The state intends to attract private investors to lend to projects for the repair, modernization, reconstruction, and construction of strategic port infrastructure facilities in Ukraine with the possibility of compensation for the funds spent through port dues.
The relevant provisions are contained in the draft resolution of the Cabinet of Ministers “Some issues of compensation for investments made by business entities in strategic port infrastructure facilities that are state-owned”, the text of which is posted on the website of the Ministry of Community Development, Territories and Infrastructure (Ministry of Health) for discussion.
The document provides for the approval of the procedure and conditions for concluding agreements on the basis of which investments made by business entities in strategic port infrastructure facilities are compensated, as well as amendments to the Cabinet of Ministers Resolution No. 899 of October 3, 2012, according to which public sector entities may make expenditures on capital investments, in particular on port infrastructure facilities, in the absence of an approved financial plan.
It is noted that the amount of investment compensation should not exceed the amount of funds actually paid by the investor to finance the design or construction of port infrastructure facilities.
In addition, it is noted that the investor may be a legal entity or an individual entrepreneur. There may be several investors at one facility.
At the same time, the new procedure will not apply to legal relations involving business entities that make private investments in port infrastructure facilities on the basis of agreements concluded under public-private partnerships, including concession agreements and lease agreements for state property.
The Ministry of Reconstruction expects that the adoption of this resolution will help restore strategic port infrastructure facilities, accelerate the growth of maritime transport, improve the competitiveness of seaports and increase their investment attractiveness.
“Due to the military aggression of the Russian Federation against Ukraine, there is a problem of insufficient funding for the maritime industry, in particular due to imperfect fiscal policy, which leads to a lack of funds at the state-owned enterprise Ukrainian Sea Ports Authority (USPA),” the explanatory note to the draft resolution says.
It is noted that the USPA has entered into contracts for a number of construction projects, but “due to lack of funds and the state’s dividend policy, it is not possible to implement even part of these projects.”
At the same time, the USPA is facing an acute issue of the need to reconstruct and maintain port infrastructure, including berthing facilities. As of February 24, 2022, the state-owned enterprise had 265 berths (cargo, auxiliary, passenger) located in 13 seaports of Ukraine. Of this number, 20 are unsuitable for normal operation, 37 require significant investment in the next five years, and more than 50 operate with low economic efficiency – they need to be restored through overhaul or reconstruction.
In addition, it is indicated that, according to preliminary calculations, in the period before the full-scale invasion, the need for USPA to finance projects for the reconstruction, modernization and construction of berths alone (more than 48 projects, of which 36 are for reconstruction and modernization) was estimated at UAH 12 billion over four years.
