Investments in BMF Port Burgas reach 158 million euros

0
110
Photo by BMF Port Burgas

BMF Port Burgas EAD is a private-owned port operator of terminal Burgas East 2 and terminal Burgas West, part of the national public port of Burgas, Republic of Bulgaria. On June 5 2019 of the Council of Ministers of the Republic of Bulgaria decided to expand the duration of the concession term of both of the terminals from 35 to 46 years and 8 months each. A couple of days ago, we took an opportunity to talk with Mr. Boris Balev, CEO of BMF Port Burgas EAD, who provided us with invaluable insight into the company’s business and development plans and their most important projects on the horizon.


Mr. Balev, how much money and in what directions are your investments in the development of BMF Port Burgas since 2012?

The investments that will be realized for the 2021 amount to nearly 8 million euros. With them, the total amount of investments since 2012 is approximately 158 million euros. I dare say that with these funds we have completely transformed the two terminals of the Port of Burgas since they were given to us for management and operation. We have talked many times about the facilities we have built and modernized in the port in the past, so I will focus on what is new for this year.

We have put into operation a new installation for discharging oil bitumen from ships to railway cars and tank trucks. We strive not only to constantly increase the number of available equipment, but also to modernize it to such with modern technologies for energy efficiency. We are constantly working towards expanding and modernizing the storage areas in the terminals.

The project for expansion of our silo complex is going well so far. This year we built 2 more silos, 5,100 m3 each. The construction of another 2 is forthcoming. The total capacity of the complex after the completion of the construction activities will be 119,000 m3. The implementation of this project allowed us to mark a number of strong months in the processing of cereals this year.

 

What was the dynamics of the realized turnover over the years?

In the period 2013 – 2019 we reported an annual growth of processed cargo of an average of 10% per year, and in 2020 the volumes are identical to that we reported in 2019. We expect to end 2021 with between 10 and 12% higher turnover than in the last two years. We are doing everything in our power to return as soon as possible to the good positive trends that we maintained before the crisis. In August we achieved an absolute record in the monthly volume of processed cargo for our entire history as a port operator. We extremely appreciate the trust that our customers continue to put in us!

 

To what extent has the crisis caused by the pandemic affected BMF Port Burgas in the last 2 years?

The transport sector and the maritime industry have been hit hard by the pandemic. We began to feel very clearly the effect of this crisis and lockdown, which was imposed in most parts of the world, in our turnover from the second half of 2020 on. There is a significant difference between our long-term business strategy set in 2012 and the new market reality. There is uncertainty in the regularity of vessel calls and the volume of deliveries that take place through the port terminals. The shutdown of a number of businesses in different parts of the world, dictated directly or indirectly by the COVID-19 pandemic, has led to the unbalanced location of containers globally. This further complicates the schedule of deliveries by sea. This puts us in a difficult position to continue to provide quality and reliable services at a time of unprecedented market shrinkage.

On top of this challenge, the rising electricity and fuel prices in recent months have forced us to rethink our business plans and strategies.

Do you observe its effects going away and what were the specific measures taken by the management to deal with them?

The latest data from the European Maritime Safety Agency show that in Bulgaria there is a decrease in the number of monthly ship visits by an average of 14% in the period January – August 2021 compared to the same period in 2019 – the year before the Covid-19 pandemic. It is too early to talk about “going away”. The crisis in the supply chain and its effects on the economy and business are yet to develop.

As far as the measures we have taken are concerned, our main focus is on preserving human health and life and ensuring the continuity of the work of the port. We have taken measures to limit the spread of the infection among the company’s employees and persons residing in our territory as much as possible, such as disinfection and protective equipment. We have introduced a system for access control in the port by remote reading of the body temperature of all persons passing through. We have also provided from-home working conditions for the administrative staff, but this is not possible for people directly involved in cargo handling. We have reorganized operational activities in a way that will ensure the continuity of the work process, regardless of the development of the epidemic.

How can you characterize your relationship, as a concessionaire, with the state? Can they be called a partnership? What do you think should be the optimal concession period and is this the best way to manage Bulgarian ports?

It is important to emphasize that the infrastructure and most of the facilities at both terminals are owned by the state. Everything we build or reconstruct as a concessionaire becomes state property after its commissioning. Meaning that even after the end of our concession agreement, what we have achieved here remains a state asset. Therefore, the partnership spirit of the relationship between the state administration and the concessionaire is essential for the development of the terminals. We hope to continue the good working spirit with the institutions, as well as to work together on the development of the capacity and potential of the port.

It is a world known practice to lease such a key infrastructure for private business management through various forms / alternatives to concession. For me, that is the winning combination – the flexibility and commercial approach of the private company in combination with adequate control by the state for maximum protection of the public interest.

The huge amount of investment we have made in the terminals allowed us in 2019 to increase the initial term of our concession contracts by almost 12 years. The obtained total concession period of nearly 47 years is good for us in terms of long-term business plans and strategies and allows the conclusion of long-term contracts with customers and partners.

Are you taking steps to decarbonise your cargo handling processes?

Our current priority is to be greener and we invest significant resources in this. This year we successfully passed the certification audit according to the international standard ISO 50001 for the Energy Management System. With the new introduced procedures under the system we will guarantee more responsible use of the available resources and reduction of the harmful impact on the environment from the port activity.

In February, we completed the retrofitting of some of our cranes, which allows the use of electricity instead of diesel to power them. In addition to the economic effect of this modernization, we expect reduced emissions and noise pollution. We are currently exploring the possibilities for modernization of the rest of the mechanization, with which to limit to the maximum the harmful impact on the environment in the port. Significant positive effect in this area, we expect from the modernization of our railway infrastructure, as well as the rolling stock used by our shunting operator. There we plan to switch from locomotives with diesel power, to ones with electricity or other power supply, which is more environmentally friendly. The first electric machine for the railway was delivered in the summer for the needs of the port.

 The other topic in the industry is automation. Do you think that the integration and implementation of automated systems is the future of port activities?

BMF Port Burgas is a member of the prestigious Federation of European Private Port Terminals and Stifador companies – FEPORT and at our last regular general meeting we once again discussed the topic “port automation”. Our colleagues and I expect that at European level a reasonable limit will be imposed on the degree of process automation in order to ensure the employment of port workers in industry.

New high-tech solutions are an integral part of the future for every area of business. The Bulgarian maritime industry is still far from moving to a high degree of process automation, and the market does not currently suggest such a large investment.

 

What are the prospects for the development of the port in the next 5 years? 

We have the ambition to expand the quay capacity of the Burgas port. We believe that Bulgarian ports have the potential to meet a large volume of the supplies from and to Europe by sea and we are working hard in this direction. We built 3 new ship berths in 2018. We have technological projects for the construction of another 4 new ship berths. We received support from the European Commission to finance the development of technical projects for the construction of these 4 berths.

On October 4, 2021, we signed a Grant Agreement with the European Executive Agency for Climate, Infrastructure and the Environment to conduct research and analysis and prepare a conceptual and technical design for 2 more berths. These studies and analyzes, as well as previous ones, will allow us to be as flexible as possible in the presence of new projects to expand the quay capacity.

The fact that for the second time we receive approval from the European Commission for funding is a great evaluation of our work.