“Kherson” Specialized Seaport Concession
The Specialized Seaport “Kherson” is located near the mouth of the Dnieper river. It handles various types of cargo, such as scrap metal, mineral fertilizers, wood, sand, etc.
Key technical characteristics
|Warehouses for general cargo storage||6|
|Open storage areas||11|
|Berths||5 (total length is 600 m)|
|Maximum depth||7.6 m|
|Port fleet||27 units|
|Handling equipment||90+ units|
|Connections||Rail and road|
The object of the concession comprises assets of SE “Kherson Commercial Sea Port”, except for the left bank, non-core assets and assets used by Dnipro Cargo Limited; as well as assets of SE “Ukrainian Sea Ports Authority” that are a part of the port infrastructure, including berths, intra-port transport and energy infrastructure, with the exception of the railway line #19. SE “Kherson Commercial Sea Port” is one of the operators in the “Kherson” seaport.
The property transferred to the concessioner as a part of the concession object remains in state ownership. When the concession agreement expires, the property will be transferred back to the state, along with objects built or modernized by the investor during the concession period.
Preparations for the concession project’s implementation have been made by the team of the Ministry of Infrastructure of Ukraine and the PPP Management office SPILNO, with support from international financial institutions.
The European Bank for Reconstruction and Development (EBRD) and The International Finance Corporation (IFC) were involved in the preparation of the project. At the end of the year 2017, a memorandum of cooperation was signed between the Ministry of Infrastructure of Ukraine and IFC, as well as an agreement between SE “Ukrainian Sea Ports Authority” and EBRD regarding further preparation of a feasibility study for pilot projects of “Olvia” and “Kherson” seaports concession. In February 2018, with the support of the EBRD, a consortium of international consultants was selected to develop a feasibility study and prepare tender documents for both projects.
The concession period – 30 years.
Concession tender results
The winner of the tender is Risoil-Kherson LLC – a consortium of Petro Oil & Chemicals and RISOIL S.A.
On the 26th of June, 2020, a concession agreement was signed, regarding the commercial seaport “Kherson”. Georgian Іndustrial Group, which comprises Petro Oil & Chemicals is one of the largest industrial groups in Georgia. RISOIL S.A. is a group of agro-industrial companies founded in Switzerland in 2000. It is represented in Ukraine by Risoil Terminal, “Risoil-Pivden”, “Rozdilnyanskiy elevator” and “Marine Technical Center”.
Risoil-Kherson LLC is a special purpose vehicle, established in 2019 to participate in the concession tender. According to the tender documentation, such entities can be created.
According to the agreement, the concessionaire (Risoil-Kherson LLC) is granted the exclusive right to create, build and manage the commercial seaport “Kherson” for the purpose of its modernization and further development.
The amount of investments
The implementation of the concession project will entail 300 million UAH of investments, including 216 million UAH during the first 3.5 years from the end of the transition period. Additionally, 18 million UAH will be invested in the development of city infrastructure.
The project will
- further the increase in the amount of cargo that arrived through rail, inland waterways and other modes of transport, except road;
- enable the government to receive an annual concession fee of at least 12 million UAH (subject to indexing) and 7% of the net profit of the concessionaire.
The concessionaire is responsible for ensuring a minimum volume of cargo handling of at least 1.36 million tons in 2030. Risoil-Kherson LLC is planning to increase the volume of cargo handling to million tons per year, within the next several years after that.
Social provisions of the contract
The concessioner will:
- engage all current employees of Risoil-Kherson LLC and some of the employees of SE “Ukrainian Sea Ports Authority”, without firing them within the next 5 years;
- not decrease the salary level of the employees for at least 3 years;
- comply with the requirements of environmental legislation and take measures to protect the environment.
The quality of stevedoring services, which are carried out using the property transferred to the concession is expected to be improved.
In 2021 the Ministry of Infrastructure of Ukraine has addressed the Ministry of Economy of Ukraine to enlist the support of the PPP Agency in increasing the institutional capacity of the concessionaires by consulting them on how to monitor and fulfil the terms of concession agreements regarding projects in seaports “Olvia” and “Kherson”. For this reason, the PPP Agency along with the International Finance Corporation (IFC) under the agreement of July 16, 2021, and with the technical support of the Public-Private Infrastructure Advisory Facility (PPIAF) have engaged advisors to assist the Ministry of Infrastructure of Ukraine and the SE “USPA” during the transition period and further with contract management.
On the 23rd of December, 2021, the transfer of assets of Port Kherson to LLC “Risoil-Kherson” in concession was finalized.