Kyiv, Ukraine, December 22, 2021—To help upgrade Ukraine's roads sector and ensure citizens and businesses have access to quality transport services, IFC and the European Bank for Reconstruction and Development (EBRD) will work with the Ukrainian government to attract private sector investments. The aim is to improve the country's infrastructure, while creating jobs and accelerating the economic recovery.
As part of the advisory agreement signed today, IFC and the EBRD, in partnership with the Global Infrastructure Facility (GIF), will advise Ukraine's State Road Agency (Ukravtodor) in structuring public-private partnership (PPP) projects that will rehabilitate, repair, and reconstruct two road segments in eastern and western Ukraine. Private sector partners—to be chosen through an international competitive bidding process—will finance, operate, and manage the upgrade of nearly 422 km of existing roads, critically important for national freight logistics, in line with good international industry practice.
Ievhen Kuzkin, the Head of Ukravtodor, said: "Public-private partnership is an instrument to diversify financial sources for the potential modernization. The project's aim is not just to maintain the quality of roads but to improve their safety."
According to the government, properly structured PPP projects can help Ukraine's roads sector attract potential investments worth around $9 billion, addressing the country's significant infrastructure needs. IFC and the EBRD will help the State Road Agency mobilize financing and expertise to prepare comprehensive projects that will support the maintenance and expansion of the road system while also ensuring better services and increased safety.
"Modern roads will help Ukraine establish itself as a logistics hub in Europe and boost competitiveness," said Jason Pellmar, IFC Regional Manager for Ukraine, Belarus and Moldova. "IFC aims to support Ukraine's infrastructure improvements by ensuring transparency, generating more revenue, and improving risk management for both the government and investors."
The modernization of these two roads, worth of over $500 million, is part of the state-backed road PPP program, which is based on the IFC-World Bank assessment that selected 21 potential viable projects. All these projects are expected to be implemented in three phases, with the first two pilot projects in the "Kharkiv-Dnipro-Zaporizhzhia" and "Yahodyn-Kovel-Lutsk" road segments likely to be finalized by 2022.
Mark Magaletsky, EBRD Deputy Director for Ukraine in charge of infrastructure, commented: "Following the successful preparation and tender of two pilot concession projects in Olvia and Kherson ports, the EBRD is now embarking on a project to support Ukrainian authorities in implementing PPPs in road sector jointly with IFC. This move represents our collective dedication and commitment to upgrading country's critical infrastructure assets by attracting private business through competitive international tenders."
In addition to road infrastructure, IFC and the EBRD are analyzing PPP opportunities in the port, rail, energy, and healthcare sectors, to help leverage private investments and drive the nation's economic growth.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.
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