The purpose of the Road PPP Program is to engage the private sector in Ukraine’s existing road network through PPP contracts to facilitate quality road network upgrades and long-term maintenance through private investment.
- A significant portion of Ukraine’s road network is in poor condition and needs repairs.
- Having limited resources to achieve its goals, the Government plans to increase the share of private investment in the roads sector.
- 2020 was announced as a year of a national Great Construction Program aiming to connect the country with modern highways.
- The availability payment PPP contracting option is considered the most suitable for the Program.
- Under this option, the private partner finances the rehabilitation and long-term operation and maintenance of the road segment.
- In exchange, it receives availability payments – a contractually agreed-upon amount, that is contingent on the private partner meeting the specified performance standards (KPIs) and output specifications.
- 6 sections of roads have been selected as potential pilot projects for the first stage.
Regarding the projects in the road sector, in December 2020 – January 2021, the PPP Agency, in cooperation with the Ministry of Infrastructure, with the support of the International Finance Corporation (IFC) and participation of advisers has completed the preparation of concept notes for the following projects:
- “PPP project on sections of international roads M-29, M-04 (first category) and M-18 (second category), which connect in one route large industrial cities: Kharkiv, Dnipro and Zaporizhzhia”,
- “PPP project regarding the road M-06 – Kyiv – Zhytomyr – Rivne” (100%),
- “PPP project regarding international roads M-07 / M-19 – Yahotyn – Kovel – Lutsk” (100%),
- “PPP project regarding the road M-03 – Boryspil – Poltava”
- “PPP project regarding the segment of the road M-14 – Kherson – Mykolaiv” (100%),
- “PPP project regarding the international road M-04 of the first category and the national road H-11 – Dnipro – Kryvyi Rih – Mykolayiv” (100%).
In July 2021, the concept notes were amended and their content was updated as per comments/remarks and proposals from the Ministry of Economy of Ukraine, Road Departments in Kyiv, Poltava, Zaporizhia, Kharkiv and Mykolaiv regions, as well as the position of the Ministry of Finance of Ukraine.
Based on the results of a detailed analysis of concept notes developed with the help of representatives of the Ministry of Economy of Ukraine, the Ministry of Finance of Ukraine, the State Agency of Motor Roads of Ukraine (Ukravtodor), the first two sections of roads for future PPP pilot projects in the PPP Road Program have been selected:
- Yahotyn – Kovel – Lutsk (М–07, М–19),
- Kharkiv – Dnipro – Zaporizhzhia (М–29, M–04, M–18).
By the Orders of the Ministry of Infrastructure of Ukraine № 705 and №706 dated 20.12.2021 the following decisions were approved:
- to develop a feasibility study for the public-private partnership project on the construction and operation of public roads of national importance regarding sections of international roads M-07 and M-19, Yagodyn – Kovel – Lutsk, and
- to develop a feasibility study for the public-private partnership project on the construction and operation of public roads of national importance regarding sections of international roads M-29, M-04 (first category) and M-18 (second category) Kharkiv – Dnipro – Zaporizhzhia.
On the 22nd of December, an agreement was signed between the State Agency of Motor Roads of Ukraine, the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) for the provision of the services needed for the public-private partnership projects in the road sector preparation and implementation, in particular services for the feasibility study development (according to paragraphs 28-29 of the Procedure for engaging advisors in the preparation of concession projects, approved by the resolution of the Cabinet of Ministers № 950 dated October 9, 2020).
Currently, tender preparations for the selection of advisors for the development of feasibility study and project tender documents is being conducted. It will be organised by international financial organizations.