The incompetent Minister of Infrastructure, Volodymyr Omelyan, is costing Ukraine dearly.
"The worst thing is that a person fed on empty words begins to believe they've grasped something important. But they've simply added more garbage to their head. True understanding, Mr. Fyodor, is when the garbage is cleared from the mind."
V. Pelevin, "Secret Views of Mount Fuji"
I'm not the only one who's written about the notorious concession. There are countless similar examples in the media. I've decided to dedicate this article to the origins and thieving consequences of this, figuratively speaking, concession itch among the highest-ranking officials in the transport industry.
Upon assuming the post of Minister of Infrastructure, Volodymyr Omelyan wasn't directly involved in the concession. He spent his first year in charge of the industry simply battling for the position of head of Ukrzaliznytsia, then elegantly and quietly placed a previously unknown "specialist" of his in the port administration. The minister's vocabulary consisted largely of foreign-sounding words: Hutchison, DP Word, and a couple of other company names, for some reason specifically and personally selected by the minister for the Ukrainian market. Audit and regulatory bodies are already vociferously assessing the extent to which the minister's personnel war at Ukrzaliznytsia and the ports has had a profound impact on the level of service and the efficiency of Ukraine's strategic enterprises. Service users also comment profusely on "Ukrzaliznytsia's work" rather than on the utter futility and expense of maintaining the superstructure of the Port Administration.
After a while, realizing that the obvious lobbying of a couple of companies wasn't having the best effect on his reputation, the minister abandoned the rhetoric of "Hutchison, DP World" and switched to a couple more catchy foreign words for maximum media hype. Namely, "hyperloop" and "concession"! The hyperloop is easier, since only a small amount of public money was invested in it. The concession is much more complicated!
The word "foreign" sounds truly beautiful and enticing. The PR campaign was at its maximum, involving both Ukrainian subordinates and the cajoling of foreigners who were about to bite such a fantastic bait in our ports that their hands would almost stretch to the maximum possible size from the prospect of a "fish"... In dreams and chatter, of course.
The unprecedented involvement of both insiders and outsiders can be judged by the press releases of the Minister's pocket Administration of the Sea Ports of Ukraine:
At the roundtable discussion "Pilot Public-Private Partnership Projects in Ukrainian Seaports," representatives from the USPA, IFC, the EBRD, the SPILNO PPP office, the World Bank, and the European Investment Bank will discuss key aspects of concession tenders and the conditions for participation by interested investors. Providing investors with up-to-date information on concession projects directly from project developers will help ensure maximum transparency in the tender process and attract the maximum number of participants.
"I am convinced that, on the eve of the announcement of the first concession tenders, it is important to once again thoroughly discuss pilot projects and future concession plans at Ukrainian seaports with potential investors and industry representatives," says Oleg Kudashov, Senior Investment Specialist at the International Finance Corporation (IFC). "It is essential to analyze the regulatory framework for PPPs and also to thoroughly address the practical issues of concession tenders that may arise for stakeholders."
"For our part, we see the readiness of the Government of Ukraine, in particular the Ministry of Infrastructure, and the Ukrainian Sea Ports Authority, to engage in constructive dialogue with businesses regarding the optimal concession model based on a balance of interests among all stakeholders. Therefore, we invite interested investors to an open discussion," adds Mark Magaletsky, Head of Infrastructure for Ukraine at the European Bank for Reconstruction and Development (EBRD).
And also – Marina Petrova, Deputy Head of the EBRD in Ukraine, speaking among representatives of the EBRD and the World Bank at the Grain Ukraine 2019 forum and the Port Forum:
"We're counting on the concessions being passed. It's unlikely this Rada will pass the law (on the concession), but we're not giving up (!!!). We don't know when it will happen, but we know for sure it will happen. And for us, this is a priority. This is very important for business."
To be more precise, I will paraphrase an expert: “Let it be as it will be, because somehow, yes, it will be, it has never happened that it would not happen…” (Brother soldier Schweik).
“But this is important for business!..” officials echo the minister, without having a single clear opinion from the business community itself!
What Ukrainian business wants to see a seaport concession from Volodymyr Omelyan in Ukraine? Yes, a couple of years ago there was a fuss over the Yuzhny port concession, favoring a specific oligarch. It didn't work out, including with Volodymyr Omelyan's participation. And how the minister tried! They didn't take the risk. It turned out it was much easier to simply "milk" the Yuzhny port, which is already 80% loaded with cargo from this oligarch. And without a concession. But then what's the minister supposed to do? Push "concessions" to other ports?!
“In June 2019, after the approval of the tender documentation, a competitive and transparent tender for the concession of the ports of Olbia and Kherson will be announced,” said Infrastructure Minister Volodymyr Omelyan on May 31, 2019” (as usual, there was no announcement of this in June…).
In other words, there's no standard law governing the future concessionaire's work in Ukraine's seaports. And there won't be one anytime soon! There's also no hope that the new Verkhovna Rada will urgently address V. Omelyan's concession obsession. Moreover, according to the Verkhovna Rada's Rules of Procedure, all bills that haven't been reviewed and adopted in their entirety by the end of the current Verkhovna Rada's term will be automatically withdrawn. Some will have to be resubmitted. This includes, of course, the controversial "Concession" bill. If anyone even dares to resubmit it.
According to a number of current people's deputies, if such projects are withdrawn, it will be for the better.
Igor Lutsenko, a member of the Verkhovna Rada Committee on Preventing and Combating Corruption, said: “Ukraine doesn’t need a concession at all yet, since the concession has discredited itself as an investment instrument.”
Member of the Verkhovna Rada Committee on Agrarian Policy Andrey Vadatursky: "It's easy to sell or lease something you didn't build for a pittance. But when we give away everything we have and see that we're receiving far less revenue than these enterprises would have generated if they had remained state-owned and managed properly, what will we do? The concession issue is a targeted solution to problems. So there's no point in rushing things now."
Can anyone in the country explain what's going on? Millions of public funds are being spent on the implementation of a single ministerial "concession" idea, while in reality, it's a completely murky undertaking. Literally hundreds of employees from the Ministry of Infrastructure and the Port Authority are holding conferences and roundtables, endlessly writing and calculating, rushing around the country and abroad with the sole purpose of demonstrating and pushing something that no one wants! A fictitious concession, in other words.
There are even estimates that the Cabinet of Ministers' Office of Infrastructure Reforms has "sucked up" billions of hryvnias of European donor funding solely to justify Volodymyr Omelyan's concession projects. Billions! The result—zero!
Cities whose ports were the first to be selected for concession slaughter are already raising their voices. Mykolaiv: "There will be no concessions at Mykolaiv region ports anytime soon! Not at all! No matter how much the minister would like it." The latest clarification of positions on behalf of the city and the minister is a clear confirmation of this. Not a single coherent argument from the minister, other than the almost childish: "I want a concession, and that's it! And then figure it out yourselves..." What childish games, only at public expense...
Meanwhile, our competitors in the port sector are successfully developing ports without the notorious concessions. Example 1: China will build a completely new port in Varna (Bulgaria)… Not a concession for the old port in the center of Varna, but a completely new port for $120 million. Example 2: Turkey – a huge new port on the Sea of Marmara is targeting unprecedented foreign investment of €400 million and handling 4 million containers per year. The latter port has concession terms for almost 30 years, but with a clear understanding of guaranteed enormous (for our country) cargo flows from the growing industrial zone nearby.
In our case, the minister is offering a concession for a port with a capacity of 2 million tons of grain, with unclear possibilities for cargo delivery to it through the center of Nikolaev and rather questionable service from the railway.
For most of the expenses related to the Minister of Infrastructure's concession and hyperloop itch, it's difficult to prove direct damages amounting to billions in ineptly squandered public funds. However, the disastrous results of the "reforms" over three years of this veritable circus in our infrastructure are obvious.
But there is also direct evidence of attempted theft under the auspices of the concession. For example, tenders for over a million public dollars for "consultations" on concessions. What do you mean? Consultations? A million dollars? Don't believe me? The first tender was announced in April 2019 (see photo below). It didn't take place. Were they afraid of publicity or something else? The second tender was announced just the other day, on June 25th. See the link: The Ukrainian Ports Authority urgently needs "Consulting Services for Concession Preparation." Port workers are ready to immediately shell out another million dollars in public money for these consultations... Questions immediately arise: why is the Ukrainian Ports Authority holding the tender, and not the Ministry of Economy? Who will evaluate the quality of million-dollar consultations? Are there specialists, a commission, and an evaluation methodology? And what kind of consultations does the Ukrainian Ports Authority need for that kind of money? Or is this a million-dollar "demobilization chord" before the leadership changes at both the Ministry of Infrastructure and the Ukrainian Ports Authority after the snap elections? in the Verkhovna Rada with a change in leadership?
Tenders are announced and state funds are prepared to be “disbursed” for “consulting services”…
Of the several possible outcomes of providing such “consulting services”:
After the analysis, the consultant will conclude that the concession is unfeasible. A million dollars from AMPU has been wasted, because the analysis was already completed.
A foreign firm will be found that, for a percentage, will agree to "launder" the million dollars from AMPU. Documents confirming the provision of consulting services will be simply downloaded from the internet, sprinkled with a few specifics and liberal use of the word "concession," and the deed is done, meaning the million dollars from AMPU has once again "flown" into the pocket of some official. The "consultation" will be read, accepted, and evaluated by their own people, the Omelyanovsky port workers.
I'm not an expert in criminal proceedings, but a Criminal Code article with a title containing words like "preparation, or organization, or attempt to seize property (money) of the state enterprise AMPU" is very much begging for action from both the NABU and the State Bureau of Investigation (DBI). The investigation can begin (by reading this page): https://zakupki.prom.ua/gov/tenders/UA-2019-06-25-001676-c.
Calling on the Ministry of Infrastructure itself to stop the embezzlement of public funds by the state-owned enterprise, the Ukrainian Sea Ports Authority, would be a waste of time and effort. After all, the minister himself is so fond of the word "concession" that he simply won't notice petty theft under this "sauce." The concession is more important!
In topic: Sea of corruption
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Alexander Zakharov, specially for the publication Argument
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