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What global banks say about ports of Ukraine

03 June 2019   Andriy Muravskyi, Maksym Bazhenov

We are citing speech by representatives of the EBRD and the World Bank on the forum Grain Ukraine 2019 and Port Forum held in Odesa in May

What global banks say about ports of Ukraine

On the photo: Deputy Head of EBRD in Ukraine Maryna Petrova on the  forum Grain Ukraine

Maryna Petrova, Deputy Head of EBRD in Ukraine:

”Globally we invest into “extension” of narrow places (of infrastructure – edit.), there is a possibility to attract more global investment. We actively finance purchase of grain wagons, work with private companies, and last year we already financed “Ukrzaliznytsia” which procures wagons.

When we asked to level tariffs for UZ and private investors, in short term it resulted in the increase of cost, but in fact it extends the possibilities to attract investment because the market is getting more transparent. .

We hope that in this way a problem with locomotives will be solved. We continue working with UZ on electrification of railways. The next project we start working on is related to electrification of sites leading to the Mykolaiiv and Kherson ports. We realize the growing importance of these ports in view of complexities arising in the Azov Sea.

We count on acceptance of concessions. With Orexim we have worked on the projects extending capacity of ports. It is unlikely that this Rada will pass the law (on concessions – edit.) but we do not surrender. We do not know when it happens but we know for sure that it will happen, and this is a priority for us. It is very important for business.

We also support the NIBULON company in terms of development of the river shipping. We hope that the legislation allowing other players to enter this market will be passed. There is a critical situation with sluices – they necessarily need repairs.  Not only they are getting inefficient, but also unsafe.

Joint financing of MV-Cargo is a hallmark project.

Renewable energy. We supported adoption of the new law. On the one hand, those who invest should receive return on investment. And the cost of energy becomes more affordable so that the Ukrainian business will continue to be competitive.

We continue working with state banks and we do hope that the reforms of the previous years will facilitate crediting of the economy by the Ukrainian banks. Now there is a lot of minor projects but one can’t make large volume with them. We would like to see more big investment”.  

Head of programmes on infrastructure and stable development of World Bank Bakher El-Khifnavi:

 “When you speak of the reform of management – I would like to look at it from another side and ask a question: can the AMPU respond to a growing demand which we have observed during recent years? I think the answer is ”Yes”. The next question. Has the port sector met the growth during the recent years? I think the answer to that question will be “No”.

If we look at the world experience – port sector, port administrations play a proactive role in the economic development of municipalities and regions where they are located. And it is not only about freights for ports. They play an active role in the area related to industrial clusters. And if we think about it, it is also necessary to look in general, what is the role of private sector in this process.

If we speak from the point of view of politics – what is the ports’ vision of the economic development of the country. What is going to happen. This is the issue of the level of Ministry. Since the answer to that question is a strategy for this industry which can be implemented by port administration. Because we have regulatory questions.

If we speak about the private sector – it will participate in managing terminals, reloading of freights and so on. And if to look at those two elements – this is the model of landlords, owners of the territory. But this is not the model currently available with AMPU. This is a model which we would like to work with you. When the port administrations can play their role, and along with that private sector also plays its role.

What stands on the way to implement this. I would like to say about one key limitation. A key limitation, important moment for AMPU which stands on the way of development and the ability to play its economic role  - this is access to land. If we speak about the internal territory of ports – there are several groups here which are the owners of the land: those are cities, municipalities, private sector. And it is very difficult to get access to these territories.

Access to land is not a critical issue but a critical issue is the rights for management. You in Ukraine also know that the state fund owns the assets and which rights are related to that. But I would like to say that without rights granted to AMPU there will be very difficult to support the economic development of municipalities and the country in general. I think this is the biggest limitation for the industry. In the course of time a certain tension between the port administration and city management has developed. There is not always understanding of what roles are being played by the port administrations, there are the issues of pollution, narrow places and so on.

We have the experience of joining representatives of municipalities to the management of port administration. And it is very important. For instance, we have Rotterdam where all five members of management are representatives of independent groups. Those are the most developed groups. That is, these should be independent groups, representatives of municipalities and the state. This is yet another piece of experience we can share.

And the last one. AMPU manages 13 ports and they all receive even portion of attention from the administration, since these ports mean 75-80% of the country’s capacity. If we speak about international experience, it is true that administrations sometimes pay more attention to several ports. And this is the issue for municipalities. It can be a direct privatization or other models. It is necessary to study this experience. In this way the AMPU will have the possibility to perform its job even better and to facilitate development of cities, territories of ports and Ukraine in general”.

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