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Business advocates for a balanced approach to legislative changes on privatisation and concessions in the port sector

03/ 02/ 2025
  Given the strategic role of ports in the development of international trade relations and the significant damage inflicted by russian military aggression, attracting large-scale investments into port infrastructure should be one of the key elements of Ukraine’s post-war economic recovery. From a business perspective, privatisation or concession of port infrastructure can serve as an effective tool for attracting investments. However, the privatisation and concession models for the port sector should not be seen as mutually exclusive. Both approaches represent potential options for securing funding, and each may be applied to specific ports, facilities, or terminals depending on economic, technological, legal, and other factors, as well as government management decisions. Experts from the European Business Association believe that the states primary role in this matter is to establish transparent, fair, and balanced rules of the game that will facilitate effective investment in the port sector, whether through privatisation or concession projects. Thus, the EBA expresses its position on two legislative proposals aimed at regulating these issues, which are currently under consideration in Parliament. The Draft Law No. 12230 introduces amendments to certain legislative acts of Ukraine regarding the privatisation of state and municipal property that has been leased. This bill has already been adopted in its first reading and is undergoing further revision. The declared objectives of this draft law are to ensure a competitive privatisation process for state and municipal assets, address the issue of non-transparent off-market acquisitions of leased assets at artificially low prices, prevent financial losses for local budgets, attract additional funds for community development, and reduce corruption risks. The business community welcomes the initiative to improve privatisation legislation and supports the declared goals of the draft law. However, the proposed method for achieving these goals, as reflected in the current version of the bill, is categorically opposed by businesses. This is because it would result in a serious violation of the rights and legitimate interests of responsible investors who have invested substantial funds into developing leased port infrastructure assets while complying with the legal framework in place at the time of investment. Such an approach would significantly deteriorate the investment climate in the maritime sector. In light of this, the EBA does not support the adoption of Draft Law No. 12230 in its current form and insists on substantial revisions. A fair and reasonable balance must be found to achieve the bill’s declared objectives without causing stagnation and decline in port infrastructure. The Draft Law No. 7508 proposes amendments to certain legislative acts of Ukraine to improve the mechanism for attracting private investments through public-private partnerships, facilitating the rapid restoration of war-damaged infrastructure and the construction of new facilities as part of Ukraine’s post-war economic reconstruction. This bill has also passed its first reading. A comparative table of the amendments prepared for the second reading is currently available on the Parliament’s website. Among other provisions, the revised draft introduces changes to the Law of Ukraine On Concession, specifically regulating the transition from state property lease agreements to concession agreements to further invest in infrastructure development, including the port sector. According to the EBAs experts, these provisions of Draft Law No. 7508 will have a positive impact on the development of Ukraine’s port sector. In particular, they will enhance investment attractiveness and further incentivise both domestic and foreign investors to fund the development of port transshipment facilities, hydraulic structures, and other port infrastructure while maintaining a reasonable and transparent balance between state and investor interests. The business community fully supports the provisions of Draft Law No. 7508 that aim to improve the transition process from lease agreements (or other forms of infrastructure management) to concession agreements. Business representatives hope that these provisions will be preserved in the final version of the draft law when it is submitted for a second reading in Parliament. The EBA’s experts hope that the business community’s position will be taken into account in the consideration of both Draft Laws No. 12230 and No. 7508.

Given the strategic role of ports in the development of international trade relations and the significant damage inflicted by russian military aggression, attracting large-scale investments into port infrastructure should be one of the key elements of Ukraine’s post-war economic recovery.

From a business perspective, privatisation or concession of port infrastructure can serve as an effective tool for attracting investments. However, the privatisation and concession models for the port sector should not be seen as mutually exclusive. Both approaches represent potential options for securing funding, and each may be applied to specific ports, facilities, or terminals depending on economic, technological, legal, and other factors, as well as government management decisions.

Experts from the European Business Association believe that the state’s primary role in this matter is to establish transparent, fair, and balanced “rules of the game” that will facilitate effective investment in the port sector, whether through privatisation or concession projects.

Thus, the EBA expresses its position on two legislative proposals aimed at regulating these issues, which are currently under consideration in Parliament.

  • The Draft Law No. 12230 introduces amendments to certain legislative acts of Ukraine regarding the privatisation of state and municipal property that has been leased. This bill has already been adopted in its first reading and is undergoing further revision.

The declared objectives of this draft law are to ensure a competitive privatisation process for state and municipal assets, address the issue of non-transparent off-market acquisitions of leased assets at artificially low prices, prevent financial losses for local budgets, attract additional funds for community development, and reduce corruption risks.

The business community welcomes the initiative to improve privatisation legislation and supports the declared goals of the draft law. However, the proposed method for achieving these goals, as reflected in the current version of the bill, is categorically opposed by businesses. This is because it would result in a serious violation of the rights and legitimate interests of responsible investors who have invested substantial funds into developing leased port infrastructure assets while complying with the legal framework in place at the time of investment. Such an approach would significantly deteriorate the investment climate in the maritime sector.

In light of this, the EBA does not support the adoption of Draft Law No. 12230 in its current form and insists on substantial revisions. A fair and reasonable balance must be found to achieve the bill’s declared objectives without causing stagnation and decline in port infrastructure.

  • The Draft Law No. 7508 proposes amendments to certain legislative acts of Ukraine to improve the mechanism for attracting private investments through public-private partnerships, facilitating the rapid restoration of war-damaged infrastructure and the construction of new facilities as part of Ukraine’s post-war economic reconstruction. This bill has also passed its first reading.

A comparative table of the amendments prepared for the second reading is currently available on the Parliament’s website. Among other provisions, the revised draft introduces changes to the Law of Ukraine “On Concession”, specifically regulating the transition from state property lease agreements to concession agreements to further invest in infrastructure development, including the port sector.

According to the EBA’s experts, these provisions of Draft Law No. 7508 will have a positive impact on the development of Ukraine’s port sector. In particular, they will enhance investment attractiveness and further incentivise both domestic and foreign investors to fund the development of port transshipment facilities, hydraulic structures, and other port infrastructure while maintaining a reasonable and transparent balance between state and investor interests.

The business community fully supports the provisions of Draft Law No. 7508 that aim to improve the transition process from lease agreements (or other forms of infrastructure management) to concession agreements. Business representatives hope that these provisions will be preserved in the final version of the draft law when it is submitted for a second reading in Parliament.

The EBA’s experts hope that the business community’s position will be taken into account in the consideration of both Draft Laws No. 12230 and No. 7508.

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