Chinese company ends project to deepen Yuzhny Port (VIDEO)

Chinese engineers have helped Ukraine to increase the cargo transshipment capacity in one of its major international ports by at least five million tons a year.

China Harbor Engineering Company has finished work to deepen the Yuzhny International Sea Port in Odesa Oblast, nation’s busiest international port, that handled more than 31 million tons of cargo in 2017.

The company finished works on Dec. 27, three months before deadline, and officially presented the completed project on Jan. 30 at the Sea Ports Administration of Ukraine.

Ukraine operates 18 seaports in the Black and the Azov seas, in general, capable of handling 132 million tons of cargo transshipment a year.  During nine months of 2017, Ukrainians ports handled 98 million tons of cargo, which is 1.3 percent higher than in the same period of 2016.

After Russia annexed Crimea in 2014, Ukraine has lost its major international ports in Sevastopol and Kerch, the cargo transshipment dropped by more than 35 percent and within four years managed to recover only by five percent.

Yuzhny, Chornomorsk, Mariupol and Odesa ports took over the cargo from Crimean ports, that are now under international sanctions.

However, with the illegal construction of Crimean Bridge through the Kerch Strait, Kremlin is going to close Ukraine’s Azov Sea Ports in Mariupol and Berdyansk for heavy cargo vessels by 2019, cutting the cargo handling capacity by 30 percent.

China Harbor Engineering Company Hr 1 billion bottom deepening project was a key factor for the end of the new $150 million grain terminal construction in Yuzhny Port – a joint project of international agrarian holding Cargill and MV Cargo company.

Within five months Chinese company extracted 4.4 million cubic meters of soil from the bottom of Black Sea in Yuzhny Port and in such a way deepened the sea near Cargill docks №25-26 down to 16 meters.

This will enable the new terminal to handle large vessels with a deadweight of up to 100,000 tons that the new facility will attract to the port.

Currently, a grain terminal, financed by the European Bank for Reconstruction and Development and World Bank’s International Financial Corporation, is the biggest foreign investment project in Ukraine.

The new terminal would provide an additional $23 million in taxes to the Ukrainian budget, create about 500 jobs and potentially could attract about $100 million investment, Raivis Veckagans, the head of the Sea Ports Administration of Ukraine, said on Jan. 30.

The Chinese company won the construction tender on Prozorro public procurement system in April, after it offered Hr 1 billion 64 million, the lowest amount among all competitors who took part in a tender, saving the Ukrainian government Hr 132 million.

Volodymyr Omelyan, infrastructure minister of Ukraine said that China Harbor Engineering Company helped to improve Ukraine’s image among the investors.

“This is the first time ever when a foreign company conducted all the work in Ukraine. By this transparent tender and early completed works, I think, we proved that Ukrainian government can be a reliable business partner,” Omelyan said.

China’s Ambassador to Ukraine Du Wei confirmed said entrepreneurs from his country were also satisfied with the project.

Corrupt havens

Ukrainian authorities indeed have had a reputation of unreliable and corrupt business partner, frequently forging tender documents in favor of certain businesses. Tenders in ports are not exception.

Ukrainska Pravda news website reported on Jan. 29, National Anti-Corruption Bureau of Ukraine conducted searches in Odesa and Mykolaiv oblasts ports as a part of an investigation of misuse of power during the bottom deepening equipment purchase for Mariupol and Berdyansk Sea Ports in 2015-2016.

In October 2015 Yuzhny branch of the Sea Ports Authorities in Ukraine purchased the bottom deepening equipment for Hr 134 million. The price is seen as unreasonably high by the NABU investigators, Ukrainska Pravda reported on Jan. 29.

Sergii Leshchenko, Petro Poroshenko Bloc faction lawmaker, said at a briefing in October 2016 Belgian engineering company Jan De Nul, supposedly linked to the People’s Front Party lawmaker Serhiy Feyermark, won Yuzhny Port deepening tender, despite offering Hr90 million higher price than its main competitor, Dutch company Van Ord.

“We have been working in Ukraine for more than 20 years, and we know how hard sometimes it can be to do business here. So thank you, everyone, involved that this is not that case,” Dmitry Vyahirev, ports project manager of Cargill said on Jan. 30, meaning the China Harbor winning tender.

High quality and speed

China Harbor Engineering Company won the next tender on Yuzhny Port deepening works, that was held in April, combating four competitors, and Jan De Nul, that offered to conduct the works for a Hr48 million higher price among them.

“The ProZorro system is fair. It is a competition, where every company could have won,” China Harbour Engineering Company President Ling Tao said on Jan. 30.

The video shows the Cargill grain terminal construction and the deepening works at the Yuzhny Port in Odesa Oblast. The China Harbor Engineering Company finished the works at the port on Dec. 27, three months before the deadline. (Courtesy of TIS)