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Agreement reached on the Klaipėda Seaport land lease fee

Date

2021 07 22

Rating
2
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The Ministry of Transport and Communications, the Klaipėda State Seaport Authority and the Association of Lithuanian Stevedoring Companies have reached an agreement regarding the Klaipėda Seaport land lease fee, which has not been changed for more than a decade. On Wednesday, Minister of Transport and Communications Marius Skuodis signed an order which establishes a new fee calculation method. 

“State investments are directed at the development of Klaipėda Seaport infrastructure – the navigation channel, quays, expansion of the port, access roads and railways. The fact that after long discussions we could reach an agreement regarding the land lease fee, which allows to maintain our competitiveness in the market, is a welcomed step. It is essential to have an effective and transparent land lease method that would create equal competitive conditions. This story has come to a conclusion, and I want to thank the Seaport Authority and the Association of Lithuanian Stevedoring Companies for their cooperation and a constructive dialogue,” says Minister M. Skuodis. 

According to the Minister, the best possible compromises have been reached during the discussions in regards to the calculation of the port land lease fee, as the suggestions and the needs expressed by the stevedoring companies regarding infrastructure modernisation and investment were taken into account.

According to the new provisions, the basic rate of the port land lease fee will increase from EUR 0.91 per m2 to EUR 1.15 per m2. The rate of the fee will no longer be indexed for the quay in service or its parts per 1-metre working (mooring) length of a particular draught; it has been decided to determine coefficients based on the nature of quay use. In addition, one of the components of the fee is being repealed – the coefficient for railway infrastructure; an agreement has been reached regarding the transition period for repealing the preferential coefficients on docking piers and quays.

Land lease fee calculation will not be associated with failure to comply with the stevedoring turnover commitment – it has been agreed to solve this in separate commitments with port land users, concluding a new or amending an existing land lease agreement when considering investment in relevant infrastructure.  

Algis Latakas, Director General of Klaipėda State Seaport Authority, says that raising fees is not an easy process, but a compromise has been found following long negotiations. 

“The new land lease fee procedure, which will be implemented gradually, and its calculation method will allow the equalisation of competitive conditions for port users. As a state enterprise, we will be able to carry out the objectives and obligations imposed by the State, including the return on our capital,” says A. Latakas.

President of the Association of Lithuanian Stevedoring Companies Vaidotas Šileika notes that this period is extremely complicated for most of the stevedoring companies of Klaipėda Seaport due to the global pandemic, geopolitical uncertainty, more expensive resources and increased competition by the neighbouring ports. 

“In view of these circumstances and uncertainty regarding the future, the decision to increase the basic port land lease fee will certainly not make it easier for the port companies to carry out their current operations. However, we are grateful to all the parties that have participated in solving this issue for the dialogue and the compromise reached,” says V. Šileika. 

The procedure for the port land lease fee calculation had not been changed for over 10 years. Over the said period, the leased property value increased at a faster pace than did the land lease revenue. It is estimated that due to investment the value of the property directly used by the lessees and owned by the Klaipėda Seaport Authority grew by 1.9 times, while the land lease revenue grew by 1.3 times due to additionally leased territories and new infrastructure (quays).

Last year, the port reached a record-breaking volume of cargo (around 48 mn tonnes) and it retains its strong position compared to the neighbouring countries’ ports.

The new procedure for land lease calculation is expected to come into effect as of 1 January 2022.