ROAD PPP PROGRAM IN UKRAINE

05/11/2020

 

On 29 October 2020, the Ministry of Infrastructure of Ukraine, the Ukrainian Automobile Road Agency (Ukravtodor), the World Bank and the International Finance Corporation presented new mechanisms for the attraction of a private investment in Ukraine's road sector (the "Program"). The Program represents the outcome of the cooperation between the Ministry and the international partners aimed at rehabilitation and maintenance of the Ukrainian road network through public-private partnership (PPP).

Experts from the World Bank and the International Finance Corporation, with the support of the Global Infrastructure Facility (GIF), have presented a PPP model where the private investor will be involved in upgrading and developing the existing road infrastructure. At the same time, the State will reimburse the investor with an availability payment mechanism.

The availability payment mechanism contemplates that the private partner finances the rehabilitation of the roads and then will carry out the long-term (20-25 years) operation and maintenance of such roads. In exchange, the investor will receive availability payments - a contractually agreed fee, which is contingent on the private investor complying with the specified performance standards (KPIs) and output specifications.

The World Bank, Ukravtodor and the Ministry of Infrastructure, have chosen six road segments with a total length of around 1,500 km, which will be implemented during the first phase of the Program. The estimated amount of investment for the implementation of the first phase of the Program is approximately USD 2 billion. It is expected that these projects will be implemented during 2020-2022 and awarded in accordance with the following schedule:

• Winter – Spring 2021 – preparation of the feasibility studies, efficiency analysis by authorized public bodies, approval of the tender launch;
• Spring – Summer 2021 – preparation of the tender documentation (instructions for bidders, draft PPP agreements and others), data room preparation; and
• Autumn 2021 – tender announcement.

According to Vladislav Krikliy, Minister of Infrastructure of Ukraine, the implementation of the entire Program will attract more than USD 9 billion of private investment, which will cover the rehabilitation and maintenance of more than 4,500 kilometers of state roads.

More information about the Program is available at https://roadppp.in.ua/en/.