Svitlana Teush, Counsel on Energy, Infrastructure and Construction at Redcliffe Partners, spoke at the international conference on “Grain Terminals: New Projects, Equipment and Technology” in Odesa. The topic of her presentation was “Legal aspects of investment in the construction of grain terminals. Case study: Co-financing by IFC and EBRD of the construction of a grain terminal in “Yuzhny Port” for M.V.Cargo and Cargill”.
In this project, Redcliffe Partners acted as legal counsel to both IFC and EBRD (the total project value is USD150 million). Svitlana outlined the key financing and operational components of the project, and emphasised the importance of selecting strategic and experienced partners – in the case discussed, these are the future operators of the terminal, Cargill and M.V. Cargo – as well as cooperation amongst all public and private stakeholders and a balanced allocation of risks amongst them.
Notably, the governmental bodies and state enterprises contributed to this project considerably, undertaking several important obligations. The Ukrainian Sea Ports Authority, a State enterprise, engaged international contractors for dredging works through an open public procurement tender procedure, and raised the required financing for the payment of dredging works under the financial plan approved by the government. The Ministry of Infrastructure approved the development plan of “Yuzhny” Port. Svitlana also described the security structure pattern in this project, which involved an escrow, a newly introduced contracting arrangement in Ukraine.
This has been a landmark project in Ukraine. It is hoped that this will lead the way for other port infrastructure projects in Ukraine.
Svitlana also commented on the measures needed to facilitate an increase in such infrastructure projects in Ukraine, and to raise more project financing for the industry. These include: the adoption of new legislation on concessions; the approval of a new transport strategy, as well as the “sub-strategies” for a balanced development of all key components of the transport industry: sea and river ports, railways, roads, waterways, etc.; improvement of the public procurement system to encompass international forms of contract and international procurement practices (for example, allowing consortia to bid, contract post-award modifications); transition from short-term to mid-term financial plans for public budgets ;relief of certain banking and currency regulations; redesign of the methodology for calculating port dues; and removal of fiscal and administrative barriers in the ports, including the targeted use of proceeds from port dues towards infrastructure development.