EBRD’s Infrastructure Project Preparation Facility (IPPF) and IFC Advisory team up to in support of Port Olvia and Port Kherson PPP preparation
Ukraine is joining forces with two international financial institutions, the EBRD and IFC, to strengthen infrastructure development in the country with the involvement of the private sector.
The government and the EBRD signed an agreement this week that mandates the Bank’s Infrastructure Project Preparation Facility (IPPF) to work with IFC PPP Advisory team on the development of PPP projects for the Black Sea ports Olvia and Kherson.
The EBRD Infrastructure Project Preparation Facility (IPPF) offers an improved support mechanism focused on bankable project preparation, coupled with a coordinated approach to infrastructure policy dialogue. IFC Advisory provides transaction advisory services to public sector clients worldwide for PPP preparation, and will act as the overall transaction lead in close collaboration with the EBRD’s IPPF.
In total, nearly €2 million in PPP preparation development costs are being allocated between the EBRD’s IPPF and IFC Advisory. In addition, the Global Infrastructure Facility, a multi-donor fund created to support PPP preparation, will provide over €1 million in support.
The focus of the port development will see significant investment by the private sector in port terminals to complement public sector investment in the port infrastructure. Major commodities, such as grain from Ukraine’s vibrant agriculture sector, will be handled at the new facilities, which may receive upwards of €200 million in capital investment.
Volodymyr Olmelyan, Ukraine’s Minister of Infrastructure, said: “We are pleased to have reached this milestone with the EBRD’s IPPF, which will work with IFC Advisory to create a convincing advisory team in support of strategic investments in the port sector. We look forward to the PPP tender progressing.”
Raivis Veckagans, CEO of the Ukraine Sea Ports Authority, added: “We are ready to act as a strong partner in this effort. We have high hopes that the arrangement with the EBRD and IFC will produce a substantial private sector investment for our sector.”
Matthew Jordan Tank, EBRD Head of Infrastructure Policy and manager of the IPPF, said: “This is a very good example of collaborative PPP preparation work on the part of two IFIs. It is pioneering in this respect and we think it can be replicated in other cases going forward.”
Georgi Petrov, Regional Manager for IFC Advisory, added: ““This partnership will leverage the strengths of each of our institutions and apply them towards preparing a bankable structure that can attract a healthy level of competition for these two port assets.”
Infrastructure development is one of the strategic priorities of the EBRD and one of the pillars of the Bank’s business activities. Every year the EBRD invests approximately 25 per cent of its new business across a diverse range of subsectors, including rail, roads, urban transport, water/wastewater, ports, logistics, airports, district heating and cooling, facilities management, irrigation and solid waste management.
Infrastructure development creates the foundations that a society needs for the orderly operation of its economy and serves as a driver of growth, jobs, connectivity and competitiveness. In addition, there is also consensus that infrastructure development is critical for the delivery of the 2030 United Nations Sustainable Development Goals. The additional investment needed is estimated to be US$1-$1.5 trillion annually over the next 15 years.
Although international financial institutions have significantly increased their activities, this goal can only by achieved with much stronger involvement of the private sector. The EBRD’s Infrastructure Project Preparation Facility (IPPF) offers an improved support mechanism focused on bankable project preparation, coupled with a coordinated approach to infrastructure policy dialogue. The aim is to mobilise and catalyse greater levels of private sector investment in infrastructure through support for PPP procurement approaches and an improved information flow in terms of preparation processes, key structural elements, how to achieve acceptable risk allocation and secure durable public support measures.
The EBRD is the largest international financial investor in Ukraine. To date, the Bank has made a cumulative commitment of almost €11.6 billion through 383 projects since the start of its operations in the country in 1993.