Category: Publications

Ukraine offers industrial parks as one of several special legal regimes to facilitate investments and future recovery. Industrial parks are among structuring options for the projects that entail real estate development in production, processing, energy, IT and some other sectors.

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On February 24, 2022, Russia launched a full-scale war against Ukraine.
The brutal violation of Ukraine’s territorial integrity was swiftly condemned by the United Nations General Assembly, yet the war continues.
Death and destruction have reached a scale unseen in Europe since World War II, with the war’s impact felt far and wide — from Ukrainian families who have lost loved ones to African nations facing the threat of famine.

This is a dark hour for humanity, but we must think about rebuilding Ukraine after the war. Planning ahead and preparing today is crucial for the country’s long-term survival: these efforts will save lives and increase the chances of success. Furthermore, they will give millions of Ukrainians hope that, after the horrors of war, there is light at the end of the tunnel.

A report by the Centre for Economic Policy Research (Becker et al., 2022) outlines an initial framework for Ukraine’s reconstruction. When the report was drafted in March 2022, uncertainty was overwhelming.
How far would Russia go in its destruction of Ukraine?
How resilient would Ukraine be in resisting the aggression?
What kind of assistance would the civilized world provide to Ukraine?

What once seemed almost unattainable—Ukraine’s victory—now appears increasingly within reach. Therefore, a more detailed analysis is needed to define what Ukraine should look like after the war and what tools policymakers will need to achieve these goals.

This book offers proposals from leading scholars and practitioners on this topic. Each chapter focuses on a specific sector, though some overlap, reflecting the comprehensive nature of Ukraine’s transformation. Many elements must work simultaneously to accomplish this complex task, making a clear vision of the goals essential.

The book’s main message is clear: reconstruction is not about rebuilding Ukraine to its pre-war state but about profoundly modernizing the country. Infrastructure, technology, the business environment, institutions, education, healthcare, and other critical aspects of the economy and society must leap forward and reform to help Ukraine shed its post-Soviet legacy. The aim is to transform Ukraine into a full-fledged democracy with a modern economy, strong institutions, and a robust defense sector. A key part of this ambitious agenda is Ukraine’s full membership in the EU and NATO.
However, there can be no compromises—Ukraine must fulfill all the membership requirements of these organizations, especially those related to democracy, resilient institutions, and low corruption.

This book emphasizes the importance of allied support. Yet, for reconstruction to truly become a success story, Ukraine’s future must be determined by its own citizens. In other words, Ukrainians must take ownership of this process.

For a long time (understandably so), many Ukrainians viewed the state as something hostile and alien, aimed at suppressing society. Today, more people recognize that they must own the state—defend their rights and fulfill their civic duties. Building on this wave of patriotism, creating mechanisms for genuine citizen involvement will help sustain national unity and the enthusiasm of volunteers into the post-war period. More importantly, it will ensure the country’s democratic development.

Rebuilding Ukraine will be a challenge not only for Ukraine itself but for the world as a whole. The destruction is vast, and no single country or organization can handle the reconstruction process alone. It will require extensive coordination among governments, international organizations, NGOs, businesses, and other stakeholders. Through the reconstruction process, mechanisms, institutions, and alliances will be established.

You can read the entire book in Ukrainian at the link: https://cepr.org/system/files/2022-12/reconstruction%20book_Ukrainian_0.pdf

Contracts and insurance
Construction contracts

What standard contract forms are used for construction and design? Must the language of the contract be the local language? Are there restrictions on choice of law and the venue for dispute resolution?

In Ukraine, there is no standard mandatory form of a construction contract. ‘The General Conditions for Conclusion and Performance of Capital Construction Contacts’ approved by the Resolution of the Cabinet of Ministers of Ukraine No. 668, dated 1 August 2005 (Regulation No. 668) provides recommended terms and conditions of construction contract in capital construction, which the parties may deviate, provided that the provisions of the contract do not contradict imperative (mandatory) provisions of Ukrainian law. Regulations No. 668 provides that the general conditions should be ‘mandatorily taken into consideration’ irrespective of the sources of construction funding or the form of ownership of an employer or a contractor.

Regulation No. 668 does not provide for a binary structure of a construction contract – there are no references to particular conditions such as in FIDIC contracts. It is more common in Ukraine to have a construction contract drafted as a single document, without splitting it into General Conditions and Particular Conditions as in the case with FIDIC.

According to the Commercial Code of Ukraine and Regulation No 668, the construction contract should contain the following material terms to be valid:

• name and details of the parties;
• date and place of execution of the contract;
• the subject matter of the contract;
• contract price;
• terms for commencement and completion of work;
• rights and obligations of the parties;
• instruments to secure fulfillment of obligations under the contract;
• order of procurement of design documentation, resources and services required for the performance of works;
• order of engagement of subcontractors;
• requirements for the arrangement of works;
• order of employer’s supervision over the quality of resources;
• terms for conduction of author’s and technical supervision with respect to construction works;
• sources and order of financing of construction works;
• payment procedure;
• procedure of handover of completed construction works/construction object;
• guarantee terms regarding the works and object, remedy of defects;
• parties’ liability for the violation of the contract;
• disputes resolution procedure; and
• grounds and procedure for amendment of the contract and its termination.

Template forms of contracts such as FIDIC may be used subject to their alignment with Ukrainian imperative law provisions.

The language of business documentation, social and economic relations as well as agreements shall be the official state language (ie, Ukrainian). At the same time, the current legislation does not prohibit concluding bilingual contracts, which are widely used in international contracts (contracts with a foreign element).

Provided that the construction contract contains a foreign element (either party is a foreign entity), the contract may be governed by a foreign law and the parties may apply either to Ukrainian courts or international arbitration institutions, subject to the agreement of the parties. As a matter of practice, construction contracts concluded as a result of public procurements are usually governed by Ukrainian law at the request of the customer.Payment methods

How are contractors, subcontractors, vendors and workers typically paid and is there a standard frequency for payments?

Payments under construction, supply and services contracts are normally made by wire transfer. The National Bank of Ukraine limits the amount of cash settlements per day to 10,000 hryvnas between business entities, 50,000 hryvnas with individuals. Non-cash payments shall be made through banks and non-bank payment service providers where the respective accounts are opened. Payment procedures as well as frequency of payments are subject to the agreement of the parties.Contractual matrix of international projects

What is the typical contractual matrix for a major project in your jurisdiction in terms of the contractual relationships among the various construction project participants?

As a matter of practice, employers in Ukraine usually conclude contracts for design works and construction works directly with certified designers and licensed contractors. For small-scale projects, employers usually engage contractors for separate work packages with a designer, and multiple contractors responsible for the fulfilment of different work packages. For large-scale projects, employers engage a general contractor, who then hires subcontractors for relevant packages of works and manages construction. The general contractor may be responsible only for construction works based on the design documentation provided by the employer (eg, similar to the FIDIC Red Book contract) or perform both design and construction works (eg, similar to the FIDIC Yellow Book contract).

Engaging an engineer (eg, with the functions as provided, eg, in the FIDIC Red, Yellow or Harmonised MDB edition) is not a widespread practice in Ukraine. Nevertheless, such engineer is often engaged in large-scale international contracts or contracts involving financing from IFIs.PPP and PFI

Is there a formal statutory and regulatory framework for PPP and PFI contracts?

Ukraine has a regulatory framework for PPPs and concessions. It was significantly updated in 2018 and is still being improved. The Ukrainian PPP regulatory framework was developed in consideration of best international practices and currently includes over 20 laws and by-laws, including the following key legislation:

• Law of Ukraine ‘On Public-Private Partnership’;
• Law of Ukraine ‘On Concession’;
• Resolution of the Cabinet of Ministers of Ukraine ‘Certain Issues of Organization of Implementation of Public-Private Partnership’;
• Resolution of the Cabinet of Ministers of Ukraine ‘On Approval of the Procedure of Replacement of Private Partner (Concessionaire) under the Agreement Concluded within Public and Private Partnership (Concession Agreement)’; and
• Order of the Ministry of Economy of Ukraine ‘On Approval of the Methodology for the Analysis of the Effectiveness of Public-Private Partnership Implementation’, etc.

Joint ventures

Are all members of consortia jointly liable for the entire project or may they allocate liability and responsibility among them?

Ukrainian law does not provide for the joint and several liability of the consortium members. Unless Ukrainian law directly provides for joint and several liability, the parties of the contract are free to agree on joint and several or joint shared liability of the consortium members.

In large-scale projects, employers prefer having a general contractor be liable for the management, timely and proper fulfillment of all works.Tort claims and indemnity

Do local laws permit a contracting party to be indemnified against all acts, errors and omissions arising from the work of the other party, even when the first party is negligent?

Under Ukrainian law, the general contractor is liable for the proper fulfilment of construction works assigned to the general contractor under the construction contract regardless of whether such works were performed by the general contractor or a subcontractor. A general contractor is liable to the employer for non-fulfilment or improper fulfilment of obligations by its subcontractors regardless of the subcontractor’s fault.

At the same time, a breaching party (eg, subcontractor) shall compensate damages to another party (eg, general contractor), unless it proves that the breach of the obligation occurred through no fault of his or her own. Therefore, the general contractor may file a regress claim to its subcontractor. Liability to third parties

Where a contractor constructs a building that will be sold or leased to a third party, does the contractor bear any potential responsibility to the third party? May the third party pursue a claim against the contractor despite the lack of contractual privity?

The contractor is liable to the employer or developer for the quality of works within the warranty period established by the contract or law and shall remove any defects in the building, within the warranty period. A third party who purchased a building from the employer or developer (first purchaser) has the right to file a claim with regard to the defects of such building to the employer/developer, which will then have a right to file a regress claim to the contractor within the statute of limitation. If the first purchaser is to further sell the building to another person, such new purchaser will have no right of claim to the employer or developer.Insurance

To what extent do available insurance products afford a contractor coverage for: damage to the property of third parties; injury to workers or third parties; delay damages; and damages due to environmental hazards? Does the local law limit contractors’ liability for damages?

The above risks may be covered by the following insurances available in Ukraine:

• insurance of construction risks, which, among other, includes insurance against accidental damages to the property of third parties;
• third party liability insurance, which covers liability for the damages to the property or health of third parties;
• professional indemnity insurance allows to ensure against losses unintentionally caused to third parties in the course of professional activities as a result of unintentional professional error (omission, negligence) or other events stipulated by the insurance contract;
• environmental insurance; and
• accident insurance including an industrial injury and occupational illness of employees.

Under Ukrainian law, the damages and losses (direct losses and lost profit) shall be reimbursed in full unless liability is limited by the law or contract. Ukrainian law does not limit the contractor’s liability for damages. At the same time, the law prohibits limiting liability for the intentional breach of obligations. 

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І. LAND MARKET

• SPFU introduced the “Land Bank” project
• State Registration of Property Rights for Land Improvement and their Components
• Compensation for the Restoration and Construction of Land Improvement Systems
• Compensation for Humanitarian Demining Costs

ІІ. LEASE OF STATE-OWNED PROPERTY

• The CMU has amended the legislation governing the preparation of documents required for the lease of state-owned real estate by social service providers

ІІІ. STATE INCENTIVES FOR ATTRACTING INVESTMENT

• New Regulations on State Support for Projects with Significant Investment (so-called “Investment Nannies”)
• Resolution of the CMU “On Certain Issues of State Incentives for Creation and Operation of Industrial Parks” came into force
• The Ministry of Economy has published a Catalogue of Industrial Parks
• 16 new industrial parks have been registered in Ukraine in 2024

І. LAND MARKET

SPFU introduced the “Land Bank” project

In May 2024, the State Property Fund of Ukraine (the SPFU) introduced the “Land Bank” project, which opens the state land lease market for farmers and agrarians. The project will be implemented within the framework of Law № 3272-IX dated 27 July 2023, which aims to ensure the efficient use of state-owned agricultural land. The formation of the Land Bank is anticipated to be implemented in several stages:

• The Cabinet of Ministers of Ukraine (the CMU) will issue a resolution transferring agricultural lands to state operators of the Land Bank — several state enterprises under the SPFU that are free of debt and corruption cases. These enterprises will subsequently be transformed into Limited Liability Companies (LLCs) or Joint Stock Companies (JSCs), with 100% of their shares owned by the state.
• The state operators will lease the land for 50 years and organise open competitive sublease auctions through the Prozorro.Sale platform.

The initial rental rate will be no less than 12% of the land’s normative monetary valuation, with sublease agreements being concluded for 14 years for annual crops and 25 years for perennial crops.

In accordance with Order of the CMU № 541-r dated 13 June 2024, 104,000 hectares of agricultural land have already been transferred to the State Enterprise “Agrarian Investment Fund” which, after corporatisation, will serve as a land auction operator. The first land auctions on the Prozorro.Sale online platform are anticipated to take place in 2024.

State Registration of Property Rights for Land Improvement and their Components

The possibility of state registration of property rights to land improvement networks and their components (for irrigation, drainage, collector-drainage and other related purposes) was introduced via amendments to the final and transitional provisions of the Law of Ukraine “On Water User Organisations and Stimulation of Hydrotechnical Land Improvement“. From now on, to register an irrigation and drainage network or its components (including changes to information about them), the applicant (any interested person, government, or local authority) may submit the following to the State Cadastral Registrar:

• An application for the state registration of a land improvement network or its components (including changes to information about them), in the form prescribed by the Procedure for Administration of the State Land Cadastre;
• Documents establishing the details of a land improvement network or its components;
• An electronic document containing information about a land improvement network or its components.

State registration or a reasoned refusal to register is granted within 14 days from the date of registration of the application.

Compensation for the Restoration and Construction of Land Improvement Systems

According to amendments to Resolution of the CMU No. 1070 dated 11 October 2021, agricultural producers who use improved land may receive up to 50% compensation for the costs incurred for the reconstruction and modernisation of existing or the construction of new land improvement systems. Water user organisations may also receive up to 50% compensation for the restoration of pumping stations. These subsidies will be provided for land improvement systems that have been commissioned between 1 November 2023 and 31 October 2024.

Compensation for Humanitarian Demining Costs

The CMU has updated the Procedure for using the state budget funds allocated to compensate agricultural producers for the costs of humanitarian demining of agricultural land. According to the amendments, the updated Procedure now also applies to demining activities carried out between 24 February 2022 and 15 April 2024, provided that such activities are conducted by certified demining operators. Compensation will cover up to 80% of the costs.

ІІ. LEASE OF STATE-OWNED PROPERTY

The CMU has amended the legislation governing the preparation of documents required for the lease of state-owned real estate by social service providers

The CMU has amended the legislation governing the preparation of documents required for the lease of state-owned real estate by social service providers included in the Register of Social Service Providers and Recipients. As a reminder, since August 2023 social service providers have been included in the list of entities eligible to lease state and municipal property without the need for an auction.

By Resolution № 381 dated 2 April 2024, the Government of Ukraine approved the list of documents that must be submitted by such applicants, specifically a document confirming the inclusion of the social service provider in the Register of Social Service Providers and Recipients, as well as a lease application. Additionally, a uniform preferential rental rate of 1% per year of the market value of the leased property has been established for all social service providers.

ІІІ. STATE INCENTIVES FOR ATTRACTING INVESTMENT

New Regulations on State Support for Projects with Significant Investment (so-called “Investment Nannies”)

The Government has approved a series of resolutions that regulate the conditions for providing state support to projects with significant investment.

In particular, to implement the provisions of Article 3 of the Law “On State Support for Investment Projects with Significant Investment in Ukraine” (“the Law“), the Government approved in March 2024 the Procedure for Compensation for Construction Costs of Engineering and Transport Infrastructure Objects by Applicant or Investor with Significant Investment (“Resolution № 292”).

Resolution № 292 outlines the requirements for the submission of documents and the procedure for obtaining full or partial compensation from budgetary funds for:

• The costs of engineering and transport infrastructure facilities constructed by the applicant or investor with significant investment, required for the implementation of the investment project;
• The cost of connection to engineering and transport networks required for the implementation of an investment project with significant investment.

To recap, the Law introduces the aforementioned state incentives for investors planning to implement investment projects in Ukraine with a value of at least €12 million and a duration of up to five years in sectors such as manufacturing, extraction and processing of minerals, transportation, logistics, and other specified industrial areas. The total amount of state support can reach up to 30% of the investment project’s value.

Additionally, on 26 April 2024, the Government approved the Procedure for Use of Funds to Support Projects with Significant Investment, including budgetary funds allocated as full or partial compensation to applicants or investors for the costs of constructing engineering and transport infrastructure facilities and/or the costs of connecting and joining engineering and transport networks.

The allocation of budgetary funds for these purposes will be carried out in accordance with the Procedure set forth in Resolution № 292, within the framework of the special fund of the state budget under the program “State support for the implementation of investment projects with significant investment.”

Among other things, the Procedure mandates that the applicant must return the received compensation if it is determined that the amount of investment is less than the threshold of €12 million or if such funds were obtained unlawfully.

On 14 May 2024, the Strategic Investment Council was established and its composition approved. The Council will approve the medium-term plan of priority public investment and the unified portfolio of public investment projects, as well as oversee their high-level implementation.

Certain Issues of State Incentives for Creation and Operation of Industrial Parks

On 11 June 2024, the Resolution of the CMU “On Certain Issues of State Incentives for Creation and Operation of Industrial Parks” came into force. Among the key changes:

• Resolution No. 1208 dated 28 October 2022 “On Approval of Procedure for Providing Full or Partial Compensation of the Interest Rate on Loans (Credits) for the Development and/or Conduct of Business Activities within Industrial Parks” is suspended for the period of martial law,
• сancellation of Resolutions No. 1207 “On Approval of the Procedure for Providing Funds on a Non-Refundable Basis for the Development of Industrial Parks and/or Ensuring the Construction of Related Infrastructure Facilities Necessary for the Creation and Operation of Industrial Parks” and No. 10 “On Approval of the Procedure for Providing Compensation for Expenses to Initiators of the Creation of Industrial Parks — Business Entities, Management Companies and Participants of Industrial Parks for Connection to Engineering and Technical Facilities”.

Instead, state support for industrial parks will now be regulated by the updated Procedure for Providing Funds for the Development of Industrial Parks and/or the Construction of Engineering and Transport Infrastructure Required for the Creation and Operation of Industrial Parks, as well as Compensation for Costs of Connecting and Joining Engineering and Transport Networks (the “Procedure“). State incentives will be provided to initiators and managing companies for two main purposes:

(i) the development of infrastructure for industrial parks, and
(ii) compensation for the costs of connecting to engineering networks.

However, the amount of state support should not exceed UAH 150 million per applicant (one industrial park) and will cover no more than 50% of the project’s cost (80% for de-occupied territories).

Furthermore, the Procedure outlines the required documentation for obtaining state funds and sets a number of requirements that applicants must meet, including the inclusion of the industrial park in the Register of Industrial Parks, timely submission of reports on the operation of the industrial park, absence of debt and open bankruptcy proceedings, absence of asset confiscation, and no records of the applicant in the Unified State Register of Persons who Committed Corruption or Related Offenses.

Catalogue of Industrial Parks

The Ministry of Economy has published a Catalogue of Industrial Parks, which contains data on the specialisation, location, area, infrastructure, and available services of industrial parks. The catalogue is intended to help businesses find partners to develop their operations within industrial parks, attract new investment, or select locations with developed infrastructure to house their production facilities.

Newly registered industrial parks

Since the beginning of 2024, 16 new industrial parks have been registered in Ukraine, primarily located in the western and central regions, with a diverse range of activities planned by future residents (production of building materials, woodworking, paper, and food industries). As of July, 84 parks have been included in the Register of Industrial Parks.

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Are you an entrepreneur or a representative of a civil society organisation? Do you want to work with a Ukrainian organisation on reconstruction activities in Ukraine and sustainable recovery of the Ukrainian economy? If so, apply for a subsidy from the Ukraine Partnership Facility (UPF).

Budget

Start date:
Wednesday 30 October 2024 00:01 (CET)

End date:
Friday 31 January 2025 23:59 (CET)

Total budget:
€ 32,500,000

For whom?

The UPF subsidy scheme (UPF2) supports Dutch and international companies and civil society organisations that want to work on recovery and sustainable reconstruction activities of the Ukrainian economy and society. These companies and organisations partner with at least one Dutch and one local organisation in Ukraine to establish and implement the project. The main applicant must represent a Dutch company or civil society organisation.

Budget

For this opening round, a total of €32.5 million is available. You can apply for a minimum grant of €500,000 and a maximum of €4 million for your project.

UPF2 reimburses up to 95 per cent of the total eligible costs for each project. You must demonstrate how you provide for the own contribution and deal with unforeseen costs. Projects must not be commercially fundable or for-profit.

Aim

Since the Russian invasion of Ukraine, the need for support has been immense. Financing projects with money from the commercial sector is not possible. Thus, UPF supports concrete projects of the (Dutch) business community that contribute to the reconstruction and sustainable recovery of the Ukrainian economy and society. The subsidy is for the following sectors:

• agriculture
• water
• healthcare
• sustainable energy, and
• circular construction.

The expertise of Dutch companies and organisations is particularly valuable in these areas. For example, expertise in providing access to drinking water, essential healthcare or improving food quality.

UPF does not cover emergency aid.

Where possible, these projects contribute to a better position of vulnerable groups, including women and youth.

Conditions

Conditions for applicants

As an applicant, keep the following in mind:

• A Dutch company or civil society organisation submits the subsidy application on behalf of a partnership.
• The partnership must consist of at least 2 companies or organisations.
• The partnership must have been formed before the applicant applies for a subsidy.
• The applicant (lead partner) sends the partnership agreement and the subsidy application.

All partners in the partnership are private legal entities established before 15 August 2023. They must also have experience and expertise in the project’s field. Partners must also be necessary for achieving the project goals. All partners are able – also financially – to make their own contributions and deal with risks.

Projects are concrete and have tangible results. They will lead to broader local economic and social development. Projects should also have a lasting long-term impact on the local community or chain of businesses and civil society organisations. For example, projects that contribute to local employment and labour employability, such as the knowledge, skills, and mental and physical health of Ukrainian citizens. Projects that contribute to reconstructing facilities damaged or destroyed by war are also eligible for a subsidy.

Feasibility studies, pilots and projects based on technologies that are in an experimental phase are not eligible.

Assessment criteria

We will use the general conditions and 3 extra criteria to assess applications:

1. alignment with local needs and priorities;
2. results and impact;
3. action plan and effectiveness.

Certain criteria are more important than others, so each is assigned a ‘weighting factor’. Look at all criteria carefully. Project proposals must score sufficiently on all three criteria.

For a list of the criteria and their respective weighting factors, see the publication in the Dutch Government Gazette.

Project duration

Project activities must last at least 6 months and a maximum of 4 years. They must start within 2 months of being awarded the UPF subsidy, but they can also begin before we award the subsidy.

Responsible Business Conduct (RBC)

What International Responsible Business Conduct requirements must my project meet?

Dutch companies set an example for others in International Responsible Business Conduct (RBC). If you do business internationally with financial or other support from the government, we expect you to act responsibly.

International RBC risks and due diligence

Using an RBC risk assessment approach, you ensure that projects you undertake or participate in reduce or prevent potential harmful effects on people and the environment. This process is also called due diligence. It examines

• the social and environmental risks of your international activities and supply chain,
• how you prevent or reduce them, and
• how you report on them.

International RBC guidelines and UPF

If we approve your project proposal, you must follow these international RBC guidelines:

• The OECD Guidelines for Multinational Enterprises. These also apply to Dutch SMEs and local businesses that receive support from the Dutch government. 
• The IFC Performance Standards. 
• Activities on the FMO Exclusion List are not eligible for funding under the UPF subsidy programme. 

Responsible Business Conduct (RBC) in your application

Specify your project’s international RBC risks for people, the environment and society. Describe what you do to manage these risks. Use the Risk Check for a quick and easy overview of potential risks.

• Establish a joint integrity policy and implementation plan for the project.
• If we approve your subsidy application, our advisor will discuss your specified international RBC risks during the initial meeting.
• We may include specific measures to prevent or reduce identified international RBC risks in confirming the subsidy approval.
• During the project, you report the measures you have taken to prevent, reduce, or end RBC risks. We expect you and your partners to share this information openly and proactively with us.

Preparing your application

There is no mandatory quick scan for this subsidy round. On the Dutch Q&A page, you will find the most frequently asked questions and answers. Is your question not listed? Mail your question to upf@rvo.nl.

Our advisors are available to answer your questions. To schedule an appointment with an advisor, visit the b2match platform website.

Has your partnership been formed, and do you have all the necessary documents? Then, you can apply for funding via the eLoket during the opening on our English apply page. You will also find the forms to send with your application on this page.

You can apply for a subsidy from 30 October 2024, 00:01 CET, until 30 January 2025, 23:59 CET. You will need at least eHerkenning level 2+ for this. If you still need to get eHerkenning, apply for it first. The process may take a few days.

Once we have received your subsidy application, we will send you a written acknowledgement. We only process complete applications in the order of receipt: first-come, first-served. If your application is not complete, we will notify you. You can add documents to complete your application until the closing date.

Is your application complete? You will receive a message about this and the date you will receive the decision (within 13 weeks).

You can add documents to complete your application until the closing date.

After your application

We aim to inform you whether we have approved your application within 13 weeks of receiving your complete application. We will also send you our assessment of your application.

Do you have questions about your approved project? Send an email to upf@rvo.nl.

Approved projects UPF1

The first application round for UPF closed on 31 December 2023. We received more than 60 project proposals varying in size and complexity, requesting a total of €200 million. The total subsidy amount of €25 million has now been allocated. Our advisors, the Netherlands embassy in Kyiv, specialists and an advisory committee assessed complete project proposals on a first-come, first-served basis. 7 projects from companies and NGOs were approved:

Agriculture

• Resilient energy-efficient agriculture and food supply for Ukraine;
• Rebuilding potato Ukraine;
• Building of a multifunctional transhipment terminal for agricultural products.

Water

• Water-immediate damage reconstruction and sustainable solutions.

Healthcare

• Expanding access to diagnostics for improved treatment and rehabilitation;
• Trauma: Scaling up community mental health care for children and youth at risk in Ukraine’s conflict-affected communities and beyond;
• Building a prosthetics and rehabilitation centre and setting up a Netherlands-Ukrainian educational programme for medical specialists.

Source: https://english.rvo.nl/subsidies-financing/upf

The State Property Fund of Ukraine (SPFU) has unveiled the Large Privatisation-2024 project, an ambitious initiative to attract strategic investors and stimulate economic growth through the privatisation of state-owned assets.

Following the success of small-scale privatisation efforts, this initiative is a key element of Ukraine’s broader economic reform strategy. It aims to enhance transparency, improve efficiency, and drive foreign investment into the country. The key highlights of the privatisation effort are as follows:

• Top assets for privatisation. The programme has identified several high-value assets that will be offered to investors. These assets represent some of the most valuable and strategically important properties available for privatisation (more information can be found here):
  • the Ukraine Hotel in Kyiv (auction scheduled for 18 September 2024 with a starting price of UAH 1.05bn/EUR 23.30m);
  • the United Mining and Chemical Company, the biggest producer of titanium ore in Ukraine (auction scheduled for 9 October 2024 with a starting price of UAH 3.9bn/EUR 86.5m);
  • LLC “AEROC”, a leading producer of aerated concrete products with its facilities located in the Kyiv and Lviv regions;
  • LLC “Demurinskiy Mining and Processing Plant”, which is developing the Vovchansk deposit of titanium and zirconium; and
  • LLC “Investment Union “Lybid”, owner of Ocean Plaza, one of the biggest malls in Kyiv.
• Strategic goals. The SPFU aims to use the proceeds from privatisation to bolster the national budget, reduce the state’s economic footprint, and improve corporate governance across various sectors. Key goals also include improving enterprise performance, enhancing property utilisation, and modernising production.
• Prozorro.Sale platform. For the first time in Ukrainian history, large-scale privatisation will be conducted via the Prozorro.Sale platform, ensuring a transparent and competitive bidding process. This platform has proven effective in promoting fair competition and preventing corruption in smaller privatisation auctions.
• Investor confidence. The initiative comes at a crucial time when Ukraine is seeking to rebuild and stabilise its economy amid ongoing challenges. The government hopes that this privatisation drive will signal Ukraine’s commitment to economic reforms and attract substantial foreign direct investment.

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The use of PPP mechanisms in Ukraine is not common and has been only recently gaining momentum. Even though the Law on Concessions was adopted back in 1999 and the Law on Public-Private Partnership in 2010, these instruments have long been underestimated.

The main reasons were imperfect legislation and the public sector’s low institutional capacity, traditionally more oriented toward leases or privatization. The state was not ready to undertake long-term budgetary obligations and participate in lengthy feasibility study procedures. In all fairness, it should be noted that there were no legislative mechanisms for this.

Real infrastructure projects, structured with the technical support of the IFC, appeared only in 2019 when the preparation of two concession projects in the ports of Olvia and Kherson started. The financial closing of both projects took place at the end of 2021. In addition to the successful completion of these transactions, the team of consultants identified weak points in the legislation, which required the fastest possible response from the government and parliament.

During the implementation of the first concession projects in ports, changes were made to the Law on Concessions aimed at implementing Directive 2014/23/EU on concessions. The changes considered the existing international experience and significantly improved the rules for granting concessions and procedures for developing feasibility studies and conducting tenders.

The improvement of the legal framework and the successful completion of the two port concessions became the impetus for the preparation of several new projects in the field of transport infrastructure. Not only the public sector but also private companies contributed to these activities.

Thanks to a private initiative, the preparation of feasibility studies of several more projects in the port sector was started. The implementation of the projects was planned for 2020-2023. Examples include the concession of the Odesa port passenger terminal and the concession of the Berdyansk and Izmail ports.

Between 2019 and 2021, the Ministry of Infrastructure launched a few infrastructure projects with the support of the WBG. In particular, a pre-feasibility study was prepared for five airports, eight railway stations, and six highways. Advisers were involved in preparing a feasibility study of two concession projects in the port of Chornomorsk. Further implementation of these projects was stopped by the full-scale military invasion.

Significant damage or a complete destruction of critical infrastructure became the reason for an intensive search for financing the reconstruction of the country. In this context, PPP appears to be one of the most promising tools.

In this regard, during the two years of the war, the government worked out appropriate changes to the legislation on PPP. A massive draft law on amendments to the laws on PPP and concessions was adopted in October 2022 in the first reading. Currently, the draft law is being prepared for the second reading. Key legal advancements include: (i) the definition of a new type of project – restoration projects, for which a simplified preparation procedure is provided that allows reducing the time for implementation (critical in the current context of Ukraine); (ii) the regulation of a new type of project – restoration projects; (iii) the expansion of sources of funding for PPP projects and sources for state support, in particular, the possibility of financing PPP projects through grants; and (iv) the initiation of the opportunity to implement PPP projects in the field of housing construction.

Furthermore, this draft law introduces systemic changes in legislation in the fields of highways, railway transport, waste management, water supply, education, and healthcare. As previous experience has shown, the imperfection of industry legislation is a key factor restraining PPP development.

Despite the martial law, the prospects of PPP projects in Ukraine are also indicated by the fact that the WBG has renewed the preparation of projects in the port of Chornomorsk (concession of ferry crossing and container terminal) and launched the pre-feasibility study of PPP projects in the field of healthcare.

Consequently, in April, the World Bank updated its Benchmarking Infrastructure Development 2023 rating, which demonstrates the quality of legal regulation in the countries of the world in terms of the possibility of implementing large infrastructure projects with the involvement of the private sector. Ukraine demonstrated one of the best results in the world, increasing its indicators by 41 points. This shows the existence of a favorable legislative environment for attracting private investments to Ukraine under PPP conditions. Hopefully, it will become the basis for financing future infrastructure projects.

Source: https://ceelegalmatters.com/magazine-articles/9894-issue-11-5/27182-ukraine-development-of-a-public-private-partnership-during-wartime

At its meeting on 6 August, the Cabinet of Ministers of Ukraine allowed foreign companies to obtain construction permits in Ukraine without obtaining licences. This was reported by the government’s representative in the Verkhovna Rada, Taras Melnychuk, Komersant ukrainskyi.

The government has decided to allow foreign companies and organisations operating in Ukraine through separate divisions and permanent establishments to acquire the right to carry out economic activities in the construction of facilities.

The amendments are made to CMU Resolution No. 314 of 13 March 2022. They relate to the construction of facilities that are classified as objects with medium (CC2) and significant (CC3) classes of consequences.

The resolution was supplemented with provisions stipulating that a declaration on the conduct of economic activity may be submitted by non-residents through the Diia portal or through an administrative service centre.

The Ministry of Digital Transformation will formulate a request for information about representative offices of foreign business entities (if such a representative office wishes to file a declaration) and then send such a request to the State Statistics Service and the State Tax Service, which will provide the Ministry of Digital Transformation with the necessary information.

As explained by the Ministry of Reintegration of the Temporarily Occupied Territories of Ukraine, the right to conduct construction activities will be granted by submitting a free of charge declaration of economic activity to the licensing authority without the need to obtain a construction licence.

The adoption of this act will improve the regulatory framework for foreign companies in Ukraine. In particular, it will allow representative offices of Polish companies in Ukraine to carry out works on the arrangement of checkpoints on the Ukrainian-Polish border.

Such works are planned as part of the implementation of the Agreement between the Government of Ukraine and the Government of the Republic of Poland on the provision of a loan on the terms of related assistance dated 9 September 2015.

The relevant provision will be in force for the duration of martial law.

What are objects with medium (CC2) and significant (CC3) consequence classes?

The consequence class (liability) of buildings and structures is a characteristic of the level of possible danger to the health and life of people who will be permanently or periodically on the site or outside the site, material damage or social losses associated with the termination of operation or loss of the integrity of the site.

All facilities are divided into the following classes of consequences (liability):

• minor consequences – CC1;
• medium consequences – CC2;
• major consequences – CC3.

As a rule, buildings and structures of class CC3 include

• facilities of oil and gas production, gas processing, metallurgical, chemical and other industries equipped with fire and explosion hazardous tanks and storage facilities for liquid fuels, gas and gas products, especially when stored under pressure (process pipelines, apparatus, boilers, gas holders, isothermal tanks with a capacity of more than 10 thousand cubic metres). cubic metres, oil and oil product storage tanks with a capacity of 30 thousand cubic metres and more, high pressure vessels, etc;)
• facilities of chemical, petrochemical, biotechnological, defence and other industries related to the use, processing, manufacture and storage of chemically toxic, explosive and fire hazardous substances and industrial explosives, biologically hazardous substances, etc;
• coal and mining facilities that are hazardous in terms of fire, explosion and gas in accordance with the classification of the State Committee of Ukraine for Industrial Safety, Labor Protection and Mining;
• buildings of the main ventilation systems at mines and quarries;
• nuclear power facilities (NPPs, AETCs, ACTs), including storage facilities and plants for the processing of nuclear fuel and radioactive waste, as well as other radiation hazardous facilities according to the SNRIU classification;
• hydro and thermal power facilities (HPPs, SDPPs, TPPs, CHPs, PSPs) with a capacity of more than 1.0 million kW
• bridges and tunnels on roads of the highest category, or with a length of more than 1000 m or a span of more than 300 m;
• stationary structures of navigation aids to navigation;
• gateways and main port facilities on waterways of the 1st and 2nd classes of DSTU B B.2.3-1;
• buildings and structures of major railway stations and airports;
• main pipelines with a diameter of more than 1000 mm or with a working pressure of more than 2.5 MPa, as well as sections of main pipelines of smaller diameter and with lower working pressure at crossings over water obstacles, railways and motorways;
• hydraulic structures of reclamation systems with an irrigation and drainage area of more than 300 thousand hectares and reservoirs with a volume of more than 1 cubic kilometre;
• large elevators and granaries, milling plants;
• residential, public or multifunctional buildings over 100 metres in height;
• buildings of major museums, state archives, and repositories of national historical and cultural values;
• spectacular facilities with a massive presence of people (stadiums, theatres, cinemas, circuses, exhibition spaces, etc;)
• buildings of universities, institutes, schools, preschools, etc;
• large hospitals and other healthcare facilities;
• department stores and other large retailers;
• life support facilities for large urban areas and industrial areas;
• large protective and safety facilities (mudflow, landslide, avalanche protection structures, protective dams, etc.).

Class CC2 buildings and structures include those that do not belong to class CC3:

• main facilities of the metallurgical industry, heavy engineering, petrochemicals, shipbuilding, defence industry (blast furnace and open-hearth shops, assembly buildings, tall chimneys, etc.)
• boreholes, engine rooms of mining machines;
• hydro and thermal power facilities with a capacity of less than 1.0 million kW, distribution systems of main high-voltage power grids (including power line towers and open switchgear);
• tanks for oil and oil products;
• roadways of main roads, runways, bridges and tunnels with a length of less than 1000 m, cable cars, railway stations, airports, helicopter stations;
• main pipelines;
• large hotels, hostels;
• water supply and sewerage facilities (including water towers, treatment plants, water intakes) of industrial enterprises and settlements;
• buildings of entertainment and sports enterprises, trade, catering, consumer services, healthcare facilities;
• buildings and structures of central warehouses to meet the vital needs of the population, warehouses of particularly valuable equipment and materials, military warehouses;
• residential, public or multifunctional buildings up to 100 metres in height.

Buildings and structures of class CC1 usually include:

• all industrial, energy, transport and communication, agricultural and agricultural product processing facilities not included in classes CC3 and CC2;
• public buildings, physical culture and sports facilities not included in classes CC3 and CC2, as well as all temporary facilities, mobile homes;
• facilities of intra-production roads, communications and product pipelines;
• greenhouses, greenhouses;
• low voltage distribution network poles, lighting poles.

Source: https://www.komersant.info/en/uriad-dozvolyv-inozemnomu-biznesu-buduvaty-v-ukraini-bez-otrymannia-litsenziy-3/

It is clear to all that a major global financial effort will be required to rebuild Ukraine. It is also now widely recognised that the investment needed to rebuild Ukraine cannot wait until the conclusion of the war. In recent times there has been a developing focus on financing and support for Ukraine’s reconstruction in the short to medium term. In this article, the fourth part of our “Rebuilding Ukraine” series, we look at the current private and public sector investment opportunities announced at the Ukrainian Recovery Conference in Berlin (“URC2024”) in June 2024.

1. Agrifood: From complex fertilizers to fruit, vegetable, poultry, and meat products. Ukraine’s agrifood sector, crucial to global food security, accounted for 62% of total exports in 2023 notwithstanding the impact of the war. The Ukrainian government is implementing reforms to ensure food safety, security, and improved investment facilitation including plans to construct a US$62m feed soy protein concentrate plant to produce toasted meal, soybean oil and pelletised hulls within the next 2 years.
2. Transportation and Logistics: Construction of new terminals, development of export logistics, restoration of roads, bridges, tunnels, and improvements in sea, river and rail transportation. Ukraine’s central location in Eastern Europe makes it important for trade and travel. Significant investment is needed to repair and modernise infrastructure.
3. Energy: Advancing renewable energy goals, increasing efficiency in traditional generation, investing in energy storage and transportation. Ukraine’s energy sector has substantial potential for renewable energy development.
4. Hydrogen: At-scale production of carbon-neutral hydrogen. Ukraine’s abundant renewable energy resources position it as a key hydrogen supplier to Central Europe, supported by competitive production and transportation costs.
5. Green Steel: The manufacturing of green steel and production of hot briquetted iron (HBI)/direct reduced iron (DRI) for green metallurgy. Ukraine’s ferrous metallurgy sector is significant. The countries of Eastern and Central Europe have become the new strategic partners for Ukraine’s mining and metallurgical complex during the war and have accepted the major share of Ukrainian exports investments in green steel initiatives such as Green steel products; DR-pellets; DRI; HBI; Mining and processing; Ferroalloys, Limestone; Recycling of waste ore processing is being sought to drive economic recovery and sustainability.
6. Critical Raw Materials: Lithium, titanium, uranium, graphite, cobalt, nickel, tantalum, and other rare-earth elements. Ukraine holds substantial potential for CRM extraction, essential for green energy transition and technological innovation.
7. Housing, Reconstruction, and Building Materials: Construction of building materials factories, reconstruction of damaged housing, social and affordable housing, water and sanitation facilities. Significant damage to the housing sector has necessitated investment in reconstruction, with a focus on sustainability and modernisation.
8. Pharmaceutical and Medical Sectors: Production of vaccines, modernisation, and construction of medical facilities. Ukraine’s pharmaceutical sector has seen growth, supported by increasing public healthcare spending and significant sectoral transformation.
9. Information and Communication Technology & Digital: Infrastructure projects, human capital developments, and technology investments. The ICT sector is a major contributor to Ukraine’s economy, with exponential growth in IT service exports and technological proficiency.

Source: https://beale-law.com/article/rebuilding-ukraine-part-4-investment-opportunities-3/