Ukraine Targets Port Concessions, Rail Overhaul, Deputy PM Says

Ukraine will offer concessions to help revamp its Black Sea ports and will restructure passenger rail services that contribute to $1 billion of annual losses for the industry, according to the country’s deputy prime minister.

Borys Kolesnikov, who’s also infrastructure minister, met with executives from companies including Royal Caribbean Cruises Ltd. (RCL) in the U.S. this week to discuss the port concessions, which may be allocated through tenders during the next two years. The plan will allow improvement work to be carried out while preserving state control, he said in an interview.

“We discussed concessions for passenger transportation with Royal Caribbean,” Kolesnikov said Sept. 12 in Washington. “They’re interested in ports such as Yalta, Sevastopol and Odessa so we’re at the beginning of that road.”

Ukraine is seeking foreign investors to help overhaul Soviet-era infrastructure and boost economic growth. Gross domestic product in the former Soviet nation advanced 3 percent from a year earlier in the second quarter as Ukraine co-hosted the European soccer championships with Poland.

Ukraine will announce in February or March a restructuring plan for its passenger rail industry, where 98 percent of rolling stock was bought during Soviet times, according to Kolesnikov.

“Subsidies should only be given to those who really need them,” he said.

New Wagons

About 45 percent of Ukraine’s cargo rolling stock has been sold to private investors, while the state retains control over the train lines and locomotives, Kolesnikov said.

“We attract investors who buy new rolling stock and pay the railroad for use of locomotives and mainlines,” he said. “We’re planning to renew 100 percent of the rolling stock in the next five years.”

Kolesnikov said his trip includes meetings with U.S. Transportation Secretary Ray H LaHood, officials from the port of Miami and federal agencies with responsibility for railroads.

Aside from the U.S., Ukraine is interested in Chinese financing for infrastructure projects after agreeing on as much as $9 billion in currency-swap and loan deals from the Asian nation since June, according to the deputy premier.

“As far as infrastructure projects are concerned, the answer is definitely yes, Kolesnikov said. ‘‘It depends whether we’re free to use this money or we have to choose certain contractors or have other obligations.’’

To contact the reporter on this story: Sandrine Rastello in Washington at srastello@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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