Ministry of Infrastructure of Ukraine (MIU) has published for public discussion an updated version of the draft resolution of Cabinet of Ministers of Ukraine (CMU) ‘Some Issues of Compensation for Investments Made by Business Entities in Strategic Port Infrastructure Facilities’.
According to the explanatory note to the document, it was developed to ensure the implementation of Article 27 of the Law of Ukraine on the Sea Ports of Ukraine, as well as to achieve and fulfil Goal 8.3 “Ukrainian passenger and business has access to water transport (transportation by river and sea)” of the CMU Program of Activities as approved by Verkhovna Rada (the parliament) in October 2019.
The draft act envisages the definition of a mechanism for concluding an agreement between the State Enterprise (SE) Ukrainian Sea Ports Authority (USPA) and an investor on compensation for investments made by business entities to finance capital repairs, modernisation, reconstruction or construction of strategic port infrastructure facilities being the public assets.
Upon launching a construction object (a phase and / or start-up complex) in operation, SE USPA shall meet its obligations to the investor who funded the construction by re-paying him by the schedule and on the conditions specified in the Investments Compensation Agreement on the funds assigned by the company into strategic objects of port infrastructure (by the investor), namely, by a financing agreement. The source of compensation for investments in strategic port infrastructure facilities can be port dues levied by USPA, and other sources not prohibited by law.
Also, the draft act envisages establishing a mechanism of compensation identified by an independent cost assessment of the sea port water area underwater hydraulic structures (based on the property transfer agreement) built at the expense of private investments before Law on Sea Ports entry into force, and inserted into Register of Hydraulic Structures in accordance with the procedure established by law, and which under the owners’ consent shall be transferred to the state ownership (MIU) and economic management of USPA. At the same time, the amount of compensation for an underwater hydraulic structure cost as per an independent assessment report cannot exceed the amount of investments made in it.
There is a forecast that the act implementation is going to attract private investments to development of port infrastructure. This would result in increase of income from port dues and / or services received from the use of strategic port infrastructure facilities by economic entities. A rise of macroeconomic indicators is going to occur at the maritime transport sector level due to the development of sea terminals infrastructure, payment of taxes, and creation of new jobs in the course of projects implementation.
“Thanks to the development of port infrastructure competitiveness of Ukrainian ports in the Azov and Black Seas plus the lower Danube regions will increase. Improving the hydrotechnical characteristics of sea ports (depth at the berth, waterfront dimensions, availability and quality of communications) by way of implementing necessary investment projects is going to increase the investment attractiveness of rear yards of sea ports, which would result in the growth of cargo throughput and accordingly contributions to budgets of all levels”, predicts MIU.
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