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Petro Poroshenko Bloc proposes privatization of Ukrainian Seaports

Ukrainian President Petro Poroshenko’s party, the Petro Poroshenko Bloc, has proposed suspending the granting of long-term concessions on operation of seaports, and instead privatizing them after the
situation in eastern Ukraine stabilizes. The law is expected to outline an approach to determining whether port facilities should remain owned by the state or whether they should be privatized. Deputy Prime Minister Volodymyr Groisman, said that privatization of ports was seen as a more effective mechanism for the developing the industry. “The most important thing is efficient management of property.

We believe that the process of privatization is as effective as possible if it is made more transparent,” Groisman said. At the same time, Groisman is not ruling out the use of the concession mechanism if market players and experts deem it necessary. As reported, the Cabinet of Ministers permitted award of concession contracts for facilities and properties of the state-owned Administration of Seaports of Ukraine on January 9, 2014.

 Concession contracts may be awarded for the port infrastructure specified in Article 23 of the Law on Seaports of Ukraine, namely berths, access roads and rail tracks (up to the first branching point outside a port), communication lines, heating, gas, water, and electricity supply facilities, and utility lines. However, all strategic assets (general-use port infrastructure, navigation systems, canals, water bodies, etc.) will remain in state ownership ownership.

The Administration of Seaports of Ukraine began operation in June 2013. It was established in accordance with the Law on Seaports of Ukraine, which entered into force on June 14, 2013. Strategic assets at seaports were transferred onto the balance sheet of the Administration of Seaports of Ukraine and branches of this state enterprise were created at seaports to manage these strategic assets. In addition, as part of the reform of seaports, state stevedoring companies were established to perform transshipment operations. The Administration of Seaports of Ukraine is fully owned by the state.

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