We had no intention to pursue the interests of only our company, but wanted the important sector in Ukraine to be developed as a whole.
A list of issues with which NIBULON and the Ukrainian Grain Association publicly addressed themselves to the Ministry of Infrastructure is only a part of problems in the river transport sector, preventing the economy development. They require certain managerial actions taking into account the state interests. For example, till now the Ministry has not done anything to simplify the procedure on doubling control of inland vessels by the captains of sea ports as well as inspectors of the State Inspection on River and Marine Transport Safety of Ukraine, resulting in considerable time loss. It is not a question of the income decrease of the state budget revenue generating companies, it is a matter of efficiency of the Ministry’s bureaucratic apparatus and delay in making concrete decisions and implementing thereof. Thus, NIBULON disproves certain arguments of the Ministry of Infrastructure that published a denial (01.09.2015) on Oleksiy Vadaturskyy’s statement concerning the Department’s unwillingness to implement the project to dredge the Dnipro.
Taking the opportunity, we call on the Ministry officials to eliminate the red tape and to start solving certain problems in the transport complex. Business entities appreciate actions and not a number of meetings and letters written. In order to prove it, we are publishing a letter of the Ministry of Infrastructure No. 3273/27/14-15 dated 22.06.15 and letters of the Ukrainian Design and Exploration, Construction and Technological Institute of the River Transport (Ukrrichtransproject) No. 01/185 dated 07.08.15 and No. 01/186 dated 07.08.15. We ask the Ministry of Infrastructure to do specific work in order to solve topical issues in the river sector and not to increase the bureaucracy.
In April 2014, the Prime Minister of Ukraine Arseniy Yatsenyuk decided to perform dredging on the limiting parts in the Dnipro Reservoir and the Dniprodzerzhynsk Reservoir in order to revive navigation along the Dnipro. He gave orders to the Ministry of Infrastructure, the Ministry of Natural Resources and the Ministry of Agrarian Policy (it. 7 of the report “On situation in the agricultural sector and development prospects in 2014” dated 08.04.2014). At present this decision has been made yet. We propose the Ministry to perform orders of the Prime Minister and not to say empty words.
Unfortunately, there are a lot of officials in the Ministry, but few officials are able to make and perform decisions which are important for the country. NIBULON must be engaged in developing economy and not in responding to groundless reproaches on the part of the Ministry.
Statement of the Ministry of Infrastructure
Denial
The project to dredge the Dnipro was developed by the Ukrainian Design and Exploration, Construction and Technological Institute of the River Transport (Ukrrichtransproject ) on NIBULON’s request in 2013. Till 2015, it was not actually implemented because the source of financing was absent.
As a river carrier that develops Ukrainian fleet, NIBULON has faced the problem, namely the government does not ensure the guaranteed depth of 3.65 m on separate (limiting) parts (sand bars) in the Dnipro Reservoir and the Dniprodzerzhynsk Reservoir, thereby increasing emergency situations during transportation and restricting mass cargo transportation. In 2010, NIBULON spoke about the necessity to develop inland waterways, since then the design and exploration works have been started. But the Ministry of Infrastructure as the main body in the system of central executive bodies being engaged in implementing the state policy on the river transport sector was not concerned with solving the problem of limiting granite sandbars in the Dnipro Reservoir and the Dniprodzerzhynsk Reservoir and does not perform its duties to maintain the guaranteed depths. Thus, NIBULON has to perform functions which are not peculiar to the private company and to initiate the project to dredge limiting sandbars. The working draft “Dredging on limiting sandbars in the Dnipro Reservoir and the Dniprodzerzhynsk Reservoir” was issued by Ukrrichransproject in 2012. The confirmative part of the project was provided to the Ministry of Infrastructure in electronic variant – in October 2012 (letter dated 30.10.2012 No.11632/05) and in documentary form – in November 2012 (letter dated 05.11.2012 No.11880/05) and was approved by the State Inspection of Ukraine on River and Marine Transport Safety (letter dated 16.11.2012 No.4069—4/9.1.1/45-12). NIBULON has repeatedly sent the design estimates to the Ministry of Infrastructure during 2013-2015. At the same time the company addressed itself to the Ministry of Infrastructure proposing to finance dredging of limiting areas along the Dnipro at NIBULON’s expense without involving state funds on compensatory basis. But the Ministry did not consider propositions specified. The Ministry also declined propositions to finance dredging due to canal dues that was collected by Delta-Pilot SE till 12.06.2013 and by the Administration of Sea Ports of Ukraine SE till 13.06.2013. The project was not implemented within several years not because the source of financing was absent, but because the Ministry of Infrastructure does not have a systematic state approach to the development of inland water (river) transport, and it is not interested in dredging the Dnipro River even at the expense of the private investor. The Ministry of Infrastructure approved a plan-schedule covering recommended measures to arrange dredging on the limiting sandbars in the Dnipro Reservoir and the Dniprodzerzhynsk Reservoir only on May 05, 2015. According to the Ministry of Infrastructure, the customer of works is the State Enterprise of Inland Waterway “Ukrvodshlyakh” that faces difficult financial situation and is controlled by the Ministry of Infrastructure. According to the plan, the dredging was to be started not later than 31.07.2015, but it was not started in fact; the customer did not organize the public procurement procedure. In fact, the Ministry does not keep to this schedule.
In 2015, for the first time, the Ministry of Infrastructure has solved the problem of financing, i.e. the Administration of Sea Ports of Ukraine will allocate the required amount (up to UAH 50 million) as irrevocable financial assistance to the State Enterprise of Inland Waterway “Ukrvodshlyakh” that will dredge.
Due to continuous delay because of the Ministry of Infrastructure, the cost of dredging has considerably increased, as material and technical resources rose in price. Thus, if in 2012, the estimated cost of dredging, according to the working draft “Dredging on limiting sandbars in the Dnipro Reservoir and the Dniprodzerzhynsk Reservoir”, comprised about UAH 20 million, thus, in 2014 – UAH 30 million, and in 2015 – up to UAH 33 million. Finally, the Ministry decided to spend UAH 50 million of state funds for dredging. Thus, due to continuous bureaucratic procedures, the cost of works has increased almost 2.5 times. It should be mentioned that the financial plan of the Administration of Sea Ports of Ukraine SE for 2015 that provides for the financial assistance to the State Enterprise of Inland Waterway “Ukrvodshlyakh” to perform dredging on navigable path of the Dnipro River, has not been approved by the Government yet. This fact prejudices the Ministry’s statement on final determination of the source of financing.
Taking into consideration the fact that such complex works have not been performed on the above-mentioned areas till now, the legislation provides for a number of endorsements and examinations. Now the Ministry of Infrastructure and the State Enterprise of Inland Waterway “Ukrvodshlyakh” have already received 6 endorsements from the authorities concerned.
The approval of the working draft “Dredging on limiting sandbars in the Dnipro Reservoir and the Dniprodzerzhynsk Reservoir” does not provide for any specific procedures. The working draft requires operational activities to ensure navigation safety on inland waterways; thereby, the works can be conducted without drawing a permit to perform dredging on the water fund land. The Article 86 of the Water Code of Ukraine establishes standard requirements for dredging. The working draft does not require any peculiar or specific endorsements or examinations.
At present the reason for delay in the final endorsement was caused not by the absence of coordination among the Ministries, as Oleksiy Vadaturskyy said, but because the project provided by NIBULON had defects. During the project examination provided for by the law, the State Enterprise “Specialized State Expert Organization – Central Service of the Ukrainian State Construction Examination” determined well-grounded remarks on certain defects in the project.
According to the laws of Ukraine, the working draft “Dredging on limiting sandbars in the Dnipro Reservoir and the Dniprodzerzhynsk Reservoir” is not subject to the expertise performed by the State Enterprise “Specialized State Expert Organization – Central Service of the Ukrainian State Construction Examination” according to the procedure to approve construction projects and to examine thereof approved by the decree of the Cabinet of Ministers of Ukraine dated 11.05.2011 No.560. The Ukrainian Design and Exploration, Construction and Technological Institute of the River Transport (Ukrrichtransproject) sent a letter dated 07.08.2015 No. 01/186 to the Ministry of Infrastructure, informing about it in detail. Neither the Ministry of Infrastructure nor the State Enterprise of Inland Waterway “Ukrvodshlyakh” addressed themselves to NIBULON, providing any remarks as to working draft or project decisions. Thus, the references on remarks made by the State Enterprise “Specialized State Expert Organization – Central Service of the Ukrainian State Construction Examination” have nothing to do with the given project. On the other side, NIBULON, initiating the project, actively assisted the above-mentioned state enterprise in performing the state ecological examination, but until now the customer of works has not ensured the execution of requirements of the current legislation and has not provide the Ministry of Natural Resources with the local authorities’ endorsements provided for by the law.
The designer will send adjusted documents on September 04, 2015. Then the project must obtain a final expert appraisal and a conclusion from the State Ecological Inspection of the Ministry of Ecology and Natural Resources of Ukraine.
Neither the Ministry of Infrastructure nor the State Enterprise of Inland Waterway “Ukrvodshlyakh” have addressed themselves to NIBULON, asking to correct the project documentation or design decisions.
Taking into consideration the above-mentioned facts, on August 25, the Ministry of Infrastructure approved the corrected plan-schedule to perform dredging. The department wants the project to be implemented as quickly as possible, but it must meet all the current requirements without damaging environmental conditions on the Dnipro River.
The Ministry of Infrastructure unilaterally establishes the volume and terms to perform certain activities. Thus, the Ministry of Infrastructure is completely responsible for the project compliance. The Ministry of Infrastructure has never provided NIBULON with the plan-schedule to perform dredging. The version dated August 25 was not an exception.
The Ministry also denies Vadaturskyy’s fabrication on disinterest in developing river infrastructure “in order to restrict the capability of Mykolayiv ports for the benefit of Odesa ports”. The river infrastructure development will positively influence all Black Sea ports in Ukraine that is confirmed by an opening of coastal lines from Odesa and Illichivsk ports along the Dnipro.
The statements of the Ministry of Infrastructure’s management on support of the dredging project published both on the official web site of the Ministry of Infrastructure (http://www.mtu.gov.ua/uk/zmi/50062.html) and in the specialized mass media (http://cfts.org.ua/news/dnouglublenie_dnepra_startuet_v_iyule__pivovarskiy_26194,http://cfts.org.ua/news/dnouglublenie_dnepra_mogut_provesti_za_schet_sredstv_ampu_26843, http://cfts.org.ua/news/mininfrastruktury_nametilo_napravleniya_reform_v_rechnoy_otrasli_24642, http://cfts.org.ua/news/rechnye_kompanii_gotovy_uvelichit_perevozki_v_15_2_raza_v_sluchae_reformy_otrasli_25304) turned out to be only declarative. The Ministry of Infrastructure does not keep to the plan-schedule approved by the Minister on May 05, 2015. Taking into consideration that NIBULON transports the highest grain volumes along river waterways, the postponement of the project implementation will negatively impact on Mykolayiv port through which the company exports Ukrainian grain. Thus, the very Mykolayiv sea ports will suffer from postponing the project implementation. These ports compete with Yuznyy, Odesa and Illichivsk sea ports on the state grain transshipment market.
NIBULON is one of the most active participants on the river transportation market. The Ministry of Infrastructure of Ukraine thanks NIBULON for numerous propositions asking to change conditions of water transport operation. Most of these propositions have to do with cancellation of dues and payment for services paid by the state enterprises in this sector. Consequently, such decisions must be well-grounded and promote the increase in transportation volumes as well as state budget revenue and not only the reduction in expenses of certain business entities.
NIBULON has addressed itself to the Ministry of Infrastructure with systematic propositions to optimize water transportation expenses and to create conditions to make this type of transport economically attractive both for shippers and carriers. At present river carriers pay for the benefit of the government and state companies more than 15 different dues and payments that exceed 1/6 in the total prime cost structure. This makes river transport noncompetitive as compared to the cargo transportation by railway and restricts further development of inland river transportation. NIBULON’s propositions aim to create economic grounds in order to develop river sector as a whole and not to obtain benefits for certain business entities. Anyway, companies of the state sector that are not engaged in transportation directly but are monopolists in fact, must not get super-profits from keeping the river infrastructure and imposing unnecessary services to carries, telling these services are necessary for navigation safety. This is confirmed by the protocol resolutions resolved at the meeting on July 03, 2015 held by the Department of Sea and River Transport of Ukraine. The latter supported some propositions made by NIBULON. However, the Ministry of Infrastructure is not in a hurry to implement these propositions.
