediately pass the new law on concessions. This Law is universal and regards not only the infrastructure. We have prepared all the necessary legal base together with Ministry of Economic Development and Trade, with our colleagues from international finance institutions. We are implementing the world best practices in legislation.
“We believe that it is the concession that serves a key to solve the sector’s problems on the whole. We understand that neither tax payers nor Ukrainian budget have any chance to invest dozens millions UAH necessary as soon as today. But this is possible to achieve on account of foreign direct investments, on account of involving direct investors. We are already doing this in the railway and aviation sectors, yet we must do it in the entire country as a system. And I thank the Government for unanimity in this case. And it is vital for us that Parliament bring it to an end so Ukraine would gain one of the world’s best laws on concession already in the nearest time”, indicated Volodymyr Omelian.
Minister of Infrastructure stressed upon the importance of concession tender transparent procedures enabling to attract a wide range of contenders and secure the state interests. According to him, 7 companies have already confirmed their participation. Above 20 companies expressed their concern in the projects further implementation. The feasibility study output shows that the concession project realisation in the sea port Olvia will promote involving about 17.3Bn UAH of investments and raising various budgets receipts up to 58Bn UAH for the whole period of concession (i.e. 35 years), including the concession payments up to 19.5Bn UAH. Accordingly, in Kherson sea port the 30-years concession is going to result in some 1.37Bn UAH of investments and up to 14.3Bn UAH of gainings by various budgets for the entire term, including those from the concession itself – up to 2.8Bn UAH.
Minister of Infrastructure noted that the mentioned results were achieved due to fruitful cooperation by MIU, MEDT, Ministry of Finance, European Bank of Reconstruction and Development, International Financial Corporation, World Bank, and USPA.
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