The year 2025 is poised to mark a significant legislative update in Ukraine’s public-private partnership (PPP) framework, representing a critical strategic approach to the country’s comprehensive post-war reconstruction efforts. The government, Parliament, and key stakeholders are actively preparing for an extensive rebuilding effort focused on infrastructure damaged during military hostilities. This process will rely on support from the European Union, the United States, international financial institutions, and other major donors.
Among both Ukrainian government officials and international partners, there is a prevailing consensus that PPP will serve as a key instrument for reconstruction. The ambitious target is to ensure that approximately 20% of reconstruction projects will be implemented through PPP mechanisms. Such ambitious plans necessitate substantial improvements in the regulatory framework to create favorable conditions for attracting private investments in this complex and large-scale reconstruction process. Draft Law No. 7508, currently prepared for its second parliamentary reading, aims to implement a profound reform and qualitatively enhance PPP procedures.
The main changes and innovations of the draft law are as follows:
1. Expansion of Financing Sources
The post-war reconstruction of Ukraine anticipates active financial engagement from international partners and donors. Governments of numerous leading European states and the management of international financial organizations (IFIs) have already declared their intention to participate in Ukraine’s reconstruction processes. Consequently, to simplify international financing and guarantee potential private partners’ rights, Ukraine’s legislation will introduce the term “donor” – defined as a project financing party, which could be the EU, a foreign state, or an international financial organization. Crucially, the proposed law will allow private partners to receive funds directly from donors, bypassing public sector intermediaries. This measure is expected to simplify funding procedures and enhance the efficiency of investment flows.
2. New Areas of PPPs
Given the government’s strategy to extensively apply PPPs in reconstruction, the legislative changes will broaden the sectors eligible for these partnerships. New areas will include residential construction, social housing development, and housing for military personnel. In alignment with Ukraine’s European integration goals and commitment to sustainable development, the updated framework will also establish energy-efficient technologies as a distinct PPP category. This move is expected to attract investment in green infrastructure projects, reinforcing Ukraine’s transition toward environmentally sustainable reconstruction.
3. Enhancing State Support for PPPs
The reform package includes plans to expand state support mechanisms for PPP initiatives. One of the key proposals is introducing a minimum income guarantee, a standard feature in international PPP practices. This measure aims to mitigate investor risks, providing greater financial predictability and encouraging private sector participation in large-scale projects.
4. Streamlining and Accelerating Procedures
A highly anticipated reform element is the introduction of the concept of a “small PPP project,” which will feature a streamlined preparation procedure. Projects valued at less than EUR 5,382,000 will qualify for this simplified approach, involving the elimination of certain tender documentation requirements and reduced partner selection timeframes (potentially compressed to several months). This procedural simplification will primarily benefit the reconstruction of destroyed housing, hospitals, schools, and critical infrastructure, ensuring that vital services are restored swiftly.
5. Availability Payment Mechanism
A major legislative innovation involves refining the availability payment PPP model, which has yet to be effectively implemented in Ukraine due to regulatory constraints. The revised framework is expected to establish this mechanism as the primary form of government and donor payments in PPP projects. By introducing a clear legal basis for availability payments, Ukraine will enhance project viability and attract greater private sector engagement.
6. New Public Partners
Currently, state-owned companies’ participation in PPP projects is practically impossible. Recognizing that state companies remain dominant in many economic sectors, allowing their PPP project participation could unlock new investment opportunities and encourage international private partners to invest in Ukraine.
Conclusion
The proposed legislative changes create favorable conditions for effectively utilizing PPP mechanisms during Ukraine’s post-war reconstruction. Streamlined private partner engagement procedures and innovative collaboration forms signal PPPs’ potential as a powerful investment attraction tool for war-damaged infrastructure restoration. Expectations are high that the Parliament will finalize Draft Law No. 7508 in the first quarter of 2025, thereby initiating a massive investment attraction process. Through transparent, efficient, and investor-friendly conditions, Ukraine is not only rebuilding its infrastructure but also reinforcing its commitment to European integration, economic modernization, and international cooperation.
By Roman Stepanenko, Partner, Asters
This article was originally published in Issue 12.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
