Tariffs for access to berth for port operator come into effect

GovernmentDecree of the Cabinet of Ministers No. 1331 of 14 December 2015 on the harmonization of tariffs for stevedoring company for access to the berth, controlled by the Ukrainian Sea Ports Authority (USPA), came into effect on January 1 of this year. According to the project developer, the document will enable market players to better plan their future costs. The decree does not apply to berths that are in use by private companies on the basis of lease contracts, concessions or other forms of public-private partnership.

The new procedure caused a mixed reaction in the industry since the entrepreneurs believe that in order to use a berth for a single time, the business will need to undergo a long bureaucratic procedure to conclude the agreement with USPA. In addition, preliminary estimates suggest that a one-time fee for access to the berth in accordance with the rates exceeds in 10 times the cost of rent or servitude. The main purpose of the decree was to solve stevedores’ problems who did not cooperate with USPA under lease, concession or other type of public-private partnership, and were forced to make a one-time fee for the use of a berth.

The attempt to make the clear pricing system failed, as tariffs are set for sea ports in accordance with the groups to which they contributed. But the methodology and criteria for the classification of Ukrainian harbors is not clearly provided by legislation.

Additional difficulties are caused by difference in the rate of exchange. Rates for access to berths are published in US dollars, and the company, guided by the norms of Ukrainian legislation, have to pay for this service in the national currency at the current rate.

Order of the Ministry of Infrastructure of Ukraine No. 541 of December 18, 2015 “On approval of tariffs for the access of port operator to the berth, managed  by Ukrainian Sea Ports Authority” says that by charging this fee revenues are primarily served for maintenance, reconstruction, modernization of existing hydraulic structures and construction of new ones. But if we refer to the law “On sea ports” we will find that there is a berthing fee for these purposes.

Thus, for the market innovation may result in new logistics costs, which will increase the prime cost of goods in the market at the end of the day.