“Olvia” Specialized Seaport Concession
The Specialized Seaport “Olvia” handles various types of cargo, with the main focus on grain and construction materials, which in 2018 comprised approximately 80% of the total volume of handled cargo.
“Olvia” seaport is located near the most significant in the region producers of metallurgical and agricultural products (wheat, corn, sunflower).
Key technical characteristics
|Warehouses for general cargo storage||2|
|Open storage areas||20|
|Berths||7 (total length is 1500 m)|
|Maximum depth||10.3 m|
|Handling equipment||100+ units|
|Connections||Rail and road|
The object of the concession is an integral property complex that includes the property of SE “Stevedoring company “Olvia” and SE “Ukrainian Sea Ports Authority”, as well as objects, build specifically to fulfil the terms of the concession agreement.
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 – 35 years.
Concession tender results
The winner of the concession tender was QTerminals – one of the leading port operators of the State of Qatar. On August 20, 2020, a concession agreement was signed online. QTerminals is an experienced operator that manages Qatar’s largest trading port, “Hamad”, which is worth more than $7 billion. The company was founded by Mwani Qatar (51% stake of the company) and Milaha (49% stake).
The amount of investments
According to the Concession Agreement, QTerminals Olvia will invest approximately 3.4 billion UAH in the infrastructure of the port. Nearly half of it will be directed towards the port development within the next 3.5 years. This is one of the largest foreign direct investments in the port industry of Ukraine in the last 30 years.
Moreover, at least 80 million UAH will be invested to improve the infrastructure of the city of Mykolaiv.
QTerminals will modernize port infrastructure to improve the quality of provided services as well as the quality of related navigation and logistics services, thereby increasing the efficiency of the port.
The project will enable
- the construction of new real estate on the territory of the enterprise, including a grain terminal or a universal transhipment complex with a design capacity of 2 million tons of grain cargo per year as well as infrastructure/industrial real estate in the northern part of the port;
- the government to receive an annual concession fee of at least 80 million UAH (subject to indexing) and 0.75% of the net profit of the concessionaire. This is 16 times more than the seaport’s profit in 2019.
The concessionaire is responsible for ensuring a minimum volume of cargo handling of at least 2.55 million tons per year from the sixth year from the commencement of the concession to the year 2029 and not less than 2.83 million tons per year from the year 2030.
Social provisions of the contract
The concessioner will:
- engage all current employees of SE “Stevedoring company “Olvia” and some of the employees of SE “Ukrainian Sea Ports Authority”, without firing them;
- not decrease the salary level of the employees for at least 3 years from commencement the of their employment;
- enter into a new collective agreement with the primary trade union organization for a period of 5 years;
- conduct an environmental and social assessment of the project; implement and maintain the environmental and social management systems.
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 managing contracts.
On the 1st of December, 2021, the integral property complex of SE “Stevedoring company “Olvia” and corresponding property of SE “USPA” were transferred to LLC “QTerminals Olvia” in concession for 35 years.