Ukraine’s network of 13 sea and 16 river ports that include eight to 10 river terminals were the topics of discussion on the second day of the British-based online transportation infrastructure conference on April 13.
Moderator Daniel Bilak of the Kinstellar law firm noted that only 2 percent of the country’s economic output is provided by cargo from ports. He had previously headed the government’s Investment Promotion Office and was the chief adviser to former Prime Minister Volodymyr Groysman.
In Soviet times, transportation by water accounted for up to 60 percent of all cargo transportation, stated Mykhailo Rizak, deputy chief executive of Nibolon, a leading Ukrainian grain exporter.
Inland navigable waterways extend to 2,714 kilometers, a United Nations’ report from last year says.
Relying on cheaper loans from international lenders like the European Bank of Reconstruction and Development, the Mykolayiv-based company has managed to build on its vision to develop a river-way logistical transportation system.
One of only two ports under concession in the region is Olvia, which the Infrastructure Ministry on Aug. 20 gave to Qatar-based QTerminals, which operates a $7 billion terminal in its country. The Middle Eastern country promised to invest up to the equivalent $125 million as part of the agreement.
The first seaport concession, a concept new to Ukraine, took place in the southern region of Kherson on June 26, which was co-financed by EBRD and the World Bank’s for-profit arm of the International Finance Corporation.
A holding company, Risoil-Kherson LLC, ultimately owned by multi-millionaire Georgian David Bezhuashvili, won the concession with a pledge to invest 300 million hrvynias to develop the port, in addition to investing more than 18 million hryvnias in local infrastructure. The concession is for 30 years.
The company’s roots lead to registered companies in Switzerland and Georgia.
Much attention was paid to the European Union’s 2030 Climate Target Plan which aims to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels. Its overall plan is for Europe “to become the first climate-neutral continent by 2050.”
Since Ukraine has a far-ranging economic and political deal with the EU known as an association agreement, the panel speakers devoted much time to how it would approach the ambitious environmental goals of the EU’s “green deal.”
It’s actually a “disruptive policy” for Ukraine’s inadequately developed infrastructure that serves as an impetus for change, said Nataliya Forsayuk, deputy infrastructure of Ukraine. “Ukraine must adopt its model [to the EU’s], otherwise it won’t be competitive,” she said. “Only [about] 20% of inland waterways are beings used for transportation.”
Forsyuk said that plans are in place to increase water transportation by “50 million tons yearly.”
Still, with such bold EU plans, Ukrainian companies and the government in Kyiv might be looking to change their business models to become more environmentally compliant, said Jason Pellmar of the IFC.
“It’s critical,” he said, adding that “this initiative [Green Deal] will have an impact…and companies will have to take a serious look at the implications…to ensure sustainability in the future.”
That means, Pellmar said, that even ports must become more efficient, “which should take the load off roads,” where more pollution is emitted.
Since Kyiv is short on cash to move forward, concessions and selling off the other ports are in the pipeline, said Taras Yelyeko, deputy head of the State Property Fund.
Three ports are slated for privatization this year: Bihorod-Dnistorvsky, Skadovsk, and Ust-Dunaisk.
They encompass more than 216 hectares and offer commercial potential, Yelyeko added.
Potential “and most profitable” seaport concessions include the Odesa, Chrnomorsk, and Izamayil – all in Odesa Oblast, as well as the “most profitable” Pidvdeniy in Mykolayiv region, said Viktor Dovhan who is an expert at an EU-funded transportation development project in Kyiv.
Shipping bottlenecks through the Azov Sea into the Russia-maritime controlled waters of the Black Sea was sparsely discussed during the discussion.
Risks persist at ports in Berdyansk (Zaporizhzhya Oblast) and Mariupol in Donetsk Oblast because cargo disembarks along routes that traverse waters where Russia arbitrarily creates delays, “and the waiting time adds additional risks,” Dovhan said.
Rizak of Nibulon boasted that 4.4 million tons of cargo was moved down rivers last year and 500,000 tons this year will as well.
He touted the environmental benefit this has “of transferring cargo from roads to water to save billions of hryvnias and have less pollution.”
A new inland waterways law will go into effect next year, which is designed to correspond closer to the EU’s initiatives that will help Ukraine demonstrate how “river transportation is the cheapest and most ecological way…as the most natural alternative” for moving cargo, Rizak said.
