Chinese Beijing Interoceanic Canal Investment Management (BICIM) has announced investments of up to US$10 billion in the construction of the Black Sea's largest trade port in the Crimean town of Sevastopol, report local authorities.
The deepwater port of Sevastopol will simplify access for Chinese ships to Europe, cutting thousands of kilometers from the current Asia-Europe route. The new port will be operating as the joint stock company and BICIM will own a majority of shares.
Interestingly, the initial agreement for the port project, signed during the Presidency of ousted Ukraine President Victor Yanukovich, stipulated that the port will be contained within a specially demarcated "special economic zone".
At the time, the logic behind this move was to grant special dispensation from taxes. But with the cash-strapped Ukraine clamping down on tax benefits, the fate of this zoning proposal remains uncertain.
Also uncertain is how the current crisis in the Crimea may affect BICIM's plans. Both Russian and Ukrainian industry analysts agree that no matter the outcome of the crisis, a Sevastopol port will serve as an important transit point from Asia to Europe.
However, the economic toll of the Crimea crisis may result in a cost blowout for the project, with Chinese analysts estimating the cost of the port to balloon out to as much as US$50 billion.