Category: Publications

The We Build Ukraine think tank develops systemic solutions for the restoration and development of key sectors of the Ukrainian economy, including transport infrastructure and logistics.

In the short and medium term, our goal is to prepare an action plan and recommendations to strengthen cooperation with international partners, as well as to create conditions for attracting large-scale investments in the country’s recovery and modernization.

This policy brief outlines the key challenges and opportunities in the field of logistics and transport infrastructure, summarizes relevant analytical data, and draws on the results of a sectoral conference on logistics held by the We Build Ukraine team.

INTRODUCTION

The Economic Growth Strategy of Ukraine, developed jointly by the Boston Consulting Group and the We Build Ukraine think tank, identifies logistics as one of the four key drivers of growth, along with access to finance, labor, and telecom infrastructure. Logistics has become a critical pillar for the resilience of the Ukrainian economy since the start of the full-scale invasion in 2022: it has helped to maintain export channels, ensure defense capabilities, and support critical imports.

However, during the first decades of independence, the transportation system remained chronically underfunded. And the war led to large-scale destruction, further complicating the development of logistics and deepening structural challenges.

In this context, European integration is of key importance. The opening of EU accession negotiations in 2024 means that Ukraine needs to adapt its transport policy and logistics routes to EU standards on a large scale. In particular, Ukraine needs to implement the acquis communautaire directives in the transport sector, modernize its infrastructure in line with TEN-T requirements, and ensure long-term integration into the European transportation market. The development of connectivity through Solidarity Lanes is only the first step in this direction.

To effectively transform the infrastructure sector, Ukraine needs strategic program planning at both the central and local levels. Such programs should be integrated into the overall economic strategy and based on a clear system for evaluating, prioritizing, and monitoring investment projects.

As of March 2025, Ukraine has updated its National Transport Strategy until 2030, is preparing roadmaps as part of the negotiation process with the EU, and is developing strategic projects in the logistics sector under the Ukraine Facility Program. Some communities have already approved mobility plans, including the development and consideration of multimodal hub concepts, but there is currently no unified approach or guidelines for the local level.

Updating the legal framework should be an integral part of the reform. We are talking about:

● the Law on Railway Transport;

● a law on the specifics of privatization of port infrastructure facilities;

● updating legislation on concessions and public-private partnerships;

● reforms in the area of tariff setting (railroad, port, and airline fees);

● strengthening the capacity of regulators.

High-quality preparation of investment projects is impossible without legal certainty and institutional capacity. It is necessary to ensure a link between the scale of an infrastructure project and the real economic prospects of the region. To do this, it is important to assess the match between infrastructure supply and projected demand for logistics services, production clusters, agricultural or industrial activity in the project’s area of influence.

According to the EBRD, it is impossible to evaluate a logistics center in isolation from the overall infrastructure. Each logistics facility must be considered in conjunction with the rail, road, sea and air transport network, as well as trade flows, access roads and the geo-economic perspective of the region.

Today, it is not just about physical restoration; the goal should be to create a new quality of logistics: digital, multimodal, EU-oriented, energy efficient, and open to private capital. This requires the simultaneous modernization of assets, updating the regulatory framework, adjusting tariff policy, and launching tools to attract large-scale private investment, including in the form of public-private partnerships.

RAILWAY TRANSPORTATION

Transformation of Ukrzaliznytsia and new regulation

The railway industry remains strategic for Ukraine, both in the defense sector and in the context of European integration and sustainable exports. As part of the Ukraine Facility program, Ukraine’s key commitment is to adopt the Law on Railway Transport in the third quarter of 2025. This law should become the basis for gradual liberalization of the market, opening access for private traction, establishing an independent regulator, and introducing fair and transparent rules for access to infrastructure. As of March 2025, the draft law was registered by the Government of Ukraine in the Verkhovna Rada of Ukraine. 

The law sets out the framework for market liberalization, tariff regulation, transport safety guarantees, and conditions for investment in the industry, as well as the separation of passenger and freight transportation into separate legal entities, and the creation of an infrastructure company.

Tariff policy and efficiency

The current tariff model does not encourage the efficient use of rail transport. This is especially true for transportation to ports, where delivery costs are often uncompetitive. A step-by-step adjustment of the tariff policy is needed, which should be based on:

●     the real cost of transportation,

●     the needs of export-oriented industries,

●     competitiveness with alternative logistics routes.

Asset optimization

UZ needs a systemic transformation of its asset management model. It should focus on the development of key operating segments (infrastructure, traction, freight rolling stock, logistics hubs) and gradually withdraw non-core assets from the balance sheet. This will allow the company to focus financial and management resources on modernization and improving the quality of services.

1435 mm projects: interoperability with the EU

The development of 1435 mm railway infrastructure is a prerequisite for Ukraine’s integration into the European transportation market. Projects of this type help to reduce border crossing time, minimize transshipment costs and ensure the continuity of logistics chains.

Example: Mostyska II – Nyzhankovychi – State Border – Khyriv project. As part of this pilot project, preparations are already underway for the construction of infrastructure for a 1435 mm gauge, including the modernization of border sections. This will directly connect Ukraine with the TEN-T corridors of Poland, which will have a significant effect on agricultural exports, container transportation, and freight transit.

SEAPORTS

Challenges and reserves

Ukraine’s seaports remain the main channel for exports of agricultural, metallurgical, and other products, but their capacity has been significantly reduced due to the hostilities and security risks. RDNA4 estimates that direct losses of port infrastructure amount to about $0.6 billion. Due to the blockade of the Greater Odesa ports, part of the cargo flows were redirected to alternative routes, in particular to the ports of the Danube cluster.

The Danube ports of Izmail, Reni, and Ust-Dunaisk have become a critical reserve for exports, including grain, oil, containers, and steel products. In 2023, transshipment through the Danube exceeded 14 million tons, almost twice the pre-war volume. At the same time, the cluster’s capacity is almost exhausted, requiring intensive investment in expansion, dredging, logistics, and railway infrastructure.

Support for the Danube Cluster

In order to ensure the functioning of the Danube cluster ports in the event of partial or full opening of the Black Sea ports in the territories controlled by the Government of Ukraine, it is necessary to take urgent measures to stimulate the competitiveness of the Danube ports, which can always serve as a kind of plan B for access to the Black Sea, to maintain their financial and operational stability, it is proposed to introduce a program to support these ports, including:

●     optimization of the level of port dues by amending the regulatory documents of the body that forms the policy in this area, which will allow for the creation of incentive conditions for transshipment;

●     introducing separate tariff regulation for rail transportation for the directions serving the cluster’s ports.

Financial autonomy for ports

State-owned enterprises that manage port infrastructure should be given the financial flexibility to invest in rehabilitation. After years of underfunding and significant war damage, the Black Sea ports’ infrastructure is in critical condition: worn-out berths, insufficient capacity, need for dredging and upgrading of access logistics.

To return the ports to pre-war levels of operational efficiency, it is necessary to implement a set of capital projects, ranging from the reconstruction of hydraulic structures to the modernization of logistics approaches. Approximately, in the ports of Mykolaiv, Kherson, Odesa, and Chornomorsk, the total investment needs could reach $200 million.

In this context, it is advisable to provide a mechanism for releasing the internal resources of state-owned enterprises by exempting USPA and other water companies from the obligation to pay part of their net profit to the state budget for 5 years after the end of the war, or limiting this amount to 20%. Provided that the freed-up funds are used exclusively for capital investments in strategic facilities, this will create an effective model for the restoration and development of port infrastructure.

Institutional steps

To ensure long-term attraction of private investment, the legal framework needs to be updated.

●     The law on the peculiarities of privatization of port infrastructure facilities should regulate the procedures for transferring hydraulic structures, berths and terminals to private use on transparent and predictable terms.

●     The Cabinet of Ministers should approve a unified procedure for allocating water fund land for the reconstruction and construction of port and hydraulic structures. This will accelerate the implementation of projects in the Danube and Black Sea clusters, as well as increase the confidence of donors and private investors.

AVIATION

Role in the logistics system

Ukraine’s aviation sector is of strategic importance for both population mobility and high-value logistics. We are talking about critical cargo: medicines, electronics, spare parts for high-tech production, and defense products. 

As of the end of 2024, some airports are completely destroyed, while others are mothballed or in need of major repairs. This requires careful assessment, prioritization, and coordination with the post-war civilian airport network to avoid a fragmented approach to recovery.

Given the possible conclusion of peace agreements and a ceasefire in 2025, the opening of some airports to civil aviation may become a reality. Priority will be given to Boryspil, Lviv, Kyiv (Zhuliany), and Odesa airports. At the same time, full recovery of the industry is impossible without a comprehensive vision of its role in the country’s new logistics system.

The infrastructure of many key airports is in critical or deteriorated condition and requires significant investment to improve. The reconstruction of runways and other infrastructure at other airports in Ukraine will require a more detailed study and prioritization of projects in accordance with the defined post-war civilian airport network.

The post-war model of aviation infrastructure can be based on the development of regional airports with cargo functions integrated into multimodal chains. The priority is to create logistics hubs with high cargo handling speeds, convenient access to road and rail infrastructure, and modern navigation and security systems.

Support tools

Suggested:

• create a special fund within the state budget (for a period of 5 years after the end of the war) to finance the war:
• restoration and development of airport infrastructure,
• covering sustainable capital (CAPEX) and operational (OPEX) expenditures for operational airports;
• develop a mechanism for compensating operating costs for selected regional airports (on a competitive basis) that are ready to accept civilian flights or create cargo services;
• Involve the private sector in the management of passenger and cargo terminals, in particular through concessions, management contracts, and public-private partnerships.

MULTIMODALITY

The development of modern logistics in Ukraine is impossible without a transition to multimodal solutions. This means integrating rail, water, road and air transport into a single transportation system with a focus on efficiency, environmental friendliness and business convenience.

Ukraine should synchronize infrastructure development with the requirements of TEN-T and the EU’s DG MOVE strategies, in particular in terms of:

• development of domestic and border logistics hubs;
• connecting ports, airports and railway junctions to the TEN-T network;
• digitalization of logistics routes.

RDNA4 estimates the need to restore multimodal infrastructure at more than $3.6 billion, including hub stations, combined transport terminals, rail approaches to ports, and logistics centers. Some of these facilities are already included in the Ukraine Facility’s project portfolio.

Roads

Road transport remains critically important for internal mobility, humanitarian logistics, border crossing services, and connections to multimodal hubs.

Restoring the operation of the State Road Fund (SRF) and ensuring proper financing of road infrastructure are critically important for Ukraine. 

According to the World Bank’s RDNA4 report, about $30 billion is needed to restore state roads over the next 10 years. An important part of this will be spent on restoring bridges and municipal roads. 

Stable funding from the State Road Fund, which consists of the excise tax on fuel and other sources, will not only restore the existing road infrastructure but also maintain it in good condition, which, in turn, will stimulate economic development and improve the quality of transportation services in Ukraine.

 The economic impact of road rehabilitation will be manifested in the creation of new jobs, attraction of private investment, and increased competitiveness of transport corridors. Improving the condition of roads and bridges will help reduce transportation costs, increase logistics efficiency, and facilitate market access for local producers.

  

Green transport and digitalization

New logistics should be energy efficient, digital, and transparent. It is suggested, if possible:

●     stimulate the use of electric traction, the purchase of zero-emission locomotives, and support for green port terminals;

●     to ensure the introduction of electronic consignment notes (e-CN) and unified digital solutions in customs clearance that are compatible with the EU;

●     use analytical platforms to manage cargo flows, monitor congestion, and optimize routes.

Particular attention should be paid to the deployment of digital services at border crossings, including automation of clearance and synchronization with data from foreign customs services.

CONCLUSIONS

A single strategy for recovery

Ukraine needs a consolidated, integrated strategy for the post-war reconstruction of its transportation and logistics infrastructure. Such a strategy should include:

●     railway infrastructure and interoperability projects;

●     restoration of ports, including the Danube cluster;

●     development of multimodal logistics hubs;

●     digital transformation of logistics;

●     rebuilding roads and bridges;

●     resuscitating the aviation industry as part of high-value cargo logistics.

This document should become not just a framework, but a practical tool for programming investments (including for the purposes of the Ukraine Facility), setting priorities for international partners, and synchronizing the actions of all levels of government.

The strategy should not focus on creating new institutions but on strengthening the capacity of existing structures to implement projects. The focus should be on:

●     transparent mechanisms for project selection and implementation;

●     reforming tariff policy;

●     deregulation and legal predictability for investors;

●     creating conditions for long-term attraction of private capital.

All infrastructure decisions should be made on the basis of an assessment of the economic potential of the regions, forecasted cargo flow, realistic models of operation and integration into European transport corridors.

Only such a holistic model will allow not only to restore what has been destroyed, but also to create a competitive, sustainable and strategically oriented new generation of logistics.

Source: https://www.webuildukrainefund.org/post/white-paper-logistics-as-a-driver-of-economic-growth-on-the-results-of-the-conferenceprepared-by-t

Three years into Russia’s invasion, the toll on Ukraine’s economy and its people is devastating. The country will need at least $524 billion over the next decade to repair and rebuild.

Context

Ukraine Remains Resilient

Three years into Russia’s invasion, the toll on Ukraine’s economy and its people is devastating.

Russia’s invasion of Ukraine continues to cause staggering losses to people and the economy. Poverty in Ukraine has increased by at least 1.8 million people since the start of 2022, rising to 9 million.

While many are suffering, the government and the people of Ukraine continue to show remarkable resilience in the face of extensive devastation. Children are attending school and Ukraine has kept critical social and health services and business running.

Ukraine’s private sector has also demonstrated incredible durability yet faces considerable challenges as it navigates the ongoing disruption and its economic aftermath. While exports have resumed, financial fragility persists, particularly for small businesses.

The country will need at least $524 billion over the next decade to repair and rebuild the country, which is approximately 2.8 times the estimated nominal GDP for 2024, according to the February 2025 Rapid Damage and Needs Assessment (RDNA4). 

Substantial infrastructure damage and extensive electricity disruptions are likely to slow economic growth to 3.2% in 2024 and 2% in 2025. 

In the energy sector, there has been a 70% increase in damaged or destroyed assets in the last year, including power generation, transmission, distribution infrastructure, and district heating, according to RDNA4. Also, 13% of the total housing stock has been damaged or destroyed, affecting more than 2.5 million households.

Reconstruction and recovery needs are the highest in the housing sector (almost $84 billion) followed by the transport sector (almost $78 billion), the energy and extractives sector (almost $68 billion), the commerce and industry sector (over $64 billion), and the agriculture sector (over $55 billion). Across all sectors, the cost of debris clearance and management alone reaches almost $13 billion.

Prioritizing investments in recovery and reconstruction will be critical for Ukraine’s EU Accession and long-term resilience. These efforts aim to rebuild the country’s infrastructure, revive its economy, and strengthen its institutional framework in alignment with EU standards. Recovery provides an opportunity to address the destruction caused by the ongoing invasion and also to build back better by adopting innovative solutions and reforms that meet the expectations of EU membership. 

Mobilizing the private sector remains critical to Ukraine’s successful recovery and reconstruction. Many firms have started to invest in repairs and resilience, including through distributed energy solutions such as gas power plants, solar panels, and biogas. Based on earlier IFC estimates, the private sector could potentially cover a third of total needs, providing an essential complement to public investment.

Strategy

Donor Support

Donor contributions channeled through Bank projects are helping to sustain public services, repair infrastructure, and support agriculture.

These commitments and pledges leverage innovative instruments, such as IBRD and IDA loans, IBRD loans guaranteed by partners, donor grants and equity, IFC blended finance and MIGA guarantees.

The World Bank Group’s Role

The World Bank Group is uniquely positioned to help rebuild Ukraine as it brings strong oversight practices and expertise in reconstruction, particularly in agriculture, energy, infrastructure/transport and social sectors, as well as global experience in supporting development-oriented reforms.

We have expanded existing projects, established multi-donor trust funds, and channeled guarantees and parallel financing from donor countries.  We routinely monitor our Ukraine portfolio for evidence of fraud and corruption and have robust mechanisms in place to swiftly deal with any reports of irregularities.

We primarily work in areas where other organizations are not present, such as in Ukraine’s social sectors, including health, social protection, and education. We collaborate with bilateral and other multilateral development banks including the IMF and EU (on reforms), EBRD and EIB (on investment). We are harmonizing procurement practices in Ukraine with other MDBs.

With support from a dedicated group of Ukraine’s partners, we are supporting the needs of 20 million Ukrainians.

The World Bank Group (IBRD, IFC, and MIGA) is working with the Ukrainian government and partners to identify opportunities for private financing of Ukraine’s reconstruction. Reforms that prepare Ukraine to rebuild and improve the investment climate are critical. The government has asked the World Bank Group for advice on reforms and investments to prepare the country for EU accession (many of which have been included in the “Ukraine Plan” with the EU).

World Bank

PEACE Project. Donor support has been channeled through the World Bank’s Public Expenditures for Administrative Capacity Enhancement (PEACE) project to help Ukraine’s government meet urgent needs and maintain public services. PEACE has helped the government continue to function by providing budgetary support and sustaining its capacity to deliver essential public services. Our support for Ukraine includes additional protections and oversight measures, including audits, to make sure financing reaches its intended recipients.  For example, the PEACE Project retroactively funds basic, eligible expenditures only after a verification process confirms payments have gone to the intended beneficiaries. After the government pays its civil servants, teachers, and other emergency workers, we verify the payments and then reimburse the government. This helps to ensure the money is going to the intended recipients.

This support has reached 15 million Ukrainians providing wages for government and school employees, pensions for the elderly, salaries for public servants, and funding social programs for the vulnerable. 

The World Bank also launched framework projects to respond to priority needs, support recovery and build capacity for reconstruction in health, energy, transport, housing, agriculture and education. These emergency operations mobilize partner resources through an innovative and flexible design that allows funds to be disbursed quickly,  scaled as necessary, and able to absorb additional financing. The projects include appropriate fiduciary, environmental and social safeguards. IBRD funding is secured through bilateral guarantees provided by development partners.

The Bank is also supporting development policy and investment operations needed to strengthen the country’s economic policy framework and enhance its macro-financial stability as well as provide urgent relief to households, support reforms of public resources expenditures and help markets function better.

IFC

With enabling reforms, the private sector can cover 1/3 of reconstruction needs and remains key to economic resilience. IFC, with its focus on the private sector, has stood by Ukraine since the first day of the invasion and continues to provide support. Initially focused on short-term support such as guarantees and liquidity, IFC has shifted toward longer-term financing, including capital investment in areas, such as food production, telecom, technology, construction, and energy. We are leveraging our advisory services and financing to support key sectors, including energy, transport and logistics, housing, agribusiness, and financial institutions, to ensure comprehensive support for Ukraine’s private sector. Since February 2022, IFC has delivered $2.2 billion to support Ukraine’s private sector, including $760 million mobilized, as part of its Economic Resilience Action program. Concessional finance from partners continues to be critical to derisking and scaling private sector investments. Development partners also continue to fund IFC’s advisory and upstream (pre-investment) programs in Ukraine – supporting private sector resilience, conducting sector analysis, and building capacity for reconstruction.

MIGA

Since Russia’s invasion, MIGA has issued six guarantees in Ukraine. MIGA also established the SURE Trust Fund to help deploy a two-fold strategy in the country: (a) enable private investment by providing guarantees – political risk insurance (PRI), trade finance guarantees, and credit enhancement – to investors and lenders; (b) ensure that projects are implemented in accordance with global best practices on integrity, environmental, social, and climate standards.

Amid limited availability of private reinsurance, the SURE Trust Fund enables MIGA’s guarantee issuance in Ukraine by sharing up to 75% of the risk. In the immediate term, MIGA is providing guarantees to support trade in essential goods, continued bank lending to firms including SMEs, as well real sector projects that have clear demonstration effects. Once peace returns, MIGA expects to use the reinsurance market to provide PRI guarantees for real sector projects at scale.

URTF

To swiftly mobilize efforts for reconstruction, the World Bank has established the Ukraine Relief, Recovery, Reconstruction and Reform Trust Fund (URTF), a multi-donor fund to channel grant contributions from donor partners.The URTF’s objectives are to help sustain the country’s administrative and service delivery capacity, conduct relief efforts, as well as to support the planning and implementation of Ukraine’s recovery, resilient reconstruction, and reform agenda.

The URTF supports the World Bank’s Framework Projects and ensures that the Ukrainian authorities can quickly and effectively utilize these critical investments and leverage the multiple sources of financing efficiently and at scale.

Partners

Donor governments: Austria, Belgium, Canada, Denmark, Finland, Germany, Italy, Japan, Latvia, Lithuania, Iceland, Indonesia, Ireland, the Netherlands, Norway, the Republic of Korea, Sweden, Switzerland, Spain, the United Kingdom, and the United States.

IFIs: EIB, EBRD, EC, IMF, CEB

Source: https://www.worldbank.org/en/country/ukraine/overview#2

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The We Build Ukraine think tank develops systemic solutions for the accelerated recovery of key sectors of Ukraine’s economy. These sectors include construction and infrastructure, which are crucial for the sustainable development of the state, attracting investment, and creating a new quality of life and business environment.

This white paper is based on the results of the sectoral conference “Construction and Infrastructure: Key Sectors for Economic Growth,” which was held in Kyiv on April 24, 2025, by the We Build Ukraine think tank with the participation of a wide range of businesses, Ukrainian parliamentarians, representatives of Ukraine’s donors and partners, and international financial institutions. This white paper contains general analytical conclusions on the transformation of these sectors in the context of post-war reconstruction. The paper aims to formulate a common vision, reform priorities, and practical mechanisms for interaction between the state, business, and international partners.

INTRODUCTION

The construction sector in Ukraine is entering a phase of strategic importance, both in terms of expected investment volumes and its impact on the country’s economic model. The focus is not only on eliminating the consequences of destruction, but also on building systemic capacity to implement long-term, complex, and large-scale infrastructure projects in conditions of war and recovery.

According to analytical estimates, construction has the potential to grow from 3–4% to over 10% of GDP and become one of the main sources of multiplier effect: development of materials production, formation of new clusters, stimulation of employment and localization. At the same time, the sector needs a restart — both in terms of investment confidence and the efficiency of procedures, the capacity and readiness of personnel, the existence of clear and understandable rules for business and transparent government planning.

During the conference, speakers and participants confirmed that a window of opportunity is open for Ukraine: international partners are demonstrating their readiness to invest, production capacities have been partially preserved, and a vision has been formulated. At the same time, without a decisive change in institutional approaches and a transition to a unified strategy for action, this chance may be lost.

This document is based on a strategic study by the Boston Consulting Group, which was developed in close cooperation with the We Build Ukraine think tank and identifies construction as one of the key sectors for GDP growth in the post-war period. In addition, the paper summarizes the results of the conference “Construction and Infrastructure: Key Sectors for Economic Growth.” A survey of participants was conducted during the event on key points of corruption pressure and systemic barriers in the field of urban development. The data obtained confirm the business demand for deregulation, transparency in the issuance of permits through digital tools, and the updating of market surveillance tools.

The white paper formulates a consolidated vision for the sector’s development and practical recommendations for the government, investors, and businesses, with a focus on reform, building trust, and creating domestic production and logistics capacities as a basis for extensive capital raising.

Thus, it is not just a matter of rebuilding what has been destroyed — the goal must be to develop a modern construction industry that meets EU requirements: sustainable, transparent, technically advanced, and open to competition. This requires alignment with European standards in planning, licensing, materials, and approaches to project management. At the same time, it is necessary to update the regulatory framework, simplify licensing procedures, harmonize market conditions for national and international players, and introduce predictable mechanisms for partnership between business and the state.

RECOVERY.

PARTNERSHIP FOR DEVELOPMENT

Institutional Weakness — a Key Barrier to Large-Scale Reconstruction

Despite the political will to implement infrastructure projects, the sector remains fragmented at both the national and local levels. State institutions are losing their ability to make quick and considered decisions due to frequent staff changes, weak interagency coordination, and a low level of institutional memory. In most cases, local communities do not have up-to-date spatial plans, which makes it impossible to develop transparent investment proposals.

This situation is complicated by the fact that key stakeholders in the process — businesses and international donors and partners — don’t have enough confidence in the predictability of the regulatory environment. Their interaction with government institutions often breaks down into isolated initiatives instead of working within a consistent policy framework.

A survey conducted among conference participants confirmed systemic barriers: almost 50% of respondents consider the lack of clear permits and procedures to be the main problem, and over 20% consider the instability of the rules of the game to be the main problem.

Business and international partners constantly emphasize that without clear conditions and institutional stability, it is impossible to launch large-scale recovery programs.

Business is Ready to Invest — But Demands Predictability

The private sector experience presented at the conference demonstrates the readiness of businesses to invest in construction, logistics, local production of materials, and housing. At the same time, the lack of tools for interaction with the state was highlighted: the absence of standard contracts, the complexity of obtaining permits, and the lack of transparent state investment packages.

Some companies are already implementing projects or preparing to do so (particularly in the areas of wind energy, bioethanol, and logistics hubs), but all emphasize the importance of institutional support—predictable regulatory decisions, access to up-to-date planning, and simplified approval procedures. Analytical findings show that without an active role for the state as a catalyst — in the form of stable regulation, clear conditions, and practical mechanisms for promotion and interaction — investors will not be able to scale up projects to industrial level.

The Service State as a Condition for Scaling Up. Coordination and Accountability

The construction industry will not be able to realize its potential without changing the philosophy of public administration — from manual administration to a service model of interaction with customers, investors, and communities. This requires the introduction of digital spatial planning registers, transparent project evaluation and selection procedures, and the prioritization of investments based on unified criteria.

During the discussions, the need to create a single point of entry to ensure strategic planning, coordination of decisions, and effective allocation of resources in the field of reconstruction was repeatedly emphasized. Such a tool should not only work with central authorities but also provide practical support to communities, including documentation templates, model projects, methodological materials, and technical support at all stages of project implementation.

The successful implementation of large-scale reconstruction programs requires not only managerial discipline, but also the formation of a sustainable coordination mechanism between all levels of government, business, and international partners. This refers to a permanent platform that will allow for the coordination of priorities, the consolidation of resources, and the assignment of responsibility for results. Providing communities with access to planning tools, model solutions, and technical support is critical to ensuring that reconstruction is not concentrated in large cities but becomes a comprehensive process across the country.

SUMMARY

Large-scale recovery in Ukraine is impossible without a reboot of approaches to institutional interaction. National and local levels of public administration need a change in philosophy — from fragmented and reactive to service-oriented and coordinated. Businesses and international partners are ready to invest in the construction industry, but they

expect transparent procedures, stable rules, and clear formats for cooperation. Communities, meanwhile, are left without the tools to transform plans into projects, and without this, national ambitions cannot be realized. Central to this process is the formation of a platform where the state not only regulates but also acts as a provider of strategic decisions, a coordinator, and a partner.

BARRIERS AND SYSTEMIC OBSTACLES

TO THE IMPLEMENTATION

OF INFRASTRUCTURE PROJECTS

Large-scale infrastructure recovery is impossible without the actual launch of projects on the ground — from technical and economic feasibility studies to the signing of contracts, completion of construction, and commissioning. However, the project cycle in Ukraine is currently burdened by a significant number of barriers, which relate not only to complex procedures but also to structural mistrust between participants. The licensing system, contract management, planning, accountability, and control all function not as a single system but as fragmented and often contradictory mechanisms.

Conference participants and analytical documents unanimously point to deep gaps between investor expectations and actual market conditions. The situation is complicated by a lack of transparent technical standards, overlapping authorities, unpredictable regulatory decisions, and a lack of support for customers and contractors at all levels. This section describes the most critical issues holding back the implementation of infrastructure projects and outlines the changes needed to overcome them.

The Gap Between Investor Expectations and National Procedures

There is a persistent gap between the expectations of the private sector, both national and international, and the actual practices of project implementation in Ukraine. Conference participants repeatedly pointed to the complexity and non-transparency of licensing procedures, the lack of standardized contract forms, and significant fluctuations in approaches to project planning. In many cases, companies are forced to adapt technical documentation on their own, adjusting to an uncompetitive and archaic regulatory framework. The lack of a unified list of source data for spatial planning creates additional uncertainty and opens the door to abuse during the approval process. In particular, the not-so-clear process for approving deviations from building codes often becomes a place for informal pressure or corruption.

These barriers significantly slow down the preparation of investment projects and create risks for international partners. In particular, there is a mismatch between the approaches commonly used in the EU (e.g., contracts based on FIDIC, NEC, or EPC formats) and Ukrainian requirements, which often come down to unpredictable demands from regulators.

It should be emphasized that a large number of market participants note the critical situation with the issue of “Soviet” methods of cost estimation, which is common for both the construction industry as a whole and public procurement: the difference between the resource-element method of pricing in construction in Ukraine, which is based on normative and estimated indicators and normative prices for labor and material and technical resources (rather than actual market prices), and European and international methods of estimating costs using aggregate prices per unit of measurement at all stages of an infrastructure project. The market notes that this practice creates opportunities for corruption in Ukraine, as market changes are not taken into account and the cost of individual works is deliberately underestimated or overestimated.

This gap is widened by the lack of publicly available tools and templates: even large companies note that they are forced to negotiate with each authority separately, without being able to rely on transparent logic or an open regulatory framework. As a result, investors postpone or scale back projects, and in some cases withdraw altogether.

Conflict of Powers and Responsibilities: Fragmentation Instead of Governance

One of the key systemic problems that was the subject of particular attention at the conference is the conflict of responsibility between different institutions involved in the implementation of infrastructure projects. Different levels of government — from central ministries to local administrations and self-government bodies — often have unclear or overlapping powers, leading to decision-making paralysis. Coordination processes take weeks or months, and legal responsibility is often not linked to actual control over the process.

Participants in the discussion noted that even when there is political will to implement a project, interagency barriers block progress in practice. Formal powers are not backed up by real resources or instruments of influence. As a result, instead of a vertical implementation structure, a horizontal conflict zone emerges, where each body makes decisions within its own narrow comfort zone, regardless of the common goal.

This fragmentation of management directly affects project timelines, costs, and the efficiency of resource use. As a result, investors and donors face not only corruption risks, but also operational risks: adoption of changes to the feasibility study/design documentation, replacement of technical solutions, revision of the order of implementation, or refusal to accept certain works due to formal restrictions on the powers of a particular authority or contractor.

Transparency Without Trust: How Permits and Controls Block Projects

Despite the availability of electronic tools and declared openness, the system of permits and supervision in the construction sector remains non-transparent, overregulated, and vulnerable to abuse. This not only creates risks of corruption but also breeds persistent mistrust between the state and business. Even formally transparent procedures are often accompanied by informal restrictions, significant human influence in the issuance of permits, double interpretation of requirements, or unexpected blockages at the final stages of approval.

The conference repeatedly raised the issue that transparency does not guarantee predictability: market participants cannot calculate the duration of procedures, and regulators retain the ability to halt the process without clear grounds. Some speakers directly pointed to situations where licensing authorities do not formally refuse but delay approval or return documents for formal reasons.

The existence of an electronic system does not eliminate the human factor if there are no standard templates for decisions, deadlines, and accountability mechanisms. Entrepreneurs and investors are often forced to bend the rules, negotiate through other channels, or lose opportunities due to delays in decision-making. In the long run, this blocks the entry of new players, especially international ones.

Failure After Signing the Contract:

Lack of Support and Implementation Capacity

Even successful completion of the selection procedures and signing of the contract does not guarantee that the infrastructure project will be implemented on time, in full, and in line with expectations. During implementation, it often turns out that institutional support is limited or non-existent. The structures that should accompany implementation either do not function properly or do not have sufficient powers to manage the process effectively after the contract is signed.

This creates a systemic gap between planning and implementation: customers and contractors face inconsistencies, delays in decision-making, changes in input data, and the absence of a responsible entity capable of ensuring the integrity of implementation. Decisions are often made anew, and technical or organizational issues trigger a chain reaction of repeated approvals. This loss of management continuity leads to delays, revisions of work volumes and, in some cases, conflicts and disputes.

This is most noticeable at the local customer level. Communities don’t have access to standard control formats, methodological support, or professional guidance. Problems are particularly critical at the final stage: non-transparent registration of readiness for operation, unjustified delays or disregard for commissioning, and the absence of a single supervisory body to verify the facility’s compliance with the approved project documentation. In some cases, commissioning takes place in violation of the rules, and refusal may be based on a subjective interpretation of the requirements.

A Life Cycle Without Logic:

Project as a Sum of Fragments

Most of the barriers hindering the implementation of infrastructure projects are not just procedural — they are rooted in the lack of a single logic for managing the entire life cycle. In Ukraine, projects are often not viewed as a holistic process: planning, permitting, financing, implementation, monitoring, and completion all exist as separate segments operating in different legal and institutional spheres.

This fragmentation creates chaos in which it is impossible to ensure either rhythmic execution or control over changes. Each stage has its own stakeholders, its own procedures, and is practically unrelated to the previous one. As a result, responsibility for the outcome is lost, and the effectiveness of the system depends not on rules but on the personal efforts of individual performers. This approach is critically inconsistent with the scale and complexity of the tasks facing the reconstruction of Ukraine.

SUMMARY

The key conclusion is that barriers to project implementation are systemic in nature. They arise not only from individual regulatory flaws but also from fragmented powers, a lack of managerial continuity, and the absence of a service-oriented approach at all stages. Mistrust between participants, a lack of standard solutions, and uncertainty after contract signing reduce the effectiveness of even well-prepared and structured projects.

CHALLENGES OF THE WAR

AND POST-WAR PERIOD

Reconstruction in Wartime:

Instability, Risks and Distorted Priorities

Infrastructure restoration in conditions of full-scale war has a fundamentally different dynamic than in peacetime. Wartime logic influences all stages, from planning to implementation. Needs are shaped by the pressure of an emergency situation, and decisions are often made without full justification and with a short-term perspective. Conference participants repeatedly noted that in such conditions it is difficult to ensure the sustainability of projects, planning that considers future needs, or coordination between sectors.

Instead of systemic priorities, decisions are made based on the immediate availability of resources or political considerations. This distorts the logic of strategic planning: projects are built according to administrative orders, without considering spatial plans or effectiveness assessments. At the same time, contractors are forced to work without guarantees of safety, insurance, or compensation, which significantly increases the cost of work and reduces investor interest.

The lack of specialized risk assessment mechanisms for projects in potentially dangerous areas (in particular, those close to the front line or critical infrastructure) makes it impossible to form portfolios suitable for financing. This limits the range of participants, makes it impossible to attract credit funds, and encourages “point solutions” that are poorly integrated into the long-term reconstruction model.

One of the critical challenges that distinguishes the post-war period is the lack of an effective mechanism for insuring infrastructure projects in risk areas. Business remains virtually the only party responsible for the physical safety of facilities, completion deadlines, and financial losses in the event of repeated destruction. While government agencies operate with concepts of force majeure, private contractors have no access to any protection instruments that would reduce implementation risks.

This situation leads to selectivity in participation: companies prefer projects in relatively safe regions or demand higher safety coefficients, which affects budgets, competition, and deadlines. For many foreign companies, the lack of insurance mechanisms or state guarantees is the main factor deterring them from entering the Ukrainian market. The absence of precedents, compensation cases, or a clear role for the state in risk distribution creates an atmosphere of high uncertainty.

Conference participants repeatedly emphasized that without a systematic insurance mechanism for projects in the potential disaster zone, reconstruction will remain sporadic, focusing on “low-risk” projects, and will not be able to cover the entire territory of the country in a comprehensive manner.

International Trust Under Pressure:

the Need for a New Model of Interaction

After three years of full-scale war, international partners expect not only new projects, but also a change in the model of interaction. Funding is no longer provided automatically — donors are increasingly demanding clear reporting, transparency of procedures, and real accountability for results. Representatives of business and foreign agencies have repeatedly emphasized that further support for reconstruction is only possible if trust is demonstrated through actions, not declarations.

At the same time, the international community’s fatigue is manifested in reduced flexibility — more and more funding programs require standard competitive selection, linkage to specific indicators, or proven impact. In such conditions, Ukraine’s main asset is its ability to create conditions for transparent competition, minimize corruption risks, and increase the predictability of decisions at all stages of the project cycle.

It is no longer a question of adapting to an emergency, but of transitioning to a stable governance regime capable of ensuring a new level of trust. Otherwise, the risk of losing investment support will increase even in the most critical sectors.

High Corruption Risks at Every Stage

of a Construction Project Implementation

Outdated Urban Planning Documentation

Any construction project implemented within the community must comply with the requirements set out in urban planning documentation (spatial development plans).

Much of the existing urban planning documentation is outdated and needs to be updated, amended, or completely revised and redeveloped. At the local level, it is usually limited to areas within settlements and does not include areas outside their boundaries. Outdated urban planning documentation results in numerous obstacles for economic operators who intend to build legally.

Market participants draw attention to the fact that previously adopted decisions in the field of spatial planning are being revoked after investors have already invested funds in the implementation of relevant projects. Given the lack of compensation as a result of such decisions, this situation has an extremely negative impact on the willingness of potential investors to invest in the development of the relevant territories.

Obtaining Initial Data: Urban Planning

Conditions and Restrictions

According to market participants, one of the most vulnerable procedures to abuse in the construction sector remains the issuance of urban planning conditions and restrictions. A document that should be issued automatically as an extract from urban planning documentation has become a tool for local officials to extort bribes. Typical practices include delays in consideration, demands for documents not required by current legislation, and unfounded and arbitrary refusals to issue urban planning conditions and restrictions. This leads to the formation of an informal market for intermediary services, without which the implementation of most construction projects is virtually impossible

There is no extrajudicial procedure for appealing urban planning conditions and restrictions, and the judicial procedure is very time-consuming. An analysis of court practice shows that there are numerous cases where courts have ordered urban planning authorities to issue urban planning conditions and restrictions, which indicates that this is a systemic problem.

Permit to Start Construction Work

The procedure for obtaining construction permits in Ukraine remains complex and vulnerable to abuse. The lack of an automated decision-making system — with verification of submitted information through state registers — leads to the preservation of the “human factor,” which is often used to create obstacles.

Typical problems include deliberate delays, unreasonable demands, and refusal to issue permits without clear grounds. At the same time, there are currently no effective mechanisms for holding officials accountable for violations of the procedure for providing administrative services.

The State Architecture and Urban Planning Inspectorate of Ukraine (DIAM), which was established in December 2020 and has established itself as a service body free of corruption, issues permits only for high-impact facilities, which account for no more than 20% of all permits. As a result, some construction clients are forced to inflate the impact class of a facility in order to avoid interaction with local licensing authorities and fall under the jurisdiction of the DIAM.

Commissioning of an Object

During the process of commissioning completed construction projects, corrupt practices have developed involving officials creating artificial obstacles for the customer in order to obtain bribes for issuing certificates confirming the commissioning of the completed projects. Most abuses occur at the stage of on-site inspection of the facility, when its compliance with the submitted documents, approved project documentation, and construction standards is assessed. At the same time, according to market participants, similar abuses are not observed in cases where commissioning is carried out directly by DIAM.

Architectural and Construction Control and Supervision

The procedures for implementing state architectural and construction control and supervision measures contain a significant number of discretionary powers for architectural and construction control and supervision bodies. This includes, in particular, the possibility to selectively conduct or not conduct inspections, make decisions to suspend work or avoid responding, and issue unfounded orders to suspend preparatory or construction work. This situation creates a breeding ground for administrative pressure and corruption.

Market participants draw particular attention to the problem of monopolization of the market for accreditation of consulting engineers authorized to perform technical supervision. The limited number of accredited specialists and the lack of transparent rules for market entry distort competition and may affect the impartiality of control.

In addition, imperfect regulation of author and technical supervision procedures opens up opportunities for informal influence on the results of inspections. Market participants point to cases of obtaining undue benefits for providing so-called “positive” conclusions of author and/or technical supervision.

Technical Regulation Defects

Current legislation requires compliance with building regulations, including during major repairs and reconstruction, which in practice is not always technically possible, because the building was constructed according to other (previous) building regulations. This prompts construction customers to obtain an additional administrative service — approval of justified deviations from building regulations.

At the same time, the imperfections of the current approach to pricing in construction lead to the development of poor-quality cost estimates in project documentation, particularly in terms of overestimating construction costs.

SUMMARY

Recovery in wartime and transition to post-war development require qualitatively new approaches to risk management, institutional accountability, and models of interaction with partners. Today, infrastructure decisions are often made in emergency mode, without strategic justification, leading to inefficient use of resources, loss of trust, and inability to scale up. At the same time, businesses and international donors do not have sufficient guarantees regarding investment protection, procedural transparency, and the state’s implementation capacity. Rethinking the insurance system, the role of the state as a guarantor of stability, and creating new formats of trust are key to recovery that will be systemic rather than piecemeal.

FURTHER STEPS TO STRENGTHEN THE STRATEGIC FRAMEWORK FOR RECONSTRUCTION

Despite the systemic challenges and priorities outlined above, further policy development in the construction and infrastructure sector requires a deeper analysis of a number of issues highlighted in the BCG strategic study and during professional discussions at the conference.

CONCLUSIONS

The restoration of Ukraine is not just a technical reconstruction process, but an opportunity for a profound transformation of the entire system of governance, the investment environment, and the interaction between the state, business, and international partners. The construction industry and related infrastructure have the potential to become drivers of long-term economic growth. However, this potential will not be realized without removing key systemic barriers: fragmented responsibility, non-transparent procedures, lack of institutional capacity, inconsistent priorities, and lack of risk sharing.

Conference participants clearly outlined the demand — for stability, predictability, practical support, and a new model of public administration. This applies to the central level as well as to communities, businesses, the expert community, and donors. Without a change in approach — from manual reactions to systematic coordination — even the best-prepared, structured, and funded programs will remain isolated.

Recovery must move from crisis response mode — where decisions are made urgently, without long-term logic — to stable, managed development policies. Only through common rules of the game, the distribution of responsibilities, and the strengthening of trust can reconstruction become large-scale modernization, rather than a collection of isolated decisions.

Source: https://www.webuildukrainefund.org/post/white-paper-on-the-results-of-conference-construction-and-infrastructure-key-sectors-for-economic-g

The European Investment Fund (EIF) and the Danish Export Credit Agency EIFO have signed the first agreement under the European Union’s export credit guarantee program for Ukraine. This initiative aims to support European companies working with Ukraine and to strengthen Ukraine’s economic integration with the EU.

The signed guarantee — the first of 13 similar agreements being prepared in EU member states — provides financing of up to €20 million for export credit operations, enabling about 40 Danish companies to strengthen their presence in the Ukrainian market.

The EIF guarantee mechanism is implemented within the innovative “export credits” program supported by the InvestEU initiative of the European Commission.

“This export credit agreement — the first of thirteen — underscores the European Union’s commitment to a strong Ukraine within the European family. Securing trade links between the EU and Ukraine is a key factor in supporting the Ukrainian economy and deepening bilateral relations on Ukraine’s path towards future EU accession,” commented Nadia Calviño, President of the EIB Group.

“In 2024, according to Eurostat, exports from the EU to Ukraine amounted to €42.8 billion — 9.4% more than in 2023. This indicates that Ukraine remains a stable and important market for European goods, ranging from machinery and transport to pharmaceuticals and clean technologies. The export credit guarantee mechanism, implemented by the European Investment Bank Group and the European Commission, helps reduce risks for European companies. Through national export credit agencies, this instrument gives businesses confidence to work with Ukrainian partners and develop trade. This initiative supports Ukraine’s economy and facilitates our gradual integration into the EU single market. We appreciate this support and consider it an important contribution to recovery and development,” said Yulia Svyrydenko, First Deputy Prime Minister and Minister of Economy of Ukraine.

“I welcome the signing of the first €20 million agreement under the export credit guarantee mechanism for Ukraine — between the Danish Export-Import Fund and the European Investment Fund. Supported by the EU budget, this mechanism helps European businesses maintain and expand trade links with Ukraine. It is an important step forward toward deeper integration of the EU and Ukrainian economies — a key element of Ukraine’s EU accession process. We expect other member states to take advantage of this mechanism and contribute to the success of this important initiative,” stated Valdis Dombrovskis, European Commissioner for Economy, Productivity, Implementation, and Simplification.

This first agreement with EIFO launches a series of approximately 13 similar agreements across EU member states. Overall, the export credit program, which provides about €300 million in guarantees to support European small and medium-sized enterprises (SMEs) and mid-cap companies from the EU, received an application volume significantly exceeding the available funding just weeks after its launch in July 2024. This demonstrates high interest from European businesses.

“Ukraine’s fight for freedom is also our fight for freedom. Ukraine’s future lies in the West. Even closer economic integration is a powerful step in the right direction. Danish businesses have repeatedly demonstrated their leading role in Ukraine’s reconstruction process. This initiative paves the way for even deeper cooperation between Danish and Ukrainian companies. It provides real support to Danish companies wishing to work in Ukraine, while also extending a helping hand to their Ukrainian partners. This is an important contribution to shaping Ukraine’s future,” said Morten Bødskov, Denmark’s Minister for Industry, Business, and Financial Affairs.

Background

The European Investment Fund (EIF) is part of the European Investment Bank (EIB) Group. It supports small and medium-sized enterprises (SMEs) in EU countries by providing access to finance through a wide network of authorized financial intermediaries. EIF develops and implements equity and debt financing instruments that promote entrepreneurship, innovation, green and digital transitions, and job creation.

The InvestEU program provides long-term EU financing by mobilizing public and private investments. The program unifies EU financial instruments into a single architecture, simplifying access to financing and increasing its effectiveness. It consists of three components:

• The InvestEU Fund (EU budget guarantee — €26.2 billion);
• InvestEU Advisory Hub;
• InvestEU Portal.

Its overall goal is to mobilize over €372 billion in investments between 2021 and 2027.

EIFO is Denmark’s national development bank and export credit agency. It operates in over 100 countries, with transactions exceeding €20 billion. EIFO offers financial solutions to support Danish companies, promotes the green transition, and invests in technology and Denmark’s defense industry. The agency actively cooperates with partners worldwide, including in Ukraine.

Source: https://odessa-journal.com/first-eu-export-credit-guarantee-agreement-for-ukraine-secures-20-million-via-danish-agency-eifo

German business is ready to invest in the Ukrainian economy despite the war.

Ukraine joined the top 3 attractive countries for investment despite the war lasting for almost three years.

Eastern Europe is becoming increasingly attractive for German business. More and more German companies already investing or planning to invest in the region in the near future. Not least of all, this concerns Ukraine, as reported by Deutsche Welle.

The article highlights, “They [German entrepreneurs – ed.] treat Poland, Romania, and Ukraine as the most attractive countries for investment, followed by Hungary and the Czech Republic. A significant part of the projects planned for the Ukrainian market will be launched this year, despite the ongoing Russian aggression”.

Relocating production to Eastern Europe

The trend of relocating production to Eastern Europe is confirmed by a survey conducted by the international consulting company KPMG and the Eastern Committee of the German Economy, in which 133 companies operating in this region participated.

More than half of them (55%) believe that by the end of the decade, the importance of Eastern European countries for their business will increase. However, only 7% are skeptical.

Regarding investments in Eastern Europe, 42% of respondents reported that they have already budgeted for costs of establishment, expansion, or relocation of production to Eastern Europe in the 2025 budget, while 56% are planning to do so in the next 5 years.

Andreas Glunz, the KPMG representative, explained, “Well-known problems concerning investment climate in Germany are forcing local companies to move their production abroad. In such a case, the best direction is Central and Eastern Europe. German business has already made large-scale investments there, has studied very well local conditions, and at the same time remains close to its home country”.

In the respondents’ opinion, this region is attractive due to high domestic demand and qualified personnel. Meantime, low labor costs turned out to be only the third most important reason.

What attracts investors to Ukraine

The most unexpected result of the survey is the high interest in investing in Ukraine, despite the ongoing war.

Michael Harms, Executive Director of the Eastern Committee of the German Economy, emphasized, “It is especially noteworthy that Ukraine ranked third among the most attractive countries for investment. It shows the great economic potential of this country”.

Among 133 surveyed companies, one in five (21%) is already an investor in the Ukrainian economy, and slightly more than a third (35%) are planning to invest by the end of this year.

However, 41% of companies are planning to invest in the Ukrainian economy for the next five years, as they expect its accelerated joining the EU. This is almost the same number of companies as those planning to invest in Romania, and significantly more than in Hungary (35%), the Czech Republic (31%), and Bulgaria (22%).

Nicolai Kiskalt, Head of the Central and Eastern Europe Desk at KPMG Germany, noted, “Despite the war, more and more international and German companies are investing in Ukraine – a country with the potential to become an energy hub for the European Union, to turn into alternative production site and to play a vital role for European companies in IT and outsourcing”.

Meantime, two-thirds of German businessmen (67%) named political risks and lack of security as the main obstacles to investment in the region as a whole, while corruption and bureaucracy are much less of a concern for entrepreneurs; respectively, 38% and 31% of respondents treat them as a problem.

We remind that America and Europe are interested in Ukraine’s victory and its achievement of long-term economic success. Mike Pompeo, former US Secretary of State, now a member of the Board of Directors of the global telecom operator VEON and its Ukrainian asset – Kyivstar, believes that Ukraine’s Western allies should help it win the war and support its economic recovery and growth with strong investments.

Source: https://tsn.ua/groshi/nimeckiy-biznes-gotuyetsya-do-investiciynogo-bumu-v-ukrayini-deutsche-welle-2760477.html?fbclid=IwZXh0bgNhZW0CMTEAAR1AMkL6sEzGnXkpymeag_9tXFjs0ttsV663R7FesTuIZcXwJMva7okFIXc_aem_oQLj4B97oMPi631FDDOmqw

The ports of Odesa and environs will be key to any significant post-war recovery in Ukraine. Already much headway has been made in the area of security.

There are many stories of resistance to the Russian invasion by the Ukrainians. Not only the soldiers at the front, but also the unknown heroes who continued to work in their place so that the State could continue to function. This is the case of the ports of Odesa, an essential artery for Ukrainian exports.

“Eighty percent of the country’s exports came out of the Ukrainian ports,” says Deputy Minister of Infrastructure Yuriy Vaskov, the man responsible for ports and river and rail transport from the beginning of Russia’s full-scale invasion until May 2024. Then he followed the fate of the Minister Oleksandr Kubrakov, dismissed by President Volodymyr Zelensky.

Together, Vaskov and Kubrakov founded the We Build Ukraine think tank in partnership with Boston Consulting Group, to define the strategic priorities of reconstruction and guide foreign investments in Ukraine.

“From the first day of the invasion in February 2022, Ukrainian ports were blocked by the Russian fleet,” Vaskov says, “and exporters looked for alternative routes, such as trucks and trains, but with profits close to ‘0’ due to non-competitive costs. On the other hand, the ports on the Danube, Izmail and Reni, increased their cargo movement 20-fold because they could cross the neutral waters of Romania.”

It was a partial solution, because the Danube seabed is not as deep as in seaports, so they can only work with flat-bottomed vessels with limited loads.

Then, in July 2022, there was the agreement to establish a grain corridor, known as the Black Sea Grain Initiative. Thanks to the diplomatic mediation of Turkey and the United Nations, the initiative lifted the Russian naval blockade of the ports of the Odesa region (though not in Mykolaiv) to allow the export of wheat and cereals. The 65 ships blocked for months in the ports were able to go out to sea again and exports resumed almost to the pre-war level.

It was then that the world became aware of the strategic value of Ukrainian agricultural exports, on which the food of 400 million people depends. That agreement lasted a year. But in the meantime, the losses inflicted on the Russian fleet due to attacks by Ukrainian maritime drones and missiles had cleared the sea of enemy ships. Since then, merchant ship traffic has resumed without having to negotiate with the Russians.

“The world became aware of the strategic value of Ukrainian agricultural exports, on which the food of 400 million people depends”

Among the officials who have remained in their posts, despite the personal risk, is Aleksey Myaskovsky, who for five years has headed the port authority that manages real estate and port services in Odesa. In the past three years, some of his employees have died because of attacks on the docks, but the workforce has remained in place, implementing safety regulations (shelters and working at a physical distance). As workers in critical infrastructure, 70% of the port employees are protected from military mobilization.

The Ukrainian economy depends on the seven ports in the region: three main ones around Odesa (the historic port, Chornomorsk and Yuzhny), three on the Danube (Izmail, Reni, Ust-Dunaysk) and one at the mouth of the Dnister (Bilhorod-Dnistrovsky). Despite the war, some of these ports have been privatized. Ust-Dunaysk and Bilhorod-Dnistrovsky were given in concession through a public tender to Ukrainian investors. But the Ukrainian government’s privatization policy does not stop. This year, two terminals in the port of Chornomorsk will be put up for grabs (the procedure for one terminal is already online) and as soon as the war is over, the cruise terminal in the historic port will be given in concession, where the burnt-out skeleton of the old Hotel Odessa, destroyed by missiles, stands tall.

According to Myaskovsky, the process of privatization of the maritime sector is now irreversible, due to Ukraine’s ambition to become a member of Europe. Law 4196-IX of February 2025 will transform all public companies into joint-stock companies – a process necessary to allocate more resources to ports. In the current system, the Ukrainian Port Authority (USPA) collects all the revenues for the services offered to shipping companies, but redistributes an infinitesimal part to maintain the infrastructure.

Merchant traffic today occurs thanks to the reduction of the risk of war and new insurance policies that shipping companies can buy.

“Security is the main problem of maritime traffic in the Black Sea,” says Arthur Nitsevych, founder of the law firm Interlegal, the largest in Ukraine for maritime law (50 lawyers), with offices in all the countries bordering the Black Sea, plus Greece and Cyprus.

From 2022 and almost all of 2023, no insurance policy for war risk available, Nitsevych explains. “Then, in November 2023, a London insurance company with a partial guarantee from the Ukrainian government offered a policy that initially cost 5% of the value of the cargo. Today it has dropped to 1-1.5%.”

However, the lawyer tells us, this insurance is voluntary, not mandatory. There are many ships owned by Turkey, Arab countries, and even Ukrainian owners, that accept the risk and sail without paying these expensive policies, to increase profits. They simply pay the policies required at an international level in each port, relating to the personnel and technical equipment of the ship.

“Security is the main problem of maritime traffic in the Black Sea.”

According to him, the reconstruction of Ukraine will lead to a further increase in port traffic because in addition to agricultural and mineral commodities there will also be construction materials. This will be a challenge for the Ukrainian port administration, which suffers from inefficiencies due to regulations defined by officials in Kyiv who often do not fully understand the economics of the port.

Regarding the economy of Ukraine, Vaskov predicts that the Ukrainian GDP will increase by 2.5-3 times in 15 years. To achieve this, a stable peace in conditions of economic security will be needed. It will be necessary to reopen the port of Mykolaiv, where there is a terminal of the Chinese operator COFCO, and from which the steel products of the Indian giant Arcelor Mittal departed. It is useful to note that Mykolaiv is already the object of the majority of Danish investments in Ukraine. And then we need to relaunch river traffic on the Dnipro, with the reconstruction of the Nova Kakhovka dam destroyed by the Russians.

The great strategic perspective for Ukraine is to hook up to the India-Middle East-Europe-Economic-Corridor (IMEC) project, the logistics corridor launched by India to connect to Central Eastern Europe through the Emirates, Saudi Arabia, Israel and the Mediterranean. Odesa could take advantage of this corridor by offering its rail connections to Poland, Lithuania and Estonia, to reach the Baltic Sea more quickly. It is no coincidence that the Polish European Commissioner has publicly announced Poland’s interest in investing in the port of Odesa. And Vaskov himself confirms that there are already projects with European partners to create new railway lines with the distance between the tracks used in Europe (Ukrainian railways have a wider gauge), to improve connections with European markets.

“The lack of a maritime strategy for Ukraine has always been its weak point.”

Ukrainian ports will play a decisive role in the revival of the economy, but on the condition that the government defines the maritime strategy of Ukraine.

“The lack of a maritime strategy for Ukraine has always been its weak point,” complains Roman Morgenstern, Director of Marketing and International Projects at Ukrferry. “In Kyiv there has always been a lack of knowledge of the port activity and the will to increase the role of Ukraine on the seas.” In this regard, the case of the Black Sea Shipping Company, known as BLASCO, is emblematic. With its independence, Ukraine inherited the Soviet merchant fleet, which with its 400 ships was the largest in the world. Due to a lack of expertise and a lot of corruption, that economic heritage was completely lost, between ship sales and scrapping due to lack of maintenance.

And yet, Odesa through its Maritime University and Naval Academy still graduates many professionals both for careers in the merchant navy and for shipping and logistics companies. An important asset for the future of Ukraine, which will be exploited to the fullest only thanks to a real maritime strategy.

Article by Ugo Poletti

Source: https://www.kyivpost.com/post/51751

The Odesa region presents a portfolio of investment projects across key sectors — from renewable energy and agriculture to manufacturing, culture, and medical infrastructure. These initiatives aim to promote sustainable community development, improve quality of life, and attract private capital for the reconstruction and modernization of southern Ukraine.

Read full Investment digest below

• EBRD deploys record amount of nearly €2.4 billion in Ukraine in 2024
• Bank has deployed nearly €6.2 billion in Ukraine since full-scale war began in 2022
• Across its regions, EBRD financing jumped to €16.6 billion from 2023’s record €13.1 billion

The EBRD prioritises support for energy security, vital infrastructure, food security, trade and the private sector in its work in Ukraine, counting both investments and trade finance in its deployed figure.

In 2024, the EBRD deployed a record €833 million of financing via partner financial institutions in Ukraine, including €472 million to support trade finance under its Trade Facilitation Programme. Portfolio risk sharing remained the main instrument for EBRD to deliver finance to Ukrainian businesses, with the EBRD remaining the leading provider of such guarantee facilities in the country.

The EBRD works with donors in Ukraine. Since 2022, the EBRD has succeeded in mobilising more than €2.6 billion in donor funds for Ukraine, including unfunded guarantees, of which nearly €1 billion was in 2024 alone. Leading donors since 2022 have been the European Union, United States of America, France, Norway and The Netherlands. In 2024, leading donors were the European Union, France, Norway, South Korea, Sweden and The Netherlands.

Following agreement in 2023 to increase the Bank’s paid-in capital by €4 billion to sustain support for Ukraine, the EBRD’s investment levels are expected to continue at around €1.5 billion a year, with potential for further increases when the time comes for reconstruction.

“Our shareholders have expressed enormous confidence in us by agreeing to a substantial capital increase for our activity in Ukraine and affected countries. I would like nothing more than for 2025 to be a year of reconstruction. This is where the EBRD can be at its best – using our financing knowledge and experience to build back better,” said EBRD President Odile Renaud-Basso.

Among highlights of EBRD work in Ukraine in 2024 were a highly innovative war risk insurance guarantee scheme designed to support trade despite the conflict; participation in a US$ 435 million telecoms deal that is bringing the country its biggest foreign direct investment in wartime; private-sector finance for postal services to Nova Post, pet food to Kormotech and bionic prosthetics to Esper Bionics; work on reintegrating war veterans into the economy, and major lending to the energy, infrastructure, banking and municipal sectors.

To mitigate the widespread electricity shortages Ukraine is experiencing as a result of Russian attacks on its power generation system, the EBRD focussed its energy investments on financing for decentralised small-scale generation capacity helping ensure uninterrupted energy supply to Ukrainian people and businesses.

EBRD energy financing has reached €2 billion since 2022, of which €639 million was signed last year.

The Bank lent €80 million to Ukrnafta, a Ukrainian state-owned oil and gas company, to finance supplying and installing a total of about 100 MW of small-scale gas-fired distributed power and co-generation capacities around the country and boost the resilience of the power sector.

The EBRD financed new players entering the energy generation market. A €180 million loan to Ukrainian Railways (Ukrzaliznytsia, or UZ) to install small-scale generators around the country, will finance the supply and installation of up to 270 MW of decentralised small-scale gas-fired power generation capacity.

Early in the year, the Bank also signed a €200 million loan package to Ukraine’s main hydropower generation company, Ukrhydrenergo, to mitigate the impact of repeated Russian attacks. An EBRD loan of €100 million backed by a concessional parallel loan of €100 million from Italy provided emergency support to restore and maintain the company’s electricity production.  

A parallel approach for supporting the nation’s energy resilience was through partnerships with Ukrainian financial institutions. The €700 million Energy Security Support Facility (ESSF), launched in September, was designed to support investments in decentralised energy generation, energy storage, and energy efficiency projects of Ukrainian businesses, regional municipalities and households. In the first three months since the launch of this programme, the EBRD signed or approved €525 million worth of financing agreements with four partner banks.

The heating needs of Ukrainian municipalities were prioritised in loans of €50 million to Kyiv, €25 million to Kharkiv, as well as municipal lending to the cities of Kryvyi Rih, Mykolaiv and Lutsk. These will be used to provide liquidity for municipal district heating as well as water treatment and transport utilities. 

With an eye to the country’s longer-term energy future, the EBRD also supported Ukraine’s ambitions for more renewable energy.

The Bank lent €60 million to fuel distributor Galnaftogaz for its first private biofuels investment in wartime, to support the domestic production of bioethanol, whose greenhouse gas emissions are 70 per cent lower than traditional fuel.

And it established a renewable energy joint venture with an experienced German solar energy company, GOLDBECK SOLAR Investment, to construct and operate new solar PV project in Ukraine.

In transport infrastructure, a separate €300 million loan to Ukrainian Railways will help the company upgrade its locomotives, to ensure stable and uninterrupted railway cargo operations for agricultural exports and critical imports as well as passenger services.

To improve road connections between Kyiv and its European Union neighbours, €267 million of an existing loan for road development was reallocated for emergency repairs on the M-06 road heading west to Slovakia and Hungary, which has experienced an upsurge in traffic in wartime.

Beyond financing, the EBRD continues to support Ukraine’s reform drive – a crucial step not only to unlock further investments from the private sector, but crucially, to progress on Ukraine’s aspiration to become an EU member.

Through the Ukraine Reform Architecture and the Business Ombudsman, the Bank has been working with government and public bodies on issues related to EU integration and alignment with EU regulation, while the digital procurement platform ProZorro has improved the transparency and efficiency of public procurement.  

The EBRD is also helping Ukraine prepare to effectively absorb the vast financing that reconstruction is expected to bring. Together with the European Investment Bank (EIB) and the World Bank, it is helping ministries and agencies build institutional capacity and providing technical assistance in the State Agency for Restoration and Infrastructure Development of Ukraine to establish an effective Project Delivery Unit.

The EBRD’s overall financing in 2024 reached a record level of €16.6 billion, a jump of 26 per cent from the previous record of €13.1 billion in 2023. The Bank’s financial results are expected to be announced in the spring.

Source: https://www.ebrd.com/home/news-and-events/news/2025/EBRD-deploys-record–2-4-billion-in-Ukraine-in-2024.html

Law of Ukraine “On Industrial Parks” and respective changes to the Tax Code (Law No. 2330-IX) and the Customs Code (Law No. 2331-IX) provide for the system of state incentives for investment parks. The following incentives are available for initiators of the creation of industrial parks, their management companies and participants:

• exemption from income tax for 10 years, subject to reinvestment in the development of the investment project;
• exemption from VAT on the import of new equipment for own use;
• the possibility of granting benefits for real estate taxation on the territory of industrial parks by decision of the local authority;
• exemption from import duty taxation of new equipment imported by participants of industrial parks for their own use.

The Ministry of Economy has developed respective by-laws for full launch of the system of state incentives for industrial parks.

For those who intend to take advantage of incentives for industrial parks, we suggest that you read the explanatory guide prepared by the UkraineInvest team.
 
The guide contains all necessary information about available incentives, requirements for industrial parks, procedures for inclusion in the register of industrial parks, selection of a management company, etc. It is updated considering amendments to the current legislation.

GUIDE: IMPLEMENTATION OF AN INVESTMENT PROJECT WITH SIGNIFICANT INVESTMENTS ON THE TERRITORY OF THE INDUSTRIAL PARK

GUIDE: INVESTMENT INCENTIVES FOR INDUSTRIAL PARKS

Source: https://ukraineinvest.gov.ua/en/analytics-research/guide-ind-parks/

1. Purpose of the Call

To support the implementation of the Ukraine Investment Framework (UIF), the optimal use of the available funds for priority projects and the participation of EU ¹ companies, the European Commission is launching a Call for Expressions of Interest from EU/EEA-based businesses to invest in Ukraine in line with EU strategic areas of interest and policy priorities.

The objective of this first Call for Expressions of Interest is to enter into dialogue with EU/EEA private companies on concrete investment opportunities and related constraints in Ukraine. Based on assessment criteria, subsequent contact with partner Financial Institutions may be facilitated for potential financial cooperation. This dialogue is aimed at building a pipeline of transformative private investments in Ukraine.

This first Call invites EU/EEA-based companies to submit project proposals for new investments into Ukraine’s real economy. Participation in this Call does not constitute any form of partnership, joint venture, or other legal relationship between the Participant and the European Commission. It does not constitute any guarantee of financial support neither from the European Commission nor any partner Financial Institutions. The publication of this Call for Expressions of Interest also does not commit the EU to finance the project investment proposal.

All project proposals presented to the European Commission will be assessed based on the criteria outlined in this Call and will be treated equally, ensuring a fair and transparent assessment process. All information submitted as part of the project proposal will be treated confidentially and used solely for the purposes of evaluating the proposals in accordance with the criteria specified in this Call.

The priority areas of the Call will be based on the Ukraine Plan and Strategic Orientations of the UIF, outlining key real economy sectors requiring Foreign Direct Investment (FDI) including:

• Energy: Develop distributed sustainable energy solutions, including renewable energy projects and modernisation of existing energy infrastructure.
• Critical Raw Materials: Invest in processing key minerals and resources needed for high-tech industries and renewable energy technologies.
• Processing industry and manufacturing: Revitalise and modernise manufacturing sector to boost industrial output and competitiveness.
• Construction materials: Support reconstruction and invest in construction material industry, design bureau, construction companies, supervisors, from housing to public buildings.
• Information technology and digital transformation: Strengthen digital infrastructure and technology to foster innovation and cross-sector efficiency.
• Transport and export logistics: Rebuild and modernise transport, logistics, and public infrastructure to support connectivity.

Eligibility Criteria

To ensure a structured and transparent assessment, the following criteria will be used for evaluating the eligibility of project proposals:

• Geographic Area: Ukraine (investment taking place on the territory of Ukraine).
• Private Sector: Eligible Participants to the Call shall be private enterprises, joint venture or consortium of companies, possessing a valid VAT registration number and Transparency registration number. Entities listed in the Early Detection and Exclusion System (EDES) ² data base are excluded from this Call for Expressions of Interest. If the project is conducted by a consortium, the consortium leader must be based in the EU or EEA.
• Nationality of Private Entity: EU/EEA-based businesses (companies possessing their real legal seat / legal incorporation in one of the EU Member States /EEA countries). For the avoidance of doubt, ‘real legal seat’ must be understood as the place where its managing board and central administration, or its principal place of business, are located.
• Alignment with Policy Priorities: Projects should focus on Ukraine’s real economy sectors and align with the priority areas outlined in the Ukraine Plan, which includes energy, critical raw material, manufacturing, digital and transport, among others.
• Minimum Investment Size: Projects must meet a specified minimum investment threshold, including a total size of the investment project at EUR 50 million and an own equity participation by the project promoter at 10% of the total value of the investment project.

Assessment Criteria

The following strategic, impact and financial criteria will be used to assess the project investment proposal:

Strategic Criteria

• Alignment with EU policy objectives and priority areas for investments in Ukraine.
• Ownership of the company in view to support EU open strategic autonomy.
• Compliance with EU standards and adherence to the Do No Significant Harm Principle.

Impact Criteria

• Impact of the project proposal on supporting EU strategic interests, including socio- economic development and green transition, taking into account risk assessment and mitigation measures.
• Replicability and scalability of the project proposal.
• Innovative features of the project proposal.
• Capacity of the Participant to mobilise private capital to finance the proposed investment (relevant experience in the specified sector, and particularly in Ukraine, will be regarded as an advantage).
• Market assessment and how the project proposal addresses market failures.

Financial Criteria

• Financial viability, including financial needs and investment plans reflecting the scale and scope of the project.
• Maturity of the proposal.
• Investment capacity: Participants must demonstrate that they can finance through equity at least 10% of the total cost of the project.

2. Submission of Projects

Interested companies are invited to submit their project proposals through the designated EU expressions of interest form through the EU Survey link below. Each proposal should include the following documents:

1. EU Transparency Register number and VAT.
2. A two-page project fiche to be uploaded by Participants in the EU Survey, detailing the key elements of the project, including the scope, objectives, timeline, investment size, impact and expected outcomes, innovation aspects, maturity of the project, risk assessment and mitigation measures, financial structure of the project proposal, alignment with EU priorities.
3. A document presenting the governance and detailing the ownership structure of the company, indicating the nationality of shareholders holding more than 10% (and of its consortium members, if any).
4. Any other relevant documents to ease the assessment of the project.
5. The Declaration on honour on exclusion criteria and selection criteria enclosed in the EU Survey.

Proposals, all correspondence, and documents related to this Call exchanged between Participants and DG NEAR must be written in English.

Supporting documents and printed literature furnished by the Participants may be in another official language of the EU, in which case accompanied with a legally valid translation into English.

3. Timeline

The Call has been announced at the EU-Ukraine Investment Conference on 13-14 November in Warsaw, Poland. The submission portal for this first Call for Expressions of Interest is open until 1st March 2025 00:00 – Brussels time.

Eligible Participants will receive feedback on the policy alignment of their proposal within 60 working days following the Call’s closing date. The European Commission will provide information about the outcome of the assessment process and may subsequently facilitate contact with partner Financial Institutions. Participants may submit requests for clarification regarding this Call for Expressions of Interest by 31^st of January 2024. DG

NEAR has no obligation to provide clarification on questions received after this date. Requests for clarification should be submitted in writing to:

Please ensure to refer to this Call in the subject of your request. Clarifications will be published on this EU Survey at the latest 10 days before the deadline for applications. The survey will be updated regularly, and it is the company’s responsibility to check for updates and modifications during this period.

Participants will be notified of the outcome of this assessment by e-mail. The notification will be sent to the e-mail address provided in the EU survey. It is the Participant’s responsibility to provide a valid e-mail address and to check it regularly.

4. Disclaimer

We recall that all documents in the possession of the Commission may be subject of a request for access to documents³. However, it is established practice to always consult the author document regarding the possibility of an eventual disclosure. DG NEAR may refuse to provide access to the submitted information, the disclosure of which would undermine the protection of commercial interests of the company, including intellectual property.

We encourage Participants to clearly mark and explain which information they consider confidential. Please note that general statements claiming confidentiality for the entire proposal or substantial parts of it will not be considered. The EU reserves the right to make its own assessment of the confidential nature of any information contained in the proposal, always after consultation with its author.

Personal data will be processed in accordance with the applicable data protection rules and the Privacy Statement, which is available in the EU Survey.

5. Ethics clauses and code of conduct

Participants must not be affected by any conflict of interest and must have no equivalent relation in that respect with other Participants or parties involved in the project. Participants and their personnel must comply with human rights as well as environmental legislation and core labour standards. Participants shall comply with all applicable laws and regulations and codes relating to anti-bribery and anti-corruption.

Source: https://enlargement.ec.europa.eu/european-neighbourhood-policy/countries-region/ukraine/ukraine-investment-framework/publication-call-expressions-interest-eueea-based-businesses-invest-ukraine_en#ref-1-purpose-of-the-call