Round table hosted by the Office of the National Investment Council & Ministry of the Infrastructure of Ukraine

1. Investment potential of port infrastructure projects
in Ukraine: opportunities and current issues
Yuliya Kovaliv
Head of Office
May 2017

2. Office of the National Investment Council at a glance
What is the National Investment Council?
1. NIC is an advisory body to the President of Ukraine focusing on the issues related to business
environment, investment climate and FDI growth.
2. NIC brings together key high-level officials (the President of Ukraine, the Head of the Parliament, the
Prime Minister, the Head of the NBU) and representatives of largest Ukrainian and foreign investors in
Ukrainian economy.
What does the Office of the National Investment Council do?
1. Promote of policies that shall systemically improve business environment and investment climate in
Ukraine.
2. Provide Ukrainian an authorities with advice on how to remove hurdles that are blocking investments in
key sectors of Ukrainian economy.
3. Platform for public-private dialogue on issues related to investment climate.
Why is infrastructure is important?
1. Investments in infrastructure spur economic growth and job creation across the economy.
2. Total amount of investment by round table participants in Ukrainian infrastructure exceeds USD 1.0 bn.
2

3. Infrastructure: Huge growth potential
3
Extensive infrastructure, regional importance
• 5 out of 10 European transport corridors run through
Ukraine
• Ukraine has the most extensive railroad network in
Europe, handling a substantial part of passenger and
freight traffic
• Ukraine’s road network is no less extensive, it covers
the country’s entire territory and makes possible
deliveries to any point of destination
• The upcoming reconstruction of river waterways will
help river transport become a worthy alternative to its
rail and road counterparts
50%
28%
13%
8%
Railway
Roads
Water
Avia
Other
Cargo transportation structure in Ukraine,
2015, by volume

4. Ukrainian sea ports: Key asset in the Black Sea Region
4
42%
33%
11%
6%
5%
3%
Russia
Ukraine
Romania
Bulgaria
Georgia
Turkey
Total:
452 mln t
Ukraine is a noticeable maritime trader
• Ukraine operates 13 seaports on the Black and Azov
Seas (excl. Crimean ports)
• Ukraine takes leading position in global commodity
exports (by volume):
• №1 sunflower oil exporter
• №3 grains exporter (following only EU and USA)
• №4 iron ore exporter (following Australia, Brazil
and South Africa)
39.3
25.3 22.4
15.9
7.6 6.5 5.7 3.8 3.7 1.5
Yuzhny
Odessa
Mukolaiv
Chornomorsk
Mariupol
Olvia(ex
Oktyabrsk)
Izmail
Berdyansk
Kherson
Others
Chornomorsk
Olvia (ex Oktyabrsk)
Total cargo turnover in Ukrainian sea ports
was 131.7 mln tones in 2016
Location of 13 Ukrainian sea ports (excl. Crimea)
In 2015 Ukraine handled 1 in 3 tones of cargo
in the Black Sea Region

5. Opportunities in the Ukrainian sea ports
5
30%
25%
13%
32%
Grain
Iron ore
Black iron
Other
Done
Grains became main product in the Ukrainian
sea ports in 2016
• 39.5 million tones in 016
• +7% vs 2015 and +20% vs 2014
• Huge potential for grain logistics growth
• 90% of grain is exported through seaports
• Up to 50% of grains cargo supplied by multinational
companies
Key legislative developments related to sea
ports
• Government initiates new concession legislation
• Big4 audit of all State-owned stevedoring companies
• Further deregulation: in 2015 vessels waiting time
decreased by 14x times. Current vessel clearance
procedure takes 15 minutes
Investments in Ukrainian sea ports
Expected in 2017
Grains, iron ore and black iron = 68% of the
Ukrainian sea ports turnover in 2016
Total:
132 mln t

6. Key issues influencing the development of sea ports and maritime
trade potential of Ukraine
1. Outdated legislation limiting privatization and concession of sea ports.
2. Ports fees in Ukrainian ports are significantly higher than in
competing countries.
3. Unbalanced pace of infrastructure development – sea ports and
cargo terminals are developing faster than automobile/railroad grids
and sea routes dredging is done.
4. Need of finalization and start of implementation of long-term
government strategy for transportation & infrastructure development.
6

7. Round table: Next steps
1. As a group of industry leaders, provide comments to new draft law on concession
and suggestions on improvement of regulation of lease of State-owned property.
2. Set up a working group including representatives of MTU, AMPU and companies
working in sea ports that shall help MTU bring sea port fees to a level that shall (1)
make Ukrainian sea ports more competitive, and (2) cover the costs of sea ports
and AMPU.
3. Support MTU in development of long-term government strategy for transportation &
infrastructure development that shall (1) unlock all logistic chains, and (2) balance
the pace of development of various pieces of Ukrainian infrastructure.
4. Create a framework for development of investment proposals for sea-port
infrastructure projects.
7

8. UKRAINIAN SEA&RIVER LOGISTICS:
HUGE GROWTH POTENTIAL
May 2017
MINISTRY OF INFRASTRUCTURE
OF UKRAINE

9. MINISTRY OF INFRASTRUCTURE
OF UKRAINE
2
50%
28%13%
8%
INFRASTRUCTURE: STRUCTURE
INTRODUCTION
170 000 km
of roads
13 sea &
16 river ports
19 airports 22 000 km
of railways
Cargo
transportation
structure

10. MINISTRY OF INFRASTRUCTURE
OF UKRAINE
3
SEAPORTS: AT A GLANCE
INTRODUCTION
42%
33%
11%
6%
Russia Ukraine Romania Bulgaria Georgia Turkey
13 seaports*
Ukraine position in worldwide trade volumes:
# 1 Sunflower oil
# 3 Grains following whole EU and USA
# 4 Iron ore following Australia, Brazil and South
Africa
39.3
25.3
22.4
15.9
7.6 6.5 5.7
3.8 3.7
1.5
Cargo turnover by stevedores, mt, 2016
Total 131.7 Mt
* Excluded Crimea
Ukraine handles every 3rd ton of cargo in
the Black Sea region, 2015
452
mln. tons

11. MINISTRY OF INFRASTRUCTURE
OF UKRAINE
4
SEA & RIVER: CURRENT INITIATIVES
INTRODUCTION
PPP/ Concession of SEAPORTS
Private Operators on RIVERS PORTS
PRIVATIZATION of SOEs
Ports COMPETITIVENESS
New Law on Privatization is in
process of elaboration
New Law on Rent is in process
of elaboration
Law on Concession is to be voted
2017Y
PPP Infrastructure Office
Law on Inland Waterways is in
process of voting
REFORMS TARGETS LEGISLATION
Modernization of critical
infrastructure and port duties
update

12. MINISTRY OF INFRASTRUCTURE
OF UKRAINE
SEAPORTS:
INVESTMENT OPPORTUNITIES

13. MINISTRY OF INFRASTRUCTURE
OF UKRAINE
6
RussiaEU
EU
Russia
Black Sea
CONCESSION OF STEVEDORING COMPANY “OLVIA”
Key facts
Total area of the seaport: 178.8 ha
Outdoor storage: 277 200 m²; indoor storage: 41 135 m²
Total berth length (7 berths): 1.53 km
Depth near berths: 9.75-11.5 m
Total processing capacity of the port is about 3 mln tones
Main cargos: construction materials, ferrous metals, grain
Train station capacity is 828 wagons / day
Revenue (2016)
$15.4 mln
EBITDA margin (2016)
47%
Cargo turnover (2016)
3.1 mln tones
Unique opportunity for the concession in Black Sea region
SC “Olvia”
Located on the west
bank of the Dnieper-Bug
estuary in a Southern
agricultural region of
Ukraine
2.2
1.8
2.4 2.5
3.1
2012 2013 2014 2015 2016E
Cargo turnover
million tones
SEA & RIVER

14. MINISTRY OF INFRASTRUCTURE
OF UKRAINE
7
RussiaEU
EU
Russia
Black Sea
CONCESSION OF COMMERCIAL SEA PORT KHERSON
Key facts
Total area of the seaport: 47 ha
Outdoor storage: 38 560 m²; indoor storage: 12 328 m² including 3
silos of 608 m² and 12 000 tones capacity
Total berth length (4 berths): 600 m
Depth near berths: 6.9-8.2 m
Total processing capacity of the port is about 2.5 mln tones
Main cargos: grain, construction materials, food products, mineral
fertilizers
The port has a sand pit with total reserves of 12 mln tones
Revenue (2016)
$7.9 mln
EBITDA margin (2016)
14%
Cargo turnover (2016)
1.2 mln tones
Future potential for development of multimodal cargo hub
Located on both
banks of the
Dnieper river (key
inland waterway in
Ukraine) 15 km
away from its
mouth, 28 km from
the Dnieper-Bug
estuary and 90 km
from the Black Sea.
1.3 1.3
1.5
1.7
1.2
2012 2013 2014 2015 2016
Cargo turnover
million tones
Kherson SCP
Kherson city
Kyiv
SEA & RIVER

15. MINISTRY OF INFRASTRUCTURE
OF UKRAINE
8
CONCESSION OF THE FERRY COMPLEX IN CHORNOMORSK PORT
Key facts
The Railway Ferry Complex is a part of Sea Commercial Port
“Chornomorsk”
The only facility in Ukraine, which handles rail and auto ferry lines, as
well as “ro-ro” vessels
It has two berths (#26, 27) with total length of 210 m and one “ro-ro”
berth with total length of 269 m (#28)
The depth of port berths is 9.7 m
Total handling capacity is 4.5 mln tones of cargoes in wagons,
150000 trucks and 250 000 vehicles per year
The complex is a part of rail ferry lines functioning on the Black Sea
and the “New Silk Road” trade corridor
Revenue (2016)
$3.7 mln
EBITDA margin (2016)
37%
Cargo turnover (2016)
1.8 mln tones
Niche and unique potential for development of Silk Road logistic
Cargo turnover
million tones
1.4 1.6
2.2
1.4
1.8
2012 2013 2014 2015 2016
Ferry
complex
Located on
the north-
western shore
of the Black
Sea in
Chornomorsk
sea port
Ukraine
Russia
Georgia
Turkey
Bulgaria
Romania
SEA & RIVER

16. MINISTRY OF INFRASTRUCTURE
OF UKRAINE
9
DEVELOPMENT OF STATE STEVEDORING COMPANY
“CHORNOMORSK”
Revenue (2016)
$44 mln
EBITDA margin (2016)
24%
Cargo turnover (2016)
6.6 mln tones
Terminal-oriented concession/lease opportunities in the biggest sea port of Ukraine
14.5
10.1 10.5
11.9
6.6
2012 2013 2014 2015 2016
RussiaEU
EU
Russia
Chornomorsk
Key facts
Total area of the seaport: 302 ha
Outdoor storage: 356 000 m²; indoor storage: 10 000 m²
Total berth length (28 berths): 5.5 km
The port has 5 deep-water berths with depth of 13-13.5 m, the other
berths have depth 4.5-11.5 m
Total processing capacity of the port is about 30 mln tones, 1.15 mln
TEU, 254 000 auto vehicles
Main cargos: grain, iron ore, autos
Cargo turnover
million tones
Located at
Sukhoy
estuary, 12
miles to the
South-West
from Odessa
Black Sea
SEA & RIVER

17. MINISTRY OF INFRASTRUCTURE
OF UKRAINE
10
DEVELOPMENT OF YUZHNIY SEAPORT
Key facts
Totally handled in the port 48.6 mln tones in 2015, including 15 mln
tones by the state seaport operating company
The depth of the main piers is 14 meters, there are two deep-water
berths with a depth of 18.5 meters capable of accommodating
Capesize vessels
It has 7 berths with anchorage capacity of 24 vessels
Open storage yards cover 185 500 m², sheltered warehouses – 2000
m² (1 mln tones storage capacity)
Loading intensity is 40 000 tones/day, 650 cars/day
Main cargos: chemicals, ore and general cargoes including coal,
metal, cast iron, pellets, palm oil, carbamide, ammonia, methanol,
crude oil and grain
Revenue (2016)
$68 mln
EBITDA margin (2016)
49%
Cargo turnover (2016)
15 mln tones
The deepest export-oriented port of Ukraine is open for investor
SE “SCP
“Yuzhniy”
13.4
14.3
14.8
15.1 15.0
2012 2013 2014 2015 2016
Cargo turnover
million tones
RussiaEU
EU
Russia
Yuzhniy
Black Sea
Located on the
northwest coast of
the Black Sea, in
Small Adzhalyk
(Grigorievsky)
estuary, 30 km
north-east from
Odessa
SEA & RIVER

18. MINISTRY OF INFRASTRUCTURE
OF UKRAINE
11
IzmailRomania
Germany
HungaryAustria
PRIVATIZATION OF UKRAINIAN DANUBE SHIPPING COMPANY
SEA & RIVER
Revenue (2016)
$25 mln
EBITDA margin (2016)
3.6%
One of the largest shipping companies in the region
Key facts
Danube Shipping Company is one of the largest shipping
companies both in Ukraine and in the Danube region.
It has sea and river vessels, operates close to Reni, Izmail and Ust-
Danube ports, which allows it to create a transportation hub on the
Black Sea
The Company’s fleet consists of 75 self-propelled and 245 non-self
propelled vessels, including:
River barges with carrying capacity 1 000-2 300 tones
River push-tow boats with the capacity of 1 050-3 000 hp
Self-propelled vessels with the capacity of 1 814 tones
It also operates a fleet of foreign JV companies consisting of 125
vessels
Handles 2.7m tones of cargo per year and provides 20% of all
Danube shipping
Cargo turnover (2016)
2.8 mln tones