Will the port of Skadovsk survive?
The Skadovsk Sea Port Silo was put up for auction. However, only one participant was interested in the lot. It is simply not profitable to use this silo, since it is located near one of the most unprofitable ports in Ukraine – Skadovsk. USM tells the “dark” story of the Skadovsk grain silo, and also discusses whether the port has a chance for a “second life”.
In the summer, Skadovsk grain receiving station CJSC with a capacity of 33.42 thousand tons was put up for auction. The auction was scheduled for September 2nd, but did not take place.
The cost of the elevator is UAH 40.5 million (USD 1.54 million). The structure of the silo complex includes buildings and structures with a total area of 7.48 sq. km, located in Skadovsk. They also sell equipment used in production.
The silo can provide services for the storage and transshipment of grain, meal, lubricants and other products, with the possibility of using a port terminal in the seaport of Skadovsk.
The capacity of one-time storage of the enterprise is 33.42 thousand tons: 15.32 thousand tons – in steel silos, 18.1 thousand tons – in 6 flat grain storage warehouses. The receiving capacity is 1.5 thousand tons per day, loading onto vessels – 3 thousand tons per day (river/sea). Annual shipment – 600 thousand tons (it is possible to increase the shipment volume up to 1 million tons per year).
The enterprise was operated by Semilla LLC. In 2018, Semilla became a defendant in a criminal case under the article on fraud, since it owed the bank UAH 12 million (USD 456.4 thousand) taken on credit. The subject of the mortgage taken in 2014 was the Skadovsk silo. Grain receiving station and Demis-Agro (founder of Semilla) changed their registration addresses, which made it difficult to find company officials to collect the debt. The property was placed under arrest, but released at the end of 2019 by the ruling of the court of cassation.
In 2019, the silo was put up for auction, valued at UAH 34.5 million (USD 1.31 million), but to no avail. As you can see, two years later, an attempt was made to auction again, and they even increased the cost of the lot by almost UAH 5 million (USD 190.1 thousand). But this deal was also off, since only one participant was declared, and he did not pay the guarantee fee.
As of August 18th, 2021, Skadovsk grain receiving station PJSC is in a state of termination of activities. Semilla is still a going concern.
Skadovsk grain receiving station is the only terminal that helps the port of Skadovsk handle grain cargo. Enterprises depend on each other: if there are no vessel calls in Skadovsk, the terminal is empty; and in reverse order, if the terminal stops working, the port loses its grain handling performance. For example, in 2018, the volume of grain handling in Skadovsk fell from 2.5 thousand tons to zero. And just in 2018, litigation began on the Skadovsk grain receiving station.
How Skadovsk “nullified”
For many years the Skadovsk seaport has been slowly circling the drain. In 2014, the company sharply lost 80% of its cargo turnover, compared to the previous year. Then, despite the favorable geographic location and low tariffs, carriers did not risk cooperating with the port because of its dangerous proximity to the Antiterrorist operation zones (now Joint Forces Operation).
The port is so unprofitable that at the beginning of 2020 the Cabinet of Ministers has included it in a number of state property objects that are subject to privatization. But the situation is complicated by the debt hole in which the enterprise is mired: the port owes about UAH 4 million (USD 152.1 thousand) for the use of berth terminals and port charges. The port does not have this money, since there are no vessel calls and, accordingly, no cargo flow. The port can only be saved by an investor who will not only invest in the enterprise itself, but also pay its debts.
In February 2020, ex-Minister of Infrastructure Vladyslav Krikliy spoke about the privatization of the Skadovsk port: “It is unlikely that someone will enter the concession there: they are very unprofitable, they no longer have enough money for the payroll.”
In September, Krikliy had already spoken about the port concession and claimed that investors for the Skadovsk port had already been found. This spring it was announced that the privatization of the Skadovsk port is planned by the end of the year. 2021 is drawing to a close – and the crickets…
For clarity, we will demonstrate the dynamics of the decline in cargo turnover in the Skadovsk port since 2013:
In 2020, there were only two vessel calls in the port of Skadovsk. In June 2020, Skadovsk accepted the Pallada vessel under the flag of Moldova – the first after the resumption of the border checkpoint. The dry cargo vessel delivered to Ukraine 3.2 thousand tons of Portland cement in sling bags from the Turkish port of Samsun. In August, the port of Skadovsk accepted the first vessel for grain in three years. The dry cargo vessel Yilmaz Kaptan was loaded with sunflower seeds, the declared weight is 600 tons.
This year, the situation in the port was even worse: the first vessel in 2021 moored in the Skadovsk port only at the end of July – sunflower cake was loaded onto the dry cargo vessel Berk to be sent to Turkey. Then USM managed to find out that the shipper of the cargo was ODA Trade, the recipient was Liberian Industry. The shipping agent of the vessel was Sudoservice.
According to the USPA, cargo turnover indicator of the Skadovsk port in January-July is zero. Apparently, the cargo will be “credited” to the August port figures, which, at the time of this writing, the State Enterprise “USPA” has not yet published. At least, Berk is not recorded in the statistics of vessel calls for July.
Can the port be saved?
The Skadovsk port had a chance for restoration: the Turkish ferry line Cenk planned to enter the port on condition that dredging works were carried out in its water area. The port has even modernized the berth to suit the specific features of the company’s vessels. But the Skadovsk District Council did not agree to carry out the repair digging ahead of the holiday season in 2014, so Cenk moved to Chornomorsk.
One of the “salvation” options is to assign the enterprise to the Kherson port as a port point. This idea was already voiced in 2007-2008, but was doomed to failure due to the port’s debts. If you can still hope for a third-party investor who will cover the company’s debts, then you can not even reckon on help from other Ukrainian ports, which themselves would not refuse additional financing.
Nevertheless, attempts are still being made to save the port and provide it with at least some cargo turnover. For example, at the beginning of 2021, information that a major overhaul was planned in the Skadovsk port appeared. It was assumed that the reconstruction will allow the enterprise to increase production capacity. Or, perhaps, they are trying to “embellish” the port in order to attract investors for its privatization. As part of the work, they promise to renovate site 2, as well as the section of the connection of berth 1 with an embankment of the existing backwater. In addition, it is planned to manufacture a new covering from precast concrete slabs. The area of the territory of the renovated section is 830 square meters.
Also in January, the tugboat Dokovets was repaired – the only operating tug that can serve vessels in the water area of the Skadovsk seaport and is involved in rescue duty in the area of responsibility of the Skadovsk seaport administration. The repair of the tug cost UAH 2.6 million (USD 98.8 thousand).
The port of Skadovsk is located on the northern coast of the Dzharylgach Bay of the Black Sea. It begins its history in 1894, when the first pier was built. The depths in the bay do not exceed 10 m. The water area of the Skadovsk port is a basin, the entrance to which is fenced with a dam. Its depth in the middle part is 5-5.3 m.
The main specialization of the port is cargo-passenger and car ferry transportation in the direction of Turkey, as well as the extraction and sale of sea sand, transshipment of grain cargo. The port of Khorly, which USM recently talked about, is also attached to the port.
In fact, for seven years now we have been observing the subsidence of the Skadovsk port in all respects. Will it be possible to bring it back to life? The state does not expect a concessionaire to enter the port and proposes privatization. But the payment of the port’s millions of debts and its further transformation from a loss-making enterprise into a profitable one is a risky gamble. Whether anyone will agree to it – we will know only by the end of the year.