Kyiv, Ukraine, June 26, 2020 —IFC, a member of the World Bank Group, has supported Ukraine’s Ministry of Infrastructure with a landmark public-private partnership (PPP) agreement signed today to develop the Kherson Sea Commercial Port under a concession model.
The Ministry, the Ukrainian Sea Ports Authority , and a consortium comprising Risoil S.A. and Georgian Industrial Group , signed the PPP agreement. This project is a key component of the government’s efforts to mobilize much-needed private investment and expertise in the country’s port sector.
IFC , in cooperation with the European Bank for Reconstruction and Development (EBRD) and the Global Infrastructure Facility, a multi-donor fund created to support public-private partnerships, was the lead transaction advisor, helping the government competitively tender the first PPP in Ukraine designed in accordance with best international practice . The efforts also included the structuring of the Olvia seaport concession.
Vladyslav Krykliy, the Minister of Infrastructure of Ukraine, said: "Today we sign a concession agreement for the first large-scale facility in Ukraine . For the Kherson port, this means not only its further development and job creation, but also the welfare of the entire city and region. With the modernized port of Kherson, we will create favorable conditions for economic growth. The next concession project, which is being actively developed now, will be the Black Sea Commercial Sea Port . ” According to the ministry, the next step on the agenda is signing of a similar agreement for the Olvia Sea Port.
Currently, Ukrainian seaports operate at only about half of their potential capacity due to many years of underinvestment and significant degradation of the country's infrastructure. Ukraine’s port operators transported 55 million tons of cargo over the last four months, of which around 42 million tons were exports, demonstrating the importance of the port sector for the Ukrainian economy.
The concession will help transform Kherson port into a hub for cargo hauling operations on the Dnipro river, the key water artery in Ukraine, thus improving Ukraine’s export capacity. The project also showcases opportunities now opened up by Ukraine’s recently adopted Concession Law.
“We would like to congratulate the government of Ukraine for this tremendous achievement. IFC has a strong track record of structuring high-impact PPPs and concessions. This port project will help boost the development of Ukraine’s infrastructure sector and bolster its agricultural exports, in particular, which will in turn drive the country’s economic growth,” said Jason Pellmar, IFC Regional Manager for Ukraine, Belarus and Moldova .
IFC, in partnership with the Federal Ministry of Finance of Austria and the Swiss State Secretariat for Economic Affairs SECO , supported Ukraine’s Ministry of Infrastructure with structuring a comprehensive contractual framework and determining bidding criteria. As a result, tender outcomes have significantly exceeded expectations in terms of investment and concession fees . IFC and Ukraine signed a memorandum of understanding in October 2019 to identify key sectors for joint implementation of PPP projects. IFC is working on pre-assessment analyses of pilot concessions in roads, airports, rail, energy , and health care sectors, aimed at boosting investments and accelerating the economic growth of the country.
About IFC
IFC — a sister organization of the World Bank and member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2019, we invested more than $19 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org .
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