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16 September 2019

Ukraine invites bids in tenders for Kherson and Olvia seaports concession

On Thursday, 12 September 2019 the Ministry of Infrastructure of Ukraine published concession tender notifications for the assets of two Ukrainian seaports: State Enterprise “Stevedoring Company “Olvia” and State Enterprise “Kherson Commercial Sea Port”.

Official tender announcements were published in the official government newspaper “Uriadovyi Kurier”. The deadline for submitting applications will be 60 days following the publication of the same tender announcements in another newspaper, “Golos Ukrainy”. To date, it is unclear when the 60-day period shall begin, since no notices have yet been published in the “Golos Ukrainy” newspaper.

These tender notices come almost two years after preliminary feasibility studies for both projects were completed. The European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) provided advisory support to the Ukrainian government for feasibility studies and the preparation of tender documentation for the concession projects.

The invitation is addressed to both foreign and Ukrainian legal entities.

According to the timetable annexed to the instruction for candidates published on the website of the Ministry of Infrastructure, the whole tender procedure should not exceed 120 days. If the second tender publication is published soon, the winners of both tenders may be announced at the beginning of next year.

The bidding process is divided in two stages. In the first stage, eligible and prospective applicants which meet pre-qualification criteria are shortlisted. During the second stage shortlisted applicants prepare and submit their tender bids.

Among the prequalification criteria that applicants are required to comply with are experience in implementation of relevant infrastructure projects, free cash flow of at least USD 2,500,000 for the last financial year, evidence of available sources of financing etc.

The concession periods are 35 years for the port in Olvia and 30 years for Kherson seaport. Bidders can however offer a shorter period of not be less than 10 years. Mandatory investments are about USD 60 million for Olvia and USD 8 million for Kherson seaports.

The tender process is presently guided by the provisions of the current Law of Ukraine “On Concessions”. Nevertheless, given that a new concession law has recently been submitted to parliament and may be adopted shortly, it is unclear whether the selection process for Olvia and Kherson seaports will ultimately be carried out under the old or new procedure.

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