The key notes of the port businessmen concern settlement of relationship with the acting leaseholders of public assets.
Association of Odessa Sea Port Stevedoring Companies has addressed Chairman of Economical Policy Issues Committee of Verkhovna Rada (the Parliament) Andrii Ivanchuk in respect of updating some clauses of the draught Law on Concessions No. 8125 in the course of its preparing to the second reading.
As per the letter signed by the Association’s Honorary President Yurii Gubankov, the stevedores of Odessa Port on the whole support necessity of passing this law, and believe it to be very important for development of Ukrainian port sector and attraction of foreign investments to its modernisation.
Notwithstanding it, the port businessmen draw the legislators’ attention to the fact that there is a number of issues in the latest draught necessary to be upgraded.
Thus, an important item is regulation of relationship with the acting lessees of the state property: all the clauses envisaging a mechanism of non-tender concession agreement conclusion with the public assets leaseholders under the existing lease terms are deleted from the last wording. At the same time, nowadays a substantial part of private port operators exercise their activities in Ukrainian ports exactly by lease agreements. Also, a noteworthy part of large-scale investment projects in the ports of Mykolaiv, Odessa, Chornomorsk were implemented basing on lease agreements which was conditioned by the national legislation for the recent years hindering to employ other legal instruments for investing in the port infrastructure assets.
Association notes as well that while transferring from lease to concession such investors would have to bid for tenders on a general basis, so they are facing risk of losing control over the port assets they operate and in which they had earlier heavily invested. Therefore port businessmen demands that MPs return the stipulations of out-of-competition transfer from lease to concession into the final draught text.
Another controversial issue with the document is the concession project’s environmental impact evaluation. E.g. the draught text suggests that a concessionaire should prepare this evaluation after the agreement signed. However, to Odessa port stevedores, this approach encumbers concessionaires with significant risks resulting in impossibility of the project implementing due to its just found out huge negative impact on environment. Hence the obligation of environmental impact evaluation is proposed to be charged upon the concessor or the object’s asset holder prior to the concession tender is announced.
It is provided in the bill’s transitional provisions that among reasons for ceasing the land use right is granting public or municipal property to concession. The port people reckon it only necessary to specify that it means ceasing of the land use right for namely public or municipal enterprises, to avoid a risk of depriving private entities of their right for land lease.
Furthermore, to the judgement of Association member companies, the proposed changes in Law on Ports of Ukraine fail to correlate between each other. In particular, a possibility of granting to concession or PPP of strategic infrastructure objects is confined with the presence of one or two port operators using this infrastructure. Besides, there are no distinct criteria describing what is regarded by this law as ‘provision of activities’ on the part of mentioned operators. Moreover, the bill envisages possibilities of transferring berths, piers, rail and automotive access roads, communication lines etc. along with hoist and shift machinery and other equipment accompanying such assets. In case of absence of such equipment, the objects are transferred on condition of handing over the land plot adjacent to them and being sufficient for the project implementation. As Association believes, such a norm is unclear and ambiguous as much as a quay with a crane scarcely could be the object of any concession project with no superstructure available. Hence most logical looks the possibility of granting strategic infrastructure assets to concession within integral property units.
These as well as other remarks are requested by Association of Odessa Sea Port Stevedoring Companies to be elaborated prior to considering the bill No. 8125 in the second reading which is to take place as soon as in the current month.
Association of Odessa Sea Port Stevedoring Companies comprises major port operators working in Odessa port. To name some, they are DC CTO (daughter company of HHLA, Germany), Brooklyn-Kiev, Brooklyn-Kiev Port, Novolog, Novotech-Terminal, Olympex Coupe International, MetalsUkraine Corp. Ltd., and Prista Oil. By the Association’s data, there some 3,000 persons total working in these companies, and the funds invested in Odessa port infrastructure for all time of their work amount to about 3.5Bn USD all in all.
The draught Law of Ukraine on Concessions collected 240 votes at its first reading on 03 April 2018.
https://cfts.org.ua/news/2019/04/01/portoviki_ozvuchili_zamechaniya_k_zakonoproektu_o_kontsessiyakh_52514