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Whereto does the Maritime administration of Ukraine leads the industry?

Kostiantyn Ilnytskyi, Founder of the “Ports of Ukraine” magazine
16 July 2019

In the course of summarizing the results of the “National maritime rating of Ukraine 2018” the majority of experts named creation of the Maritime administration of Ukraine as the best achievement of the last year. But along with this the start of work of the administration was named … as the biggest failure. Let us try and analyze the reasons of this paradox.

”Previous convocation”

The answer to the question why creation of the Maritime administration (MA) was called by the majority of experts as the best achievement lies on the surface. This is due to the fact that during the last few years our country lived without any separate management body in the sphere of maritime transport and its absence was greatly felt by the maritime industry.

A bit of history. The role of Maritime administration in our country from 1993 was performed mainly by Ukrmorrichflot (Ukrainian Maritime and River Fleet), and from 1998 the latter was doing this jointly with the State Fleet Inspectorate. In March 2009 the State administration of maritime and river transport was created as a governmental body. It preserved the reduced name of Ukrmorrichflot and managed to exist in the space of a little more than a year, and then it was transformed into the service – a central executive body.

In the spring 2011 the body was abolished at all. There’s no secret why this happened. A rather robust and plenipotentiary managerial structure simply stood on the way of the then authorities to implement their plans to divide the remaining significant state assets in the industry. Of course, they did not need a professional management body where people still had their point of view. Ministry of Infrastructure headed by a vice-premier would be enough. One person is always enough to come into agreement.

Re-establishment of Maritime administration

A change of authorities and several years of efforts by maritime non-governmental organizations, managers, specialists of maritime transport enterprises were needed in order to accomplish the re-establishment in the country of a central executive body in the sphere of maritime transport.

As the witnesses say, the idea of re-establishment of MA was positively perceived by the managers of the Ministry of Infrastructure during the time of the Minister Andriy Pyvovarskyi and the Minister Volodymyr Omelian. The latter was actively pushing the ministerial employees who prepared the documents and promoted the idea of maritime administration in the Government.

The decree of the Cabinet of Ministers on creation of MA in the form of the State service of maritime and river transport was published on 17 January 2018. A new structure received a full range of authority as a central executive body implementing the state policy in the sphere of maritime and river transport,  merchant shipping, shipping in the internal waterways, navigation and hydrographic support of shipping, as well as in the sphere of safety on maritime and river transport (except for the fishing industry fleet).

Drawbacks of the new structure

Experts said that from the legal and normative point of view a robust managerial structure was in place. But in real life the structure turned out to have serious drawbacks. The main drawbacks were related to staff and financial problems complementing each other.

Speaking about the financial problems, we need to remember that yet back in 1990s an administrative harbor fee was introduced to let the maritime transport managerial body fully function, execute obligations of the country, first and foremost, under international conventions and agreements. But the previous “regional authorities”, who had abolished Ukrmorrichflot, streamed the administrative harbour fee into the general budgetary fund.

The administrative harbour fee is good money amounting annually approximately $6-7 m. MA managers constantly mention the necessity of a special fund to finance their work, we assume they count for the administrative harbour fee money. But the specialists know how difficult it is – if possible at all – to take something from the budget. So wherefrom in the meantime is it possible to find money, and also the money to employ high-class professionals? It’s a very serious problem. 

And now about staff problems. As mentioned above, it was the Minister of Infrastructure Volodymyr Omelian who made efforts for a new body to appear, giving his consent for delegating it a number of ministerial authorities. But when it came to appointment of the manager for this body, the Cabinet of Ministers had ignored the opinion of the Minister. Despite his rejections, Dmytro Petrenko, ex-Deputy  Head of UkrTransbezpeka, was promoted to the post.

This means that a mine had been laid into the relations of close structures in advance. Since the Maritime administration is a central executive body whose activity is coordinated by the Government via a member of the Cabinet – the Minister of Infrastructure. The Maritime administration has no right to pass any regulatory acts, while this is the authority of the Ministry. It can develop them and pass them over to the Ministry for consideration. And how will those documents be considered when there is lack of understanding on the level of two first managers?!

Like personnel, like decisions

It must be acknowledged that the task to form a team for a newly created MA “from a scratch” was extremely difficult. In this instance a name of the American thriller “Mission: impossible” comes to my mind. When back in 1993 in Odesa Ukrmorrichflot was created, then a major part of specialists were “delegated” by the then still powerful Black Sea Shipping Company. In Kyiv today there doesn’t exist any similar base of personnel at all.

Among the tasks of MA, for instance, the first six are of international nature: from implementation of new international legal norms into the domestic legislation to development of a strategy for execution of the national flag obligations. It is difficult to find a specialist capable of sorting out the things in the IMO standard and turn it into a form of a normative act of the Ministry of Infrastructure or the Cabinet of Ministers.

If we add to this a loss of professionals from the profile ministry and from enterprises of the industry which was characteristic for the last years, then the complexity of staff problems becomes clear. As the result, the newly-created Maritime administration was staffed by simply those who were found. A notable part of the personnel was from the ex-Ukrrichinspektsiya (Ukrainian River Inspectorate), which later on came through the Ukttransbezpeka (Ukrainian Tansport Safety) which became famous for specific habits and skills.   

New managers and employees started with the spheres related to financial resources – a system of training, certification and watchkeeping for seafarer as well as system of port state control, rather than dealing with the priority for MA tasks of the international nature. Those directions came first according to a principle: we do what we can do and we earn where we can earn.

“Dispersal” of training centres

In fact, professionalism in appointing staff turned out to be of no importance for the management of both Ministry of Infrastructure and Maritime administration. Let’s say that starting from summer 2016, the Inspectorate for Certification, Training  and Watchkeeping for Seafarers was headed first by an ecologist, then by a lawyer who had nothing to do with training seamen, and then by a major of SBU (the Security Service of Ukraine – a note by translator) (from November 2016 and without any competition held).

MA declared reform of the system of training and certification of seamen but the first results of such “reforms” became at the beginning of 2019 a single drastic (10-12 times) increase of training seamen in a number of training centres and vocal corruption scandals. The Inspectorate on Certification and Training had initiated a total re-conclusion of contracts with education and  training centres for registration of seamen documents  for seamen in the State registry of documents for seamen. As it turned out, seamen could get training in a very limited number of training centres only. And those had instantly jacked up prices for their services.

And what could seamen think because of that? Moreover, many of them were given hints that the documents from the “selected” centres only would help to stay an exam for re-qualification.

On the other hand, as it was noted, for example, by many participants of the 2nd National forum of the Ukrainian crewing in February 2019, Maritime administration, which is a controlling body for certification and training centres, used every occasion to stop their check: it did not coordinate programmes, did not send commissions in a timely manner, made irrelevant remarks during checks which are not required by normative documents and so on. That is to say, they by any means reached the situation when an earlier issued document of compliance expired, after which training centres were doomed to stop their activity.

For example, at the beginning of 2019, in his interview for our magazine Mykhailo Dudnikov, director of the Illichivsk plant for repairing vessels, told us that” it is already for two years that we cannot get documents in a legal way in order to resume the work of our training centre. In the process of processing documents the ex-Ukrtransbezpeka resorted to direct violations but did not just issue permits. We already have a decision by the administrative court on abuse of authority by the Ukrtransbezpeka specialists when they refused issuance of the required permits”. And today it is the Maritime administration which is impeding the process of processing documents for the centre.   

Where to arrange examinations

Yet another direction of the “reform” of the system for certification and training for seamen has appeared at the end of 2018 when in the regions commission members who received exams for seamen qualification confirmation were dismissed and instead of them roving commissions from Odesa were sent.

It is possible to understand what came of it on the example of work of such a commission in November 2018 in Izmail. According to Ukrrudprom website, “On 8 November, after only two out of first eight boatmasters passed the exam, other 32 candidates decided not to play with the fortune and, as suggested by the members of commission, took their documents and submitted them to Odesa straight away. In Odesa, a little bit later all passed the exam. To tell the truth, it cost approximately one thousand dollars for each”.

Later on, the operations similar to those in Izmail were performed in other regions – roving commissions with unknown status and financing, taking exams with a similar outcome. As Ukrrudprom informs, “those who failed to pass an exam were offered to go to Odesa where everyone will pass the exam, on certain conditions”. As the result of such reforming efforts the activity of commissions on confirmation of seamen qualification in all regions, except for Odesa, was artificially blocked. 

It was the first time when traditionally politically inert layer of seamen got demonstrably disturbed. On the website of the representative office of the President of Ukraine there appeared a petition about an illegal and inadequate price increase which was supported by 5,5 thousand votes. After that there appeared one more petition about corruption and impunity in the system of maritime education and certification in Ukraine.  

At the same time there appeared the information about growing number of cases when our seamen, unwilling to have anything to do with the national state service, began to apply for maritime documents in the neighbouring countries.

II National forum of the Ukrainian crewing passed a decision to address the Ministry of Infrastructure and the Cabinet of Ministers of Ukraine expressing distrust of the State Service of maritime and river transport of Ukraine due to unsatisfactory work: non-transparent actions, absence of coordination of implemented initiatives with the community, lack of practical results of work in carrying out functions of maritime administration of Ukraine and so on.

Diarchy of harbour masters

A story about diarchy of harbour masters has created a stir in society. MA Head Dmytro Petrenko has “forced” through the amendments in the Regulation on a harbor master and a service of harbor master, approved by the order No. 190 of the Ministry of Infrastructure

Along with that, it was stressed that harbor masters should become civil servants within MA. It must be noted here that the authors of the existing legislation, balancing between the necessity to provide attraction of reputable and, naturally, highly paid professionals to the posts of harbor masters, and the necessity to avoid traditionally low salaries of civil servants, have envisaged in the Code articles serious rights for harbour masters in the area of state monitoring, without mentioning where such officials should work. It allowed the harbor masters, who were indeed the most reputable sea captains, during long years to work and get salary in the state-owned maritime and commercial ports, and after the port reform – in the SE ”AMPU”.

Maritime administration as a central executive body, which “forced” through the posts of harbor masters within its structure, should have held competitions for those posts. However, the Code of Merchant Shipping and the law on ports were not amended.

It is one thing that Maritime administration hired personnel being both professionally and qualification wise far from the criteria set for such officials. And on the other hand there appeared a diarchy in the sea ports of the country where the old (previous) harbour masters should continue perform their duties according to the existing laws.

Practice shows that such managerial mistakes are corrected only, save God from that, after a serious incident.

An all-Ukrainian scandal broke out. For in the whole world, as in Ukraine up until recently, a harbor master is a key person bearing a personal responsibility for the safety in the port water area and having significant authority. And in no way it can be right that this post is taken by an official without a relevant qualification who at the same time holds a modest post of a deputy Head of the Maritime administration regional department slash harbour master.

It is clear that the Head of MA has made a mistake. A harbour master, a very reputable man who successfully works on this position for many years, cannot just be declared non-professional and obsolete. But the Ministry of Infrastructure has also a solid part of fault for the conflict, which could not get determined how to find a reasonable way out of the situation and then, in fact, supported violation of laws by the Maritime administration, while the amended order No. 190 bears a signature of the Minister.

I would like to stress the main thing – such managerial decision really lowers the level of safety in our maritime ports. It appears that this is something that neither MA, nor the Ministry of Infrastructure would like to hear. As the life shows, such managerial mistakes are corrected only, save God from that, after a serious incident.  

And there were options for better decisions. As experts say, the simplest variant, which does not require any legislative change, is to create a state-owned unitary enterprise integrating services of harbor masters, which would be financed at the expense of percentage from the administrative or vessel fees.  An enterprise would be under control of the Maritime administration.

At such an enterprise not only harbour masters can work and get decent salaries, but also inspectors for control of the port’s state and the state of flag, whose high maritime qualification and high resistance to corruption is subject to special requirements. Their state service with low salaries makes the task unreal.

Unique Morrichservis

On 30 May 2019, in Odesa, a service centre of the state enterprise “Morrichservis” was opened accompanied with a solemn ceremony. A state enterprise the founder whereof was Maritime administration. Until the end of the year, in the country there should appear three more similar service centres and in the next year their number will reach 14.

It was declared many times that these centres are created exclusively for  convenience of clients, and seamen in the first row. One would but can’t believe this, while this year seamen have already encountered dramatically increased cost of services in the sphere of training and certification which happened involving MA. Seamen can hardly believe it.

Shipping Chamber of Ukraine has monitored functions of maritime administrations of other countries and the experience of other countries in introduction of centres providing administrative services. A poll has shown that nowhere in the world, in the system of certification, there exist service centres within the system of certification and training of seafarers. Confirmation of qualification of seamen in all countries is exclusively the function of maritime administrations.

According to the opinion of the Shipping Chamber representatives, normative confirmation of maritime documents in the conditions of an open registry, services of making entries and confirmation of documents should be free of charge. This is the function of the state. And a lot of state money has been spent for creation of an open registry of documents.

On the other hand, the maritime community has earlier sounded the alarm after “Morrichservis” tried to impose on ship owners an illegal repeated fee for processing the arrival and departure of vessels, in addition to all earlier paid expenses

Association of Maritime Agencies of Ukraine (AMAU) has informed that “we receive petitions from member companies regarding the attempts by “Morrichservis” to impose on maritime agents a contract on provision of services dated 25 February 2019 v in the form of adhesion. Clause 2.1.1 of the contract provides that the subject, among other things, is organization and technical support of processing the arrival and departure of vessel from a maritime port (receipt, processing and issuance of a documents, administration of relevant databases and so on)”.

But this directly contradicts the Merchant Shipping Code according to which processing of arrival of vessel in port and its departure from port belongs to the functions of harbor master. In addition, paid services for such a processing are not envisages by law.

Due to illegal nature of such actions, the Shipping Chamber of Ukraine sent a relevant enquiry to the Anti-Monopoly Committee of Ukraine on 22 April 2019.

MA in attack

But the Maritime administration management, using their connection in the Government, seemed to have got into administrative swing, inspiration.  In April 2019, it submitted for consideration of the Cabinet of Ministers a draft decree which would significantly widen the MA functions, contrary to the legislation.   

The decree was passed by the Cabinet of Ministers in a package with other documents without consideration on 22 May 2019, on a day when the Prime-minister announced his resignation. Along with this, according to Ivan Niakyi, Vice-president of Shipping Chamber, who sent a direct telegram to the President, several laws, including the Constitution, were violated.

In relation with that the European business association expressed its disturbance and underlined that such decisions require a prior public discussion, public analysis and consideration of the business community position.

It is still unclear whether the scandal, which broke out, will impact the fate of the decree, whether it will be published and what sort of wording it will have. But it is worth saying a few words about some points of the draft decree published in the social networks.

The draft decree significantly widens the authority and headcount of MA – almost a threefold growth. Let’s say that for the state monitoring and investigation of the cases of incidents additional 200 staff employees are required, which, according to experts, is an absolutely unreal figure. For monitoring the compliance of protection systems of port facilities – 30 persons. According to specialists, such functions should be performed by the existing PSC, FSC inspectors. In extreme circumstances, it is enough to have 2-3 people within the MA central staff. And so on.

Among additional authorities granted to MA according to the draft decree, there are unique ones. We will cite the document wording to allow the readers-businessmen feel the risks, if such authorities are implemented. What sort of authorities?

“Carrying out state control over observation of legislation by business entities whose carry out their activity or provide services in maritime and river ports (terminals of Ukraine)”. And this is without any clarification what is going to be controlled. Does it sound like a total control over everything? Now, business, wait and see!

And there fully logical seems to be another with by MA – draft decree envisages MA structures protection by the National Guard along with a number of ministries and treasury. Does it mean there’s a perception that one must be afraid?

 “A big minus”

Speaking at the press-conference “No to corruption on maritime transport” in Odesa in April 2019, Viacheslav Kyslovskyi, the executive vice-president of the Shipping Chamber of Ukraine, said: “We were the initiators of creation of the Maritime administration as a body which would deal with the issues of safety in the maritime industry and would help it to develop. But, unfortunately, today we have got a totally different result. Practically in all aspects of the Maritime administration activity there’s a big minus”.

So whereto does the current Maritime administration lead the industry?

In the mist of nice words about the reforms, professionalism, use, convenience and so on there can be definitely seen certain directions.  

Firstly, the enhancement of non-professionalism and a general decrease of the level of qualification which can have a negative impact, in the first row, on the safety of shipping.

Secondly, the enhancement of legal nihilism, bureaucratic pressure of business in the maritime sphere and the attempts to bring execution of state functions onto the commercial rails.

Thirdly, the enhancement of non-transparency of the decisions passed and facilitation of conditions for corrupt actions.

Fourthly, the enhancement of tension in relations between maritime administration and maritime community, seamen, business.  

Was that anything that the maritime community was struggling for re-establishment of the Maritime administration during few years?

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