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French FDI coming to Odessa

June 17, 2015

“In the age of acorns, before the times of Ceres, a single barley-corn had been of more value to mankind than all the diamonds of the mines of India.” – Henry Brooke

Well, perhaps.

However, barley, and in particular malt, seems likely to take on a particular importance in Odessa.

Whether or not Sasha Borovik, who has now been tasked with bringing FDI to Odessa Oblast by Governor Saakashvili has anything to do with it, French FDI into the Oblast is on its way – and malt (presumably barley) is the reason.

Soufflet Group on 19th June will sign a memorandum expressing interest in developing Illichovsk port – or so sayest those within the Ministry for Infrastructure.

The port at Illichovsk is by far the biggest of the three Odessa ports – though Yushni is the deepest.

Illichovsk has 29 births, covers an area of just under 49 square kilometers (including the container terminals), handles over 300 million tonnes of cargo per annum, and is specially equipped with purpose built terminals for bulk, liquid and general cargo.

With Soufflet Group to sign such a memorandum with Government Ukraine in about a month’s time regarding its investment intentions at Illichovsk, further development of the agriculture/food terminals appears very likely.  It would not be unreasonable to expect expanded grain storage and lifters to appear over the next few years port-side.

For inquiring minds, all major port-sides, as with all major airport runways, are the property of “the State”.  The associated terminals and other logistical infrastructure can be (and often is) privately owned.  The logic for State ownership of Ukrainian port-sides and major runways is one relating to force majeure, and therefore State access and uninhibited use.

That said, Siguler Guff & Company, a US registered investment company (that appears to be little more than a front for Russian investors) will be pleased having secured 50% ownership of Illichovsk port infrastructure earlier this year.

A seemingly prudent decision despite the on-going legal wrangles over a joint venture between Illichovsk Port-side and Illichovsk Container Terminal.  It is Illichovsk Container Terminal that Siguler Guff & Company now own 50% of – the other owners being SSR Deutschland 25%, and 25% owned by Andriy Pavliutin (the original owner).  Indeed with Government Ukraine attracting FDI for the government infrastructure, the raison d’être for purchasing and investing in the container terminals is now underscored for investor digestion.

Whatever the case, whether it be an ill wind that shakes the barley – or not – barley is seemingly about to become far more important to the economy of the Oblast than it previously was thanks to French FDI.

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