what kind of object is it and why is it profitable to buy it right now

The Belgorod-Dniester Sea Trade Port was designed as a competitor to the Black Sea Port. For various reasons, this could not be done. But from 1971 to 2015, the port worked, actively developed and processed cargo in the status of a state enterprise. Then began a period of destruction. And perhaps the enterprise would have disappeared from the map of one of the oldest cities in the world if the state had not put it up for sale.

Experts unanimously say that this facility is a profitable investment, because, as a “dry” port, it works despite the war. And after it, it has great prospects of becoming a powerful logistics center.

What is special about the port on the Dniester estuary and why it should be bought right now, said the acting director. port director Oksana Kiktenko and maritime industry expert Oleksandr Popov.

EMC of Bilhorod-Dnistrovsky port: equipment, warehouses and sites where new facilities can be built

The EMC consists of three parts:

Bilhorod-Dniester port, which is located in the city of the same name;
the port-point of Bugaz, from where merchant ships go to the open sea;
a recreation center, a mini-hotel on the first line in Zatoka, and a sports complex in Bilhorod-Dnistrovskyi.

The port itself is an area of ​​59 hectares on the banks of the Dniester estuary. In addition to transshipment of cargo, it is possible to provide storage services, build additional warehouses, elevators, or create production. 9 ships, 4 diesel locomotives, 18 gantry cranes and 47 vehicles, including forklifts, excavators and cargo equipment, are owned by the state-owned enterprise. 160 thousand m² of open and 12.9 thousand m² of closed warehouses are located on the territory. There is also a truck parking lot with 200 spaces and 8.5 km of its own railway, which allows for the simultaneous processing of up to 100 wagons per day. Therefore, the Bilhorod-Dniester port handles cargo transported by sea, road and rail transport. These are iron ore pellets, grains, mineral fertilizers, metal products, building materials, wood products, etc.

The company’s subdivision – the port-point of Bugaz – has 5 hectares of territory and its own track with a length of 2 km, which are located on the shore of the Black Sea. The passport depth of its channel is 6.5 m, it can be deepened further. The port point itself is located near the bridge. Therefore, more powerful merchant ships can be served here: with high superstructures and larger loads.

The advantage of this state stevedore is that no other private stevedores work here. At one time, it was possible to return 252 objects from the balance sheet of the Seaports Administration: passage, perimeter, road and railway roads, all engineering networks and communications, etc. So access to all objects remains with a single owner.

The port also owns a marine anchorage with a depth of 12 m, located at a distance of 5 km from the port-point of Bugaz. After the war, you can resume raid transshipment (from one ship to another) here.

In addition, there is a prospect of reviving the water connection between Moldova and Ukraine by the Dniester River, which flows into the estuary. The shipping channel E 90-03 passes there, which used to transport goods between the two countries. Talks about the restoration of shipping through this channel led even before a full-scale war. Both parties were interested in it.

From 70% of wood exports – to shrubs on the road

“When I came to work here, in June 2021, the port was in ruins. It seemed that it was impossible to destroy the enterprise any more. In recent years, the port was openly looted, cut into scrap metal. There was no electricity and working communications, but the railway, open warehouses and, in fact, , all the facilities were overgrown with bushes and trees. None of the machinery, vehicles and equipment were working and had no permits. Everything was out of order. This beautiful area on the shore of the estuary had spontaneous dumps. We removed about 200 tons of waste in the first weeks This is what a promising state-owned enterprise actually looked like in practice. Therefore, I believe that the decision to privatize it is the most significant event in the life of the port. After all, this is how it got a chance at life,” assures the acting director. Oksana Kiktenko, director of the Bilhorod-Dniester port.

For 16 years, she worked in the field of management of state-owned agricultural enterprises in the Ministry of Agriculture. And from the summer of 2021, Oksana is preparing the port for privatization.

At that time, the port had 186 employees. People have not received wages for years. In fact, they were no longer working. Someone robbed what they could get their hands on, and someone found another job. Despite this, the entire team received “eights” in the time sheet and thereby increased the company’s debts from wages. Therefore, as of June 2021, they amounted to UAH 15 million.

According to Oksana Kiktenko, the previous managers brought the company to this state. Until 2015, 70% of all exported wood (roundwood forest) passed through the Belgorod-Dniester port. The processes for handling such cargo worked perfectly. And then the state imposed a moratorium on the export of round wood, and the port seemed to freeze. The management at that time did not find or look for another way to develop the enterprise, although there were and are opportunities for this. Hence the decline began. Due to problems with the quality of services, other customers left the port, because of this, the number of ships decreased, and the channel began to silt up.

While the port was slowly collapsing, one of its former managers created a private stevedore company in the Black Sea port. To work there, he rented 23 units of the best equipment from the Bilhorod-Dniester port for nothing until 2026.

“An hour of operation of such equipment costs from 2,000 hryvnias, and this ex-driver rented it from our port for 4,000 hryvnias per month! And he did not want to pay even this amount. Therefore, we had to go to court in order to collect the debt and terminate these unprofitable companies contracts for most of the equipment. We are still fighting for the rest in court,” the director explains.

Similarly, a private stevedore leased the Bugaz port point. Oksana Kiktenko says that he was “regained” together with the regional branch of the Federal State University and the prosecutor’s office. Now, due to the aggression of Russia, this port point has been destroyed. But it can be restored, the channel can be deepened even more and receive heavy cargo vessels.

2.5 months after the start of the full-scale invasion, the first grain trucks entered the port.

Even before the full-scale invasion, many experts said that the Belgorod-Dniester port could not handle grain. But on May 8, 2022, the first soybean trucks drove there.

“When the invasion began, we understood: privatization is postponed, the state is not in charge of the port at the moment, so there will be no support. But people have to be paid salaries, the infrastructure must also be maintained. After all, the port is a small town, a living organism that needs to be taken care of every day. So we gathered a team and asked if they were ready to resume work in the port on their own. And the people agreed. They were ready to work so that their enterprise would live. We looked for materials, borrowed tools, fuel. We repaired warehouses, dug the railway road literally from underground, cut trees on it. Then they bought the first battery to start the loader. We agreed with DTEK on debt restructuring. So despite the war, in fact, without money and with negative forecasts, our port came to life,” Oksana Kiktenko enthusiastically shares.

According to her, after starting work, it was possible to pay part of the salary debts. Currently, people get it on time. The company also repays debts for electricity, restores equipment and documentation. But there is still a lot of work and the port itself needs investment. Therefore, employees and acting The directors hope that this object on the shore of the estuary will soon have a new owner. The terms of privatization of the port are standard: preservation of the activity profile and staff for at least 6 months. And also – to pay off the payables of UAH 130 million, mainly taxes and a part of wages.

“If the new owner pays the debt to the tax authority within 6 months after the transfer of ownership, then, according to the tax code, the DPS must cancel all fines and penalties that were charged before that. This is an incentive,” the port manager explains.

A state-owned enterprise cannot compete with private ones.

The first successes despite the war greatly inspire the port staff. But without money, it will not be possible to radically change something.

“A self-sustaining commercial state enterprise has a specific form of management. The property belongs to the state, but the enterprise is not subsidized by it. It has to make money independently and compete with private stevedores, but the conditions are unequal from the beginning. Tender procedures, bureaucracy, restrictions of the manager and, in general, the enterprise in action… In business needs to react quickly, and this is impossible in state-owned companies. I believe that commercial SOEs, if it is not a monopoly, should be privatized. Because the state and commerce are completely different things, they cannot be combined. And I will say this: we managed to launch the port , in particular, thanks to the fact that tenders were canceled at the beginning of the war,” explains Oksana Kiktenko.

The director of the Ust-Dauna port, expert Oleksandr Popov, has a similar opinion regarding state-owned enterprises. He believes that, with rare exceptions, it is expedient for the relevant ministry and FSMU to transfer state-owned stevedoring companies to domestic and foreign investors with the help of public-private partnerships.

“I believe that the FSMU made the right decisions regarding the privatization of YEMK state stevedores of small ports – Skadovsk, Ust-Dunaisk, Bilhorod-Dnistrovskyi. After all, these ports have been inefficient and unprofitable for years,” says Popov.

“War is not an obstacle to the continuation and start of new facilities in ports”

Oleksandr Popov notes that FSMU sees an increase in the value of objects by an average of 2.7 times. 4-5 offers are received for auctions.

Oleksandr Popov

“For example, there were 8 participants at the tender for the sale of the EMC of the SE “Sea Trade Port Ust-Dunaisk”. The price increased more than 3 times. Sea transport in general is always cheaper compared to other types of cargo transportation. Also, everyone understands that after cases with blocking trucks on neighboring European borders, terminals in ports play an irreplaceable role in supporting the economy. Then the time will come when they will make a considerable contribution to its renewal and growth,” the expert believes.

And he adds that the sector of port assets is already attractive for investment. Among the reasons are the continuation of work in ports despite the war, the profitability of stevedore activities and additional services, forecasts regarding the accession to the EU and the growth of agricultural export volumes. Therefore, the war is not an obstacle to the continuation and start of new projects in the ports.

Belgorod-Dniester Port is one of these projects. Currently, ships do not enter its berths. The reason is the war, a silted canal and a destroyed bridge. But despite this, the enterprise works as a “dry” port. According to Oksana Kiktenko, under this mode of operation, the break-even point is 65,000 tons of cargo per month, currently 20,000 tons are being processed here.

Vitaly Koval

“Privatization of state-owned enterprises takes place efficiently and transparently. We carefully prepare enterprises for privatization, eliminate any violations and inaccuracies. This is important so that investors can get a clear picture of the state of the state-owned enterprise and make an informed decision about its acquisition. Therefore, a business, buying state-owned enterprises enterprise, receives assets that will generate income after the restart,” emphasizes Vitaliy Koval, head of the State Property Fund.

Now the company is waiting for a private owner so that a new chapter in the life of the port on the Dniester estuary can finally begin.

This article was produced with the support of the American and British peoples through the United States Agency for International Development (USAID) and the Foreign, Commonwealth and Development Office (UKaid). The views and opinions of the authors expressed in these publications do not necessarily reflect those of USAID, the US Government, UKaid or the UK Government.