EBRD, IFC to help modernise Ukraine’s roads

By Olga Rosca
@olgarosca

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  • EBRD, IFC to help structure first PPP projects in Ukraine’s road sector
  • 422 km of vital roads to be upgraded
  • Projects to help attract private investment of up to US$ 9 billion

The European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) will work with the Ukrainian government to attract private-sector investment and  improve the country’s infrastructure, while creating jobs and accelerating economic recovery.

As part of a new advisory agreement signed today, the EBRD and IFC, together with the Global Infrastructure Facility (GIF), will support Ukraine’s state road agency Ukravtodor in structuring public-private partnership (PPP) projects that will reconstruct two road segments in eastern and western Ukraine. A private-sector partner – to be chosen through an international competitive bidding process – will finance, operate and manage the upgrade of nearly 422 km of existing roads that are vital for national freight logistics, in line with good international industry practice.

Ievhen Kuzkin, Head of Ukravtodor, said: "Public-private partnership is an instrument to diversify financial sources for the potential modernization. The project’s aim is not just to maintain the quality of roads, but to improve their safety.”

According to the government, properly structured PPP projects can help Ukraine’s road sector to attract investments worth around US$ 9 billion, addressing the country’s significant infrastructure needs. The EBRD and IFC will help Ukravtodor to mobilise financing and expertise to prepare comprehensive projects that will support the maintenance and expansion of the road capacity, while ensuring improved services and road safety.

Jason Pellmar, IFC Regional Manager for Ukraine, Belarus and Moldova, said: “Modern roads will help Ukraine to establish itself as a logistics hub in Europe and will boost competitiveness. IFC aims to support Ukraine’s infrastructure improvements by ensuring transparency, generating more revenue and improving risk management for both the government and investors.”

Modernisation of the two roads, worth more than US$ 500 million, is part of the state-backed road PPP programme, one of 21 potentially viable projects selected by an IFC-World Bank assessment. While the projects are expected to be executed in three phases, the first two pilot projects on the Kharkiv-Dnipro-Zaporizhia and Yahodyn-Kovel-Lutsk road segments are likely to be finalised by 2022.

Mark Magaletsky, EBRD Deputy Director for Ukraine in charge of infrastructure, commented: “Following the successful preparation and tender of two pilot concession projects in the Olvia and Kherson ports, the EBRD, together with IFC, is now embarking on a project to support Ukrainian authorities in implementing PPPs in the road sector. This move represents our collective dedication and commitment to upgrading the country’s critical infrastructure assets by attracting private businesses through competitive international tenders. The road modernisation effort will start with the Kharkiv-Dnipro-Zaporizhzhia and Yahodyn-Kovel-Lutsk, which will be future-proofed, climate-ready and aligned with the Paris Agreement.”

In addition to road infrastructure, the EBRD and IFC are analysing PPP opportunities in the port, rail, energy and healthcare sectors to help leverage private investment and drive the nation’s economic growth.

The EBRD is a leading institutional investor in Ukraine. To date, the Bank has invested almost €16 billion in 506 projects across the country, with a focus on assisting economic stabilisation, anchoring reforms, strengthening energy efficiency and energy security, and supporting agricultural and industrial projects, as well as smaller businesses.

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