Two port concession tenders announced in Ukraine

On 12 September 2019, the Ministry of Infrastructure of Ukraine published announcements in newspaper "Uryadovyi Kurier" ("Government Courier") in regard to the two pilot concession tenders relating to (i) the assets of State Enterprise "Stevedoring Company "Olvia" ("Olvia") and certain assets of State Enterprise "Ukrainian Sea Ports Authority" (the “USPA”) located at the Mykolayiv port, and (ii) the assets of State Enterprise "Kherson Sea Commercial Port" (the "Kherson SCP") and assets of the USPA located at that port.

These two pilot projects are intended to initiate the use of public-private partnership projects in industries requiring substantial investment, such as infrastructure, health care, energy, etc. Clearly, PPP is a unique legal mechanism that attracts financing, and which thus far has not been properly used in Ukraine. The Ministry of Infrastructure and the Ministry of Economy, with the help of international financial institutions, such as EBRD and IFC, have made a number of efforts to make these projects come about. Announcement of these two tenders, as well as adoption of the new law on concessions following its first reading, shows the new Government's full support of the further development of PPP projects in Ukraine.

The concessions will be granted by the Ministry of Infrastructure of Ukraine based on the results of future tenders. The tender applications in Olvia and Kherson projects can be made within 60 days from the date of publication of the tender announcement in newspaper "Golos Ukrainy" ("Voice of Ukraine"), which is expected to be published in October 2019. 

Key conditions for the concession projects include:

A. Mykolayiv:

1. Minimal investment of approx. USD62 million.

2. Term of 35 years. A reduced term, of not less than ten years, may be proposed.

3. Property granted with the concession comprises all of Olvia's assets and certain assets of the USPA located at the Mykolayiv port with some exceptions (e.g., berth No. 1, and some real estate objects).

4. Investment requirements:

        • the construction of a new grain terminal with capacity of 2 million tonnes per year;
        • upgrade of surrounding roads; and
        • investment in the development of the city of Mykolayiv's infrastructure of not less than 5% of the total investment in the construction of the new grain terminal.

B. Kherson:

1. Minimal investment of approx. USD9 million.

2. Term of 30 years. A reduced term, of not less than ten years, may be proposed.

3. Property granted with the concession comprises all of the assets of Kherson SCP (with some exceptions) and certain USPA assets located at the Kherson port (e.g., berths, intra-port facilities, transport and energy infrastructure).

4. Investment requirements:

        • investment in the development of the existing infrastructure of Kherson SCP (repair / partial replacement of existing infrastructure);
        • modernisation and increasing the capacity of transhipment facilities;
        • upgrade of surrounding roads; and
        • investment in the development of the city of Kherson's infrastructure of not less than 5% of the total investment under the concession agreement.

Both concession projects include the following employment requirements:

        • a new collective agreement with personnel;
        • no salary decreases during the three-year period following the transfer of personnel; and
        • no redundancies during the five-year period following the transfer of personnel.

More details about the concession projects and the tender procedures are available at:

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