Ukraine has already parted with pure public ports as the pattern intrinsic to the previous phases of maturity.
«The management of Ukrainian ports doesn’t fit into any of the four classical patterns”, the World Bank experts noted in their report on investigation of port areas use and recommendations on adjusting to the Port-Landlord system in the Ukrainian context. That is Ukraine has already drifted apart from merely state-owned ports being a model inherent for the past periods of evolution and possesses in fact ‘private ports’ with operational harbourages. Moreover, the ports function by the Port-Landlord pattern with narrowed land aspects in the overwhelming majority of cases.
The essence of the Port-Landlord pattern lies in the following:
• A port authority having the ownership right or in some other way (trust by power bodies, lease etc.) controlling use of port areas, responsible for ports planning and complex development;
• Private port operators providing stevedore activities under a concession agreement or assets and land lease contract with the port authority;
• In the course of investing in modernisation and infrastructure development of the port sector, a sea port authority is entitled to grant port infrastructure assets and land plots to investors for construction on the terms of public-private partnership, while the investors are entitled to operate the terminals built within a certain period of time after which either prolong the agreement or return the land plot along with the terminal to the authority.
Ukraine is an East Europe maritime state, and a major global supplier of agro products mostly exported by sea.
Along with that, Ukraine lacks a well-balanced mechanism of management and development planning of sea ports aimed at efficient use of territories, harmonisation of interests of the public, social, municipal, and private sectors, as well as attraction of investments.
The WB report notes that Ukraine’s port industry further development toward the benefit of national economy, investors’ and port operators’ interests, as well as local inhabitants, is going to be favoured by advance toward the management pattern Port-Landlord.
It has positively proved itself in international practice and is applied in most of European and the world’s major ports like Rotterdam, Antwerp, Singapore, Riga, Constanta, and Gdansk.
This is a logical extension of the port sector reform started in 2013 envisaging a complex approach to port areas planning and utilization. All the while, the reform should not envisage change of the existing investors’ rights in respect of ownership relations regarding the land plots in ports.
In the course of reforming it is vital to take into account the Ukrainian background. Ukrainian ports are the territories employed by various subjects and with regard to which there is no system planning and management in respect of the lands except for a corresponding port’s development plan as provided by Law of Ukraine on Sea Ports.
The system of local authorities participation in the development of Ukrainian sea ports is imperfect as well, in particular as concerns lands allotment for new handling capacities and organisation of their connection to main communication lines. Such a situation entangles application of the best world practices of port management.
Nevertheless, there are certain steps towards the Port-Landlord pattern adaptation already done in Ukraine. In 2013 Ukrainian Sea Ports Authority was established having branches as local port authorities which do not provide cargo handling but grant access to strategic infrastructure for the market. The two ports have already received their definite borders – Bilhorod-Dnistrovskyi in 2018 and Mariupol in 2019. The state’s parting with stevedoring activities goes on, including the concession tenders in Olvia and Kherson sea ports, where USPA shall act as a party on behalf of Ministry of Infrastructure with a certain set of functions dealing with monitoring and control as well as operational dredging.
The course of USPA reforming envisages the following:
• enhancement of regulatory and legal framework, including amendments in Land Code;
• inventory of port lands, including defining and legally assigning the port territory borders and forming a ‘land bank’;
• improvement of USPA governance by way of the company’s corporatisation;
• involvement of local municipalities into the ports’ boards activities, and upon USPA’s corporatisation – into participation in pilot projects of jointly owning the port’s authorities.
Adaptation to the Port-Landlord pattern is going to enable port authorities to efficiently perform their duties of port planning and development, to ensure further increase of competition in the port sector of Ukraine, and hence – to favour its qualitative development.
Today Ukraine has an opportunity to reform its port industry in order to achieve its maximum efficiency level and further extension of international trade scales.
Volodymyr Shemaiev, Head of Strategic Planning Division, USPA
https://ports.com.ua/opinions/port-lendlord-ukrainskiy-kontekst