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UKRAINE PUBLIC PRIVATE PARTNERSHIP DEVELOPMENT PROGRAM (P3DP)
QUARTERLY REPORT– Y3Q1
OCTOBER 1, 2012 – DECEMBER 31, 2012 USAID Cooperative Agreement # AID-121-A-00-10-00708
January 30, 2013 This document was prepared by FHI Development 360 LLC through the Public-Private Partnership Development Program in Ukraine.
Contents Executive Summary 3 1.Program Activities and Results 4
Objective 1: Policy and Legal Environment 6 Objective 2: PPP Unit and GOU Institutional Support 7 Objective 3: Capacity and Awareness Development 10 Objective 4: Pilot PPP Transactions 11
2. Key Upcoming Events and Activities 15 3. Program Administration 15 4. Annexes 16
P3DP Performance Monitoring Report Y3Q1 (October-December 2012) 17 Concept of Public Private Partnership Development in Ukraine for 2012-2017 33 Strategy on Public Private Partnership Development in Ukraine for 2012-2017 and Strategy Implementation Plan 48
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Executive Summary
P3DP deliberately intensified efforts to engage private sector firms in PPP development by organizing business
seminars and market sounding events, thus advancing a key goal stated in FHI360’s Cooperative Agreement,
“to attract private sector finance and operational expertise”. P3DP’s main event during this quarter was a
business seminar on municipal PPPs organized in cooperation with two leading business organizations in
Ukraine, the American Chamber of Commerce (ACC) and the US-Ukraine Business Council (USUBC). By utilizing
ACC and USUBC’s extensive membership bases, P3DP was able to specifically target invitations to high-potential
firms for PPP development. This event attracted a full capacity crowd of 70 participants consisting of private
investors, operators and financiers. The seminar was successful in fulfilling its goals: 1) to identify private
investors interested in PPP projects; 2) to present existing PPP pilot opportunities; and, 3) to obtain private
sector viewpoints on PPP potential in Ukraine. Key private sector contacts included: 1) VEOLIA, a regional
leader in solid waste collection and disposal, which expressed high interest for involvement in P3DP’s PPP pilots
in the solid waste sector; 2) Smart Holding, a large equity investor, which sought cooperation with P3DP on a
water treatment PPP in Crimea; and, 3) SWARCO Traffic Solutions, an EU urban development company, which
provided its ideas to P3DP on energy efficiency street lighting.
Several PPP pilots are rapidly advancing towards tendering. The Vinnitsa City Executive Committee approved
the “Vinnitsa Program for Solid Waste Management”, thus authorizing the city to progress towards tendering
utilizing a PPP mechanism. Following a healthcare market sounding event in Zaporizhia where P3DP presented
financial model scenarios, the local City Council work group formally approved the “Zaporizhia PPP Healthcare
Concept Paper” and the related financial model assumptions. The work group then requested P3DP’s support
for the next stage and P3DP responded by issuing a TOR to engage consultants to develop the full Feasibility
Study that is required by MOEDT prior to PPP approval and tendering. P3DP provided assistance to its entire
pilot PPPs in the areas of concept paper development, financial modeling, legal analysis, technical research and
environmental review.
P3DP continues to support advances in institutional capacity at the Ministry of Economic Development and
Trade (MOEDT), P3DP’s primary beneficiary and recipient. Progress continued despite the Parliamentary
elections in October and the appointment of the new Cabinet of Ministers and subsequent appoint of the new
Minister of MOEDT on December 24, 2012, Mr. Igor Prasolov. The “Strategy on PPP Development in Ukraine
for 2012-2017”1 and accompanying “PPP Strategy Implementation Plan”1, prepared by P3DP’s STTA consultant,
renowned Ukrainian economists, Dr. Geyets and Dr. Yefimenko, were presented to MOEDT for approval and
subsequent submission to the Council of Ministers to be included in their national plan. To improve MOEDT’s
visibility and effectiveness with municipalities, P3DP agreed to MOEDT’s request for development of
a “Practical Guide”1 to be used as an instructional guideline for the preparation of the required PPP “Feasibility
Study”. In addition, P3DP assisted the MOEDT’s PPP Unit to develop an informational leaflet explaining the PPP
Unit’s competence, functions, capacities and contacts. These leaflets will be utilized to introduce municipalities
and potential private-sector partners to PPP opportunities and the support available through the PPP Unit. To
strengthen the operational effectiveness of the MOEDT PPP Unit, P3DP developed a systematic training
program on the preparation of feasibility studies at the municipal level .
1 Included in Annex
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1. Program Activities and Results
The goal of the Public Private Partnership Development Program (P3DP) in Ukraine is to accelerate the use of
public private partnerships in order to improve the quality of infrastructure and public services. The Program is
achieving this goal by facilitating legal and institutional reforms; establishing public institutions, processes and
capacity to support PPP development; enabling local officials to conduct PPP transactions and stakeholders to
recognize their benefits; and implementing multiple pilot PPP transactions in various sectors.
IMPLEMENTATION CHRONOLOGY
Notable programmatic activities during Y3Q1 included:
Dates Activity
October 2 P3DP signed a Memorandum of Cooperation with the “Institute for Budgetary and Socio-Economic Research” (IBSER) defining areas of joint work to assist the Government of Ukraine.
October 3 Tatiana Korotka participated in the PPP Expert Center meeting organized by the American Chamber of Commerce. The meeting was devoted to attracting private investments for PPPs, particularly those under concession agreements.
October 4-5 Alan Pieper, Tatiana Korotka, and Olexandra Chala attended the International Black Sea Economic Forum. P3DP was invited as contributors and strategic partners of the forum.
October 5 P3DP managers conducted two meetings with representatives of Kiev-based private kindergartens to advise the Kiev City Administration on the feasibility of the Pilot PPP projects in the area of kindergarten care.
October 10 Alan Pieper and Tatiana Korotka met with European Investment Bank staff: Lilia Chernyavska, Head of EIB in Ukraine; Marion Hoenicke, Head of Division of Lending Operations in Eastern Neighbor States on financing potential for PPPs.
October 11 Alan Pieper and Tatiana Korotka met with the head of ADETEF, French technical assistance organization to define areas of cooperation in delivering assistance to the PPP sector.
October 15 Alan Pieper and Tatiana Korotka attended the workshop “Energy Efficiency in Ukraine: Policy, Experience, Reforms”, organized by EUEA with the support of the British Embassy, organized to showcase new developments in the energy sector.
October 16-17 P3DP attended the 4th International Renewable Energy and Energy Efficiency Forum to identify new market innovations and private sector partners for potential energy efficiency PPPs.
October 18 Tatiana Korotka and Natalia Boyko met with the advisors of the Head of Kyiv City State Administration to advance activities on a PPP kindergarten pilot project.
October 18 Tatiana Korotka met with representatives of VEOLIA company in Ukraine, a regional leader in solid waste management, to discuss potential Pilot PPP projects. VEOLIA expressed interest in the pilot work that P3DP is doing in the SWM sector.
October 18 Tatiana Korotka and Ruslan Kundryk met with Mr. Geyets, Mrs. Yefimenko, and Mr. Cherevykov to finalize PPP Strategy document and arrange PPP strategy seminar for interested stakeholders.
October 22 Tatiana Korotka and Ruslan Kundryk met with IBSER to discuss the practical cooperation in the area of budget legislation improvement in order that municipalities are able to enter into long-term PPP contract.
October 23 P3DP selected the local consultant to complete the short term technical assignment on collection and verification of quantitative information for a PPP financial model on disposal of solid waste in Vinnitsa so the City Council could approve progressing to the next stage of preparing tender documents.
October 25 Tatiana Korotka participated in the meeting of the Economics Reform Committee of Kyiv City-State Administration and gave a presentation on the scope of joint activities between P3DP and Kyiv Authorities.
October 25 P3DP submitted the drafts of “Strategy on PPP Development in Ukraine for 2012-2017” and “PPP Development Strategy Implementation Plan” to MOEDT for final review and subsequent submission to Council of Ministers to be included into the national plan.
October 30 P3DP submitted the draft business model on Western Crimea PPP Pilot Project to ARC Council of Ministers in order to evaluate PPP solutions in waste collection and disposal
October 31 P3DP submitted the Memorandum on Legal Viability of PPPs regarding municipal kindergarten management to Kyiv City Administration to advance the concept of identifying a private partner to manage new kindergartens in Kyiv.
November 1 Tatiana Korotka met with Mr. Ovchinnikov, the head of development projects from “Smart Holding” corporation. The parties discussed potential PPP projects within “Balaklava Green” town project.
November 2 The National Commission on Communal Services Regulation approved the draft decree on new tariff regulation methodology in water, wastewater and district heating sectors. The methodology introduces a new long-term (3-5 years) RAB approach to tariff calculation, recommended by P3DP: http://jkg-portal.com.ua/ua/publication/one/tarifam-zhkg-nadali-stimul-30205
November 6 P3DP organized the round table for GOU officials to discuss the final draft of “Strategy on PPP Development in Ukraine for 2012-2017” and “PPP Development Strategy Implementation Plan”.
November 6 Olena Maslyukivska and Mick Mullay met with AUC to discuss the development of case studies and the publication of a collection of best practices dedicated to implementing PPP projects in Ukraine.
November 6 Valeriy Dobrovolskiy attended the “Congress on Communal Services Sector Reforms”, organized by Ministry of Regional Development.
November 8 Alan Pieper, Tatiana Korotka and Mick Mullay attended the regular USAID OEG partner meeting, which focused on the impact of Ukrainian parliamentary elections on project implementation.
November 12 Tatiana Korotka and Valeriy Dobrovolskiy conducted a business trip to Zaporizhia to participate in meetings on Zaporizhia Healthcare Pilot PPP by providing presentations on the financial model and feasibility study to representatives of the City Council Executive Committee. P3DP experts also met with Deputy Mayor, to obtain commitments of cooperation between P3DP and the municipality on feasibility study preparation and tendering.
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November 15 P3DP met with the new head of National Project Agency "Clean City" to discuss cooperation on pilot cities and the laws of Ukraine #5400 and #5402, that were enacted recently in the area of solid waste management.
November 16 Mark Cockburn of Cambridge Economic Policy Associates Ltd. delivered a presentation regarding his analysis of the feasibility of a Project Development Facility (PDF) in Ukraine. CEPA’s report summarizes the views of the donor community and examines PDF in other countries to compare their applicability in Ukraine.
November 20 P3DP has met with representatives of Green Energy Opportunity (energy-efficiency consultancy) to discuss the concept of PPP biomass district heating pilot project in Zhytomyr region.
November 21 P3DP organized the Business Seminar on Municipal PPP in Ukraine, aimed at identifying private investors interested in PPPs involving the delivery of communal services and municipal infrastructure. The Seminar focused on the presentation of 6 ongoing P3DP pilot PPP projects covering inner-city parking management, municipal solid waste management, park management and medical service delivery.
November 22 Valeriy Dobrovolskiy and Nellie Makariy participated in the Municipal Investment Forum, organized by GIZ in district heating, water supply and waste water treatment, maintenance of buildings and transportation.
November 22 At MOEDT request, P3DP provided comments and proposals to the draft law “On amendments to some laws in solid waste treatment area”.
November 27 P3DP received an official letter from MOEDT (No. 3931-04/45011-13) with its comments on PPP Practical Guide, prepared by P3DP consultants.
November 29 Olena Maslyukivska participated in the meeting "Odessa Region 2013: Investments and Development," organized by the Odessa Regional Committee for Economic Reforms.
November 30 Tatiana Korotka and Ruslan Kundryk traveled to Simferopol to participate in the meeting of the Simferopol City Council PPP Working Group to discuss the status of Gagarin Park Management pilot PPP land issue.
November 26 P3DP provided comments to the draft resolution of Kyiv City Council on investment tender procedure. P3DP suggested including PPP as a type of investment project.
December 4-6 With P3DP support, Pavlo Pakholko, Deputy Head of Investment and Innovations Department of the MOEDT, attended the UNECE’s Seventh Session in Geneva to gain knowledge on PPP development in Europe and identify practical applications for the PPP Unit in Ukraine.
December 5 P3DP met with the newly appointed director of MOEDT’s Department for Investments and Innovations, Mr. Viktor Kovalenko, and the head of the PPP Unit, Ms. Oksana Kordina, to discuss 2013 workplan activities.
December 7 P3DP submitted Concept Paper for the PPP Pilot Project Municipal Solid Waste Management in Ivano-Frankivsk to the Ivano-Frankivsk City Council and the Mayor.
December 7 PPP Practical Guide was officially submitted to the MOEDT. PPP Practical Guidelines training for MOEDT’s PPP Unit staff is expected to be delivered 25-31 January, 2013.
December 11 Chris Shugart and Tatiana Korotka met with representatives of VEOLIA (a prominent solid waste management company operating in Ukraine). The parties discussed private sector interest in P3DP’s pilot projects and explored the potential for private partner involvement utilizing a PPP structure.
December 11 P3DP met with the members of National Committee on Communal Services, as will work together to develop a SWM tariff methodology for Ukraine.
December 12 Nellie Makary and Ruslan Kundryk attended the “Energy Efficiency in Buildings” workshop, organized by GIZ in Chernigiv, and met with Ima Khrenova-Shymkina, Coordinator of the Energy Efficiency in Buildings Project.
December 12 Nellie Makary met with Ivan Dmytruchenko, the head of Energy Efficiency and Municipal Enterprises Unit of the Ivano-Frankivsk municipality, to refine project ideas for a biogas power plant.
December 13 Ruslan Kundryk met with Yuriy Yusipovych, Deputy Head of the Housing Policy Department of the Ministry of Regional Development of Ukraine, on drafting of the law on energy service contracts.
December 13 Ruslan Kundryk and Natalia Boyko met with representatives from IBSER to finalize amendments to Budget Code of Ukraine and agree on submission of the document to Ukrainian national level authorities.
December 13 The Vinnitsa City Executive Committee approved a draft of the “Vinnitsa Program for Solid Waste Management for 2013-2020” (City Council Regulation #3052 from December 6, 2012) that allows the city to move forward towards tendering utilizing a PPP mechanism. The City Executive Committee specifically approved a PPP structure for their landfill construction and management and recognized P3DP as the cities primary technical consultant.
December 17 P3DP PSG met with representatives of SWARCO Traffic Solutions, the EU operator in urban development solutions. The meeting was dedicated to exploring potential interest of the Operator in Dnipropetrovsk Street Lighting PPP Project and discuss development of energy efficiency projects in Ukraine.
December 17 P3DP met with Ukrainian Operator “Energy Consulting” in energy efficiency and utilities’ management projects to discuss energy efficiency, alternative fuel district heating and other related projects.
December 18 Ruslan Kundryk and Natalia Boyko attended a meeting with representatives of Kyiv Department of Education and Kyiv City State Administration to present acceptable legal forms of a kindergarten PPP structure.
December 19 P3DP organized a follow up workshop on Solid Waste Management Study Tour to Hungary and Austria. Participants discussed the functions of state authorities and responsibilities of local self-governments in SWM.
December 19 Tatiana Korotka and Nellie Makary met with the head of MOEDT PPP Unit, Oksana Kordina, to discuss P3DP’s support in developing MOEDT PPP Unit’s webpage.
December 19 Tatiana Korotka and Nellie Makary met with GIZ’s Coordinator of Energy Efficiency in Buildings Project Ima Khrenova-Shimkina, to discuss potential cooperation in energy efficiency projects.
December 20 P3DP visited Zaporizhia to participate in the meeting of Zaporizhia City Administration Working Group on development of Healthcare PPP Pilot Project financial model.
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A summary of P3DP assistance and activities during the reporting period follows:
Objective 1: Policy and Legal Environment
P3DP is assisting the Government of Ukraine (GOU) to create a legal environment conducive to PPP initiatives in
multiple sectors. During this reporting period, P3DP developed a concept paper on “PPP Development Strategy
in Ukraine for 2012-2017”. After scrutiny of peer review at a public round table presentation on November 6th,
the final draft of this document was submitted to MOEDT for approval on November 27th. In addition, P3DP
developed a “Strategy Implementation Plan” for the 2012-2017 planning horizon.
P3DP continues monitoring GOU websites, tracking legislative developments, preparing monthly legal
assessment reports and compiling experiences gained during implementation of P3DP pilot transactions. These
activities contribute to P3DP’s ability to refine priorities in the area of PPP legal reforms and identify stakeholder
concerns with existing PPP legislation.
P3DP cooperates with various GOU agencies instrumental to promulgating legal and regulatory reforms.
Following is a summary of activities and status of these partner institutions that P3DP works with in the pursuit
of PPP legal reforms:
1.1 Pursuit of PPP Legal Framework Improvements
P3DP is monitoring and providing professional opinions for legislative developments regarding:
1. draft law #10228 “On Amendments to the law of Ukraine regarding PPP” prepared by Parliament
Committee on Industrial and Regulatory Policy and Entrepreneurship, and,
2. draft law #9739 “On Amendments to the Laws On Leasing Out or Giving in Concession of Communal
Facilities of District Water and Heat Supply and Sanitation”, prepared by the Ministry of Regional
Development.
Both draft laws were submitted to Verkhovna Rada and are critical for improving the PPP legislative
environment in Ukraine. Due to the parliamentary elections in November 2012 there were no formal actions
performed in regard to these draft laws during the reporting period.
Unfortunately, the Verkhovna Rada’s PPP Working Group did not meet during this reporting period because all
activities were postponed due to parliamentary elections. The new Verkhovna Rada was elected in November
2012 and the new PPP committee members were approved in January 2013. P3DP will continue its
participation in the newly appointed PPP Working Group and provide legal opinions and analysis to assist with
necessary reforms. In addition, recognizing that SWM tariffs regulation authority was reassigned to the
National Commission on Communal Services Regulations, P3DP agreed with the National Commission to
provide technical assistance in developing new methodology in SWM regulations, including tariff calculations.
A number of legislative acts affecting PPPs development were adopted during this reporting period by the
Parliament: 1) law #5458, law #5400 and law #5402 addressing new procedures in Solid Waste Management
(SWM) and empowering the National Commission on Communal Services Regulation to act as the regulator for
SWM tariffs; and, 2) decrees #356 and #357 on water supply, disposal and heating tariff calculations.
MOEDT requested that P3DP review and comment on draft law regarding SWM to facilitate PPP
implementation, which P3DP completed and submitted to MOEDT in November 2012.
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A new Minister of MOEDT was appointed on December 24, but the key staff involved in the PPP Unit remained
constant, and therefore P3DP was able to continue joint legislative drafting activities with MOEDT.
P3DP supported Kyiv City-State Administration and responded to their request that P3DP draft regulations on
investment tendering procedures (submitted on December 17th) to facilitate PPP development in the city.
P3DP also provided proposals to facilitate investments in the Health Care Sector (submitted November 1st) for
concessions in health care in pilot regions of Kyiv, Dnepropetrovsk, Donetsk and Vinnitsa.
P3DP is working with IBSER on developing draft law “On amendments to Budget Code” in order to implement a
concept known as “contingent obligation”, one of the key issues identified in P3DP’s “Critical Legal Issues”
report published last year. On October 2, 2012, P3DP and IBSER signed an MOU outlining joint legislation
drafting activities. The parties agreed to jointly work on drafting legislation to improve existing regulations
related to:
- long-term budget liabilities by public partners within the framework of Public-Private Partnerships in
order to allow commitments beyond the current one-year budget term;
- compensation to private partners in the event of early termination of a PPP contract, thus allowing the
private partner to recover damages; and
- mechanisms for issuing guarantees by government entities.
1.2 Obstacles to PPP Implementation
Critical legal obstacles identified this reporting period as a result of pilot implementation are:
a) PPP in City park management (namely, concession projects) are prohibited in the territories, meant for
social, cultural and recreational activities, forcing P3DP to apply other types of PPP contract
(cooperation contract, etc.)
b) The wording and terminology of PPP Law does not provide sufficient clarity regarding the ownership of
the objects created under the PPP contract, limiting the implementing BOT contracts.
c) The Municipalities and central government bodies are limited in providing direct commercial activities.
d) The Law “On Concessions” is not suited for BOT form of concessions.
e) Energy performance contracts (as a PPP form) cannot be widely implemented due to the limitation of
one year public procurement.
f) The legislation on SWM tendering needs to be adapted to PPP concept.
Objective 2: PPP Unit and GOU Institutional Support
P3DP is assisting the GOU to create designated regulatory and administrative bodies having the responsibility to
facilitate the use of PPPs; establish systems and processes to monitor their use; build necessary staff capacity;
and create and implement a National PPP Strategy.
2.1 PPP Appraisal Methodology
During the previous year, the “PPP Appraisal Methodology” and the “Feasibility Study” format were developed
and adopted by the MOEDT (Order #255) as the PPP Unit’s operational documents. During the current
reporting period, P3DP agreed to MOEDT’s request to develop a “Practical Guide” to be used as an instructional
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tool for preparing PPP Feasibility Studies. This document, adopted by MOEDT as an element of the PPP Unit’s
operational policies, serves the needs of applicants preparing PPP proposals as well as regulators assessing the
feasibility of those proposals. “Practical Guide” training will be delivered January 23-31 in Vinnitsa, Simferopol,
Zaporizhia and Kyiv. The targeted audiences are representatives of municipal city councils, regional offices of
MOEDT, NPA and other relevant agencies contributing to preparation or approval of PPP projects.
2.2 GOU Staff Development
A primary task of P3DP is enhancing the capacity of MOEDT to establish a national level PPP Unit that will facilitate the creation of PPPs by bridging the gap between the government and private sector interests. To achieve this, P3DP is delivering a systematic training program that instils the knowledge and skills necessary for the effective operation of the PPP Unit.
To successfully create a financial picture of an envisaged PPP project opportunity, an array of actions must be put into motion - input variables identified, economic data analysed and forecasts created to assess financial viability. Absent comprehensive financial planning, review, and analysis, PPP projects are at risk of failure. A primary area of interest is the preparation of comprehensive feasibility studies, including development of a
financial model that allows financial risk assessment of PPP projects.
During this reporting period, P3DP conducted a round-table to review and discuss PPP experiences from the Solid Waste Management study tour to Hungary and Austria. Outputs of this meeting produced: 1) a summary of lessons learned; 2) methods for their application in Ukraine; and, 3) recommendations on amendments to the PPP enabling environment in Ukraine. The round-table was successful in bringing together key decision-makers from USAID, Ministry of Economic Development and Trade, Ministry of Regional Policy, Construction and Housing, and the National Commission for
Municipal Services Regulation. The participants concluded:
a) It is important to continue strengthening the MOEDT PPP Unit’s role to transform it into an efficient
national coordinating and advisory body able to support local self-governments in terms of
methodology and PPP advice;
b) It is necessary to reform the legal framework in Ukraine in order to speed up and facilitate PPP
preparation, and to introduce transparent, efficient and coherent PPP procedures; and
c) It is necessary to improve methodological basis for PPP projects preparation and implementation,
embracing such issues as risk forecasting and analysis, financial modelling, estimation of economically
reasonable (cost efficient) tariffs on services provided under PPP contracts, securing of private partner
benefit from PPP given that PPP project progress demonstrates achievement of planned social benefits,
and introduction of mechanisms enabling the public partner to undertake long-term obligations on
funding of PPP projects.
Having identified existing legal obstacles for PPP development in Ukraine and deficiencies of Ukrainian legislation, it was agreed among the participants that an Aide Memoire should be drafted containing the most urgent and important steps to pursue, particularly:
a) to start joint drafting of amendments to legal acts to improve PPP risk assessment and management
control, while introducing cost-efficient tariff setting mechanisms;
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b) to continue developing and strengthening PPP-related capacity of stakeholder institutions, including
skill development of PPP-related staffs;
c) to draft legal provisions with the support of P3DP-provided international and local experts, in the
following areas:
i. identifying those public entities that can engage in PPP contracts as legal partners;
ii. developing a legal mechanism that will enable public partners to undertake long-term
obligations for financing PPP projects;
iii. improving risk assessment and management procedures to enable government bodies to more
effectively support PPP projects;
iv. introducing licensing requirements for business entities operating in the solid waste industry;
v. developing a rational methodology for setting tariffs in solid waste processing and disposal;
vi. establishing procedures to facilitate efficient PPP implementation in the SWM sector, such as:
- authorizing local self-governments to select (on a competitive basis) one operator combining the two operational functions of solid waste collection and disposal;
- authorizing local self-governments to select (on a competitive basis) companies to build and operate SWM facilities for waste processing, recycling and disposal; and
- developing enabling legislation that will support the implementation of regional PPP projects (e.g. multiple cities, districts and oblasts).
It was universally accepted that legislation improvement should be based on international best practices in the areas of cost-effective tariff models, transparent licensing rules and PPP budgeting processes. It was also agreed that a high-level SWM Tariff Methodology round-table should be organized to kick off the development of new tariff policy. It is expected that P3DP will play a central role in this round-table by providing international experts to present approaches used by the international community.
2.3 PPP Strategy and Implementation Plan
During the last reporting period, P3DP submitted the final agreed version of the Draft PPP Development Concept (Strategy) 2012-2017 and Strategy Implementation Plan (SIP) to MOEDT with further plan to submit it to the Cabinet of Ministers of Ukraine to be introduced into the National Plan. In November 2012, P3DP delivered a round-table dedicated to discussion of the PPP Strategy and SIP, including wide-ranging consultations with the MOEDT. P3DP expects that the PPP Strategy will be adopted by summer 2013 thus establishing formal governmental policy on PPP and enabling implementation of SIP as foreseen by the Cooperative Agreement.
2.4 PPP Unit leaflet
P3DP assisted the MOEDT’s PPP Unit to develop an informational leaflet explaining the PPP Unit’s competencies, functions, capacities and contacts. These leaflets will be distributed to municipalities and potential private-sector partners in order to introduce them to PPP opportunities and the support available through the PPP Unit on PPP project initiation, preparation and the application process. It was also recognized that the PPP Unit’s existing webpage requires substantial improvements to make it more user friendly and provide statistical data and relevant information about PPPs in Ukraine. P3DP agreed to assist MOEDT with the task of webpage development.
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Participants of the PPP training in Kyiv.
2.4. Supporting the Ministry of Economic development and Trade of ARC
P3DP together with the MOEDT ARC conducted Work Group meetings dedicated to resolving issues related to land and asset transfers that emerged during initial stages of the Simferopol Park pilot PPP project. P3DP has been providing extensive consultation to Simferopol city council. MOEDT ARC also proposed a regional solid waste landfill concept for Western Crimea and requested that P3DP assist with identifying implementation steps for this potential PPP project.
Objective 3: Capacity and Awareness Development
P3DP conducts capacity development and awareness events to provide representatives of selected pilot municipalities with knowledge and skills needed to identify, launch and manage successful PPP projects. P3DP also invited representatives of private firms and NGOs to participate in these awareness events. P3DP deliberately intensified efforts to familiarize private sector entities with PPP developments and project opportunities in Ukraine by conducting business seminars on municipal PPPs in Ukraine and market sounding events.
3.1 General PPP training in Kyiv
P3DP conducted training for the Kyiv City Administration on how a PPP structure could be utilized for kindergarten management in Kyiv. The training was conducted by Ms. Natalia Dotsenko-Bilous, a local legal expert renowned for her experience in contract law. The one-day session was attended by 32 participants, including representatives of the Chief Department for Communal Services; Chief Department for Energy Use and Energy Saving; Chief Department for Construction and Architecture; Department for Industrial, Scientific and Innovation Policy; Chief Department for Economics and Investments; Law Department; Kyiv City State Administration; Center for Investments and Development and Kyiv City rayon administrations.
The participants received information on PPP concepts and development potential, such as: i) international examples of PPP projects; ii) legal constraints and opportunities in Ukraine; and iii) various PPP contract forms, such as concessions, leases, consortium and joint ventures.
3.2 Business Seminar on Municipal Public-Private Partnerships in Ukraine
P3DP organized a Business Seminar on Municipal Public-Private Partnerships in Ukraine to advance a key program objective “to attract private sector finance and operational expertise in public infrastructure development and provision of related public services”. The goals of the event were: 1) to identify private investors interested in PPP projects in communal services and infrastructure; 2) to present existing PPP pilot opportunities supported by P3DP; and, 3) to garner feedback from potential private partners on their views of PPP potential. In order to broaden P3DP’s private sector professional network and exposure to businesses interested in PPP transactions, P3DP organized the event with the two leading business organizations in Ukraine, the American Chamber of Commerce (ACC) and the US-Ukraine Business Council (USUBC), in order to use their extensive
Speakers for the first session: Ruslan Kundryk, Alan Pieper,
Chris Shugart, Pavlo Pakholko, Tetiana Korotka.
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membership bases to reach P3DP’s targeted audience: investors, operators and financiers interested in public-private partnership (PPP) projects. The 70 participants included: 17 investors and operators, 4 financiers, 17 transaction advisors, 6 representatives of public sector and 7 donors; of the participants, 42 were male (60%) and 28 female (40%).
The business seminar became an important milestone for P3DP in terms of engaging the private sector in PPP development activities. P3DP identified and targeted those companies with the potential to become important participants in PPP projects in Ukraine. The next step in engaging the private sector will be market sounding events organized by P3DP for each pilot project, where the proposed PPP project structure and financial model results will be presented.
3.3 Market Sounding Event in Zaporizhia
P3DP facilitated a market sounding event in Zaporizhia, where the Healthcare PPP project financial model was presented and tested against assumptions of both public and private sector participants. The event, attended by 12 participants, provided valuable feedback on the feasibility of the financial model and helped to identify market players for this P3DP flagship project. Based on the outcome of this meeting, P3DP subsequently developed a TOR to engage consultants to develop the full Feasibility Study that is required by MOEDT for PPP approval.
3.4 Collection of PPP case studies
P3DP, through its implementing partner AUC, has started collecting case studies to illustrate PPP practices in Ukraine. The first phase of case study documentation is expected to be ready for public dissemination by mid-year 2013.
Objective 4: Pilot PPP Transactions
P3DP’s four objectives collectively pursue the mission of developing the PPP environment in Ukraine both at the state and municipal levels, with the specific goal of objective 4 being to implement municipal level pilot PPPs and use these experiences as feedback to improve the Ukrainian legal and regulatory climate. It is anticipated that successful pilot PPPs will serve as models for other municipalities throughout Ukraine. Therefore, the pilot PPPs were selected based on their broad-based applicability in the important industry sectors of solid waste management, healthcare, transportation and street parking, management of municipal objects (city park), energy efficiency, water supply and waste water treatment. In this reporting period, P3DP’s main focus was assisting with concept papers, technical research, legal analysis and financial modelling to advance the projects to the stage of compiling a complete feasibility study, as required by PPP regulations promulgated by MOEDT.
During this reporting period, P3DP’s Objective 4 resources were mainly directed at the following PPP Pilot Projects (described in detail below):
a) Zaporizhia Healthcare b) Simferopol Urban Park Renewal c) Vinnitsa Solid Waste Management d) Ivano-Frankivsk Solid Waste Management e) Western Crimea Solid Waste Management f) Lviv City Parking Management
Each of the above pilot projects is characterized by strong municipal leadership, a verified business model of the project (drafted by P3DP and agreed to by the municipality), interest from private operators, and ability to deal with risks during the project preparation and implementation (budgetary, methodology, tariff regulations, land, property and other issues arising while the project is taken through the procurement stage).
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4.1 Zaporizhia Healthcare PPP
P3DP has been actively working with Zaporizhia Municipality to develop a PPP in healthcare at one of the oldest and most well-managed municipal hospitals. Zaporizhia City Council demonstrated sufficient capacity and leadership to quickly take the project through all stages of project lifeline. Tender documents are expected to be finalized and released to the public by mid-year 2013. Although the city initially anticipated a concession contract covering the entire hospital facility, P3DP’s legal review identified structuring the PPP project as a cooperative agreement as a better approach to accomplish the hospital administration’s goals and comply with relevant Ukrainian legislations.
After drafting the initial business model, P3DP worked with the city to identify clinical and non-clinical services to be provided by the private partner without interfering or limiting the size of the existing medical services. The new services-for-a-fee will be the main source of return-on-investment to attract private sector investment for renovation of hospital premises and acquisition of new equipment.
Paid private sector medical services became the basis for drafting the financial model of the project. The financial model was prepared and presented to the Municipality Working Group in the Zaporizhia City Administration. As an outcome of the meeting, the parties agreed to prepare the feasibility study; to conduct meetings with decision-making groups in the City Council; to present the project to local stakeholders; and, to support the City Council with their PPP tender decision by providing legal consultants funded by USAID through P3DP.
4.2 Simferopol City Park and Recreational Area
P3DP assisted Simferopol City Council Working Group with the preparation of a PPP Concept Paper for Simferopol city park (Gagarin Park) management. After the formal approval of the concept paper by the working group, P3DP is now assisting the city with activities that must be completed to lead the project to procurement stage. P3DP is advising Simferopol Municipality, the Ministry of Economy and Trade of ARC and the Ministry of Regional Development and Communal Services on drafting decisions, resolutions and undertaking certain procedural steps, aimed at movement through project lifeline.
P3DP is working closely with the city to resolve two critical obstacles regarding land and property decision authority over the municipal park. These issues reflect the general difficulties of communal ownership in Ukrainian municipalities, where numerous state and municipal enterprises can have conflicting ownership rights over the same piece of property, thus freezing decisions and preventing progress on project development and implementation.
Simferopol Municipality arrived at the conclusion that the whole Gagarin Park territory, consisting of 35 hectares, must reside under municipal authority before the municipality can release tender documents to attract a private partner to develop part of the park (approximately 3 hectares) for commercial activities in return for improving the remaining public area under a PPP arrangement. P3DP is working with the municipality to obtain the necessary approvals that will consolidate all decision authority over the land, trees and other assets within the park boundaries in the hands of Simferopol City Council.
4.3 Vinnitsa Solid Waste Management
P3DP organized a study tour for representatives of Vinnitsa City Council to visit several solid waste management PPPs in Hungary and Austria to learn about the operations of regional landfills and solid waste incineration enterprises. These visits revealed successful PPP experiences that the Vinnitsa City Council used to design a PPP SWM approach for Vinnitsa municipality and surrounding rayons.
13
P3DP has hired a professional local consultant to prepare a technical concept study for Vinnitsa City Council. The study provided current information on waste generation and collection and proposed a design for waste disposal operations, including construction of a new landfill that conforms to international best practices.
On the basis of the technical study, P3DP has updated the project financial model, which indicates a staged approach in construction of the landfill and inclusion of surrounding rayons as the most financially advantageous implementation strategy. P3DP is now working with the city to proceed with preparation of a formal feasibility study that can be submitted to MOEDT for review and approval. Assuming the recent pace of project progress continues, it is anticipated the tender documents will be prepared and released for bidding during 2013.
P3DP International PPP expert Chris Shugart assisted P3DP with preparation of “Project Notes”, that was shared with international landfills and solid waste sector companies in order to gauge their interest and ideas regarding how the project could conform with market expectations. After this process is completed, P3DP plans to approach financial institutions, including development banks, to determine financing opportunities and identify their requirements for loan approval.
4.4 Lviv Parking Management
Although this project is temporarily on hold awaiting legislative reforms, which are needed to give the city authority over parking fee collection in Lviv, P3DP continues to support the city and has explored several financial scenarios, which show the various tariff levels needed to profitably construct and operate an off-street parking facility in the designated land plot in Lviv center. A tariff of 15-25 UAH per hour during business hours and 10 UAH per hour for non-business hours have been identified as the minimum charges needed to cover a 15-20 year contract to construct and operate an underground garage.
If this level of tariffs is not acceptable to the citizens of Lviv, then city subsidies or payment guarantees will be needed to make the project financially feasible. All the above information has been made available to the City for review, so that the parties can determine a mutually acceptable decision.
4.5 Ivano-Frankivsk Solid Waste Management
P3DP has prepared a SWM Concept Paper, which has been provided to the municipality for review. The Concept Paper provided a detailed overview of current solid waste management systems and outlined areas where a PPP component could enhance waste collection and disposal performance. Landfill management and biogas harvesting utilizing private sector expertise are considered to be viable options that would be more attractive to market sector operators and simultaneously maximize benefits to the community.
P3DP’s recommendations were presented to the mayor of Ivano-Frankivsk at a December 2012 meeting, at which time P3DP was given a green light from the mayor’s office to proceed with project preparation. The mayor is interested in pursuing a PPP, because of the common understanding that involvement of a professional private partner will improve solid waste management performance.
14
4.6 Western Crimea Solid Waste Management
A regional landfill PPP was on the radar of ARC officials and P3DP, as P3DP has conducted an on-site visit to identify ways to structure utilization and safe disposal of waste on a regional basis in western ARC. P3DP has drafted the Concept Paper and the financial model of the project, providing the background of how the new regional landfill might serve two large cities and three rayons of ARC, servicing a total of 300,000 citizens throughout the year and as many as 500,000 people during tourist season. In addition, two ARC representatives travelled as part of the study tour group to Hungary and Austria to visit several regional landfills, and this experience has been a valuable contribution to ARC vision regarding how the project will be structured and tendered.
P3DP participated in a working group meeting, organized by the Council of Ministers of ARC, dedicated to identifying future steps required to advance the PPP pilot project. Certain priorities shifted in ARC’s global vision of how local solid waste management will develop over the coming years. In response, ARC has signed a MOU with an international engineering company to develop and construct solid waste treatment enterprises in ARC. Currently, P3DP is verifying the proposed options and plans to conduct a series of meetings with stakeholders related to assessing the feasibility of the proposed project ideas and ways of structuring them as PPPs.
4.7 Kiev Kindergarten
P3DP was approached by the representatives Kyiv City State Administration (KCSA) with a request to explore a PPP mechanism to assist the city to close an existing supply gap in providing pre-school education services in the City and improve the quality of those services. Kyiv Department of Education has identified a short list of properties that it would be willing to allocate for potential PPP pilots. All of the facilities are fully depreciated and would require significant upfront investment by a private partner.
P3DP contacted several major private-sector market participants to assess the level of interest in potential kindergarten PPPs, identify major risks associated with launching this project, and explore the current market opportunities. Private market participants expressed high levels of interest; however, certain regulatory shortcomings present significant risks. Specifically, provisions of the budget code do not allow Kiev City to enter into management contracts with private partners; maximum lease agreement terms are insufficient for executing PPP contracts; and other existing market mechanisms, such as long-term cooperative agreements, are still questionable. P3DP will continue its effort to identify possible ways of executing long-term PPP contracts for this project within the given legislative environment.
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2. Key Upcoming Events and Activities
Significant program events and activities planned in the months ahead are noted below.
Target Dates Planned Activity
January 23-30 PPP Guidelines Training “Preparation of PPP Feasibility Study and application of PPP Appraisal Methodology” January 23-30, 2013 Vinnitsa, Simferopol, Zaporizhia, Kyiv
February 14 Round-Table “Tariff Regulation Methodology in the sector of Solid Waste Management: international practices and regulation in Ukraine”
TBD All-Ukrainian Council of City Mayors
3. Program Administration
Administration
Mark Cockburn of Cambridge Economic Policy Associates Ltd. delivered a presentation to P3DP and USAID on the feasibility of a Project Development Facility (PDF) in Ukraine. Based on Mr. Cockburn’s work, P3DP and USAID concluded that a PDF is not feasible for Ukraine at this point in time. FHI360 should pursue a modification to the Cooperative Agreement to exclude the creation of a PDF as a program goal.
Based on directions from the new USAID administrator, P3DP followed the direction provided by P3DP’s AOTR to include Global Climate Change Indicators in P3DP’s Work Plan.
Based on a letter from the Regional Contract Officer at USAID Ukraine Mission, FHI360 was instructed to begin submitting P3DP reports to the Development Experience Clearinghouse.
Personnel
Alan Pieper, P3DP COP, submitted his resignation to FHI360 in mid-December with an effective date of departure on February 28.
Nellie Makariy has been hired as the Program Manager to lead efforts focused on increasing the institutional capacity of MOEDT and the PPP Unit.
Elena Holubenko was hired as P3DP’s Secretary/Receptionist in November to fill the open position that was created when Anastasia Walsh was promoted to Finance Assistant under the supervision of P3DP’s Financial Manager, Natalia Logvinova.
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5. Annexes
A. Y3Q1 Quarterly Monitoring Report
B. Concept of Public Private Partnership Development in Ukraine for 2012-2017
C. Strategy on Public Private Partnership Development in Ukraine for 2012-2017 and Strategy Implementation Plan
D. PPP Practical Guide (available upon request in Ukrainian)
17
Annex A
P3DP Performance Monitoring Report Y3Q1 (October-December 2012)
Public Private Partnership Development Program 44 Khreschatyk Str, 3
rd Floor,
Kyiv, Ukraine +380442794481
FHI Development 360 1825 Connecticut Avenue, NW
Washington, DC 20009 United States
P3DP Performance Monitoring Report
Y3Q1 (October-December 2012)
This research was made possible with the generous support of the American people through the United States Agency for International Development (USAID) The Author’s views expressed in this publication do not necessarily reflect the views of the USAID or the United States Government
1
P3DP Performance Monitoring Report
Y3Q1 (October-December 2012)
The Kyiv Economics Institute prepared this report to assist the PPP project development
team in evaluation of its performance, identification of the possible delays and risks in the
implementation of the Program objectives.
The analysis shows that in the first quarter of Year 3 of the project, the planned activities
are mostly performed within the respective timelines, although a few of them are delayed
for reasons independent of P3DP (namely, parliamentary elections held in October 2012).
The rest of this report is structured as follows. For each of the four objectives of the
Program, activities foreseen by this objective for the entire Year 3 (Y3) and their
implementation are described and then the relevant performance indicators, their targets
and actual values are presented. For the ease of perception, activities that were fully and
timely implemented are marked with green, activities that are either delayed or
implemented partially marked with yellow, and activities that are not implemented are
marked with red. The report ends with some concluding remarks.
List of abbreviations
ARC – Autonomous Republic of Crimea
GOU – Government of Ukraine
IBSER – Institute for Budgetary and Socio-Economic Research
MoEDT – Ministry of Economic Development and Trade
MRDCH – Ministry of Regional Development, Construction and Housing
NCCSR – National Commission of Communal Services Regulation
NPA – National Project Agency
PPP – Public-Private Partnership
P3DP – Public-Private Partnership Development Project
RT – Round Table
SIP – Strategy Implementation Plan
SPA – State Property Agency
SWM – Solid Waste Management
TA – Technical Assistance
WG – Working Group
List of tables
Table 1. Events P3DP team took part in during Y3Q1………………………………page 4
Table 2. Performance indicators for Objective 1………….…………………………page 5
Table 3. Performance indicators for Objective 2…………….………………………page 8
Table 4. Analytical documents related to PPP transaction design, implementation and monitoring
drafted together with the PPP Unit(s) ………………………………page 8
Table 5. Performance indicators for Objective 3…………………………………….page 10
Table 6. Projects under P3DP consideration………………………………………....page 12
Explanatory note: Activities highlighted in green were conducted according to the Y3
Work Plan, highlighted in yellow were postponed/delayed and highlighted in red were not
conducted.
2
Objective 1. Legal Framework Enhancement.
To achieve this Objective, P3DP works closely with Ukrainian officials, representatives of
the private sector and international investors to make legal environment in Ukraine more
favorable for PPP development.
In Y3Q1, the following activities were planned and performed within this Objective:
Activity 1.1.1 – a year-round monitoring of legal environment. Within this activity, P3DP
team continued to issue Weekly Highlights on new developments in PPP legislation
(including developments in the area of utilities tariffs regulation – Activity 1.1.4) and
Monthly Legislation Assessment.
Activity 1.1.2 – the amendments to PPP laws that Verkhovna Rada returned to its
Committee on Industry and Entrepreneurship at the end of Year 2, were planned for review
and approval by the Committee during Y3Q1. However, due to the parliamentary elections
and consequent resolving of organizational issues by the new Parliament (election of the
speaker and heads of committees, distribution of deputies by committees etc.), Verkhovna
Rada practically did not work on legislation during October-December 2012. Hence,
review of the law draft was rescheduled for Y3Q2.
Activity 1.1.5.1 – a report on recommendations for legislation governing long-term budget
commitments in PPP area was planned to be developed in Y3Q1. Although the report has
not been finalized yet, P3DP has made a considerable progress in its development.
Namely, during Y3Q1, P3DP team:
- on 2012-10-02: organized cooperation with IBSER and signed a MoU (by mail);
- on 2012-12-06: drafted proposals to the Draft Law “On amendments to the Budget
Code” and presented them to IBSER for further discussion;
- on 2012-12-14: held a meeting with IBSER discussing Draft Amendments to the
Budget Code on implementation of the mechanism of long-term obligations.
During the meeting, P3DP and IBSER reached an agreement to jointly work on the
law draft and to organize in Y3Q2 a round table on long-term budget obligations.
Upon the round table discussion, the recommendations on the law drafts regarding
long-term budget obligations are to be developed.
Under Activity 1.1.6 P3DP is drafting comments and amendments to the licensing
regulations to provide them to MoEDT by the end of Y3Q2. In Y3Q1, P3DP discussed
with MoEDT the inclusion of P3DP proposals and amendments to the licensing regulations
into MoEDT agenda.
In Y3Q1, P3DP completed (on 2012-10-25) and submitted to MoEDT (on 2012-11-27) the
Draft Strategy on PPP Development in Ukraine for 2012-2017 and Strategy
Implementation Plan. At the end of Year 2, P3DP completed (on 2012-08-28) and
submitted (on 2012-09-06) a short version of the Strategy - Draft Concept Paper on PPP
Development in Ukraine for 2012-2017. Hence, after MoEDT approval, the Strategy
implementation will begin.
3
Under Activity 1.2.1 P3DP assisted MoEDT in organization of public discussions of Draft
GOU PPP Development Concept and Strategy, including Strategy Implementation Plan.
Namely, P3DP organized the following events:
1) 2012-11-06 – a roundtable discussion of the Draft GOU PPP Development
Concept, Strategy, and SIP (Activity 1.3.1);
2) 2012-11-21 - presentation of MoEDT PPP development ideas and pilot PPP
projects to investors at the Business Seminar on Municipal PPPs (Activity 1.3.2). At
the Seminar, developments of PPP framework were discussed, MoEDT addressed
commitments concerning PPP developments, transaction advisers expressed their
interest in participation in PPP Projects.
3) 2012-12-19 – a round table on on international SWM PPP experience (Hungary and
Austria study-tour follow-up). At the round table, representatives of GOU
(MRDCH, MoEDT, NPA, NCCSR) and P3DP discussed international experience of
PPP Unit functioning and SWM PPP implementation. P3DP and NCCSR agreed to
organize a new round table to share foreign experience in the area of SWM tariff
regulation affecting PPP Projects.
Within the year-round Activity 1.3.3 (participation in conferences, round tables, workshops
on national and regional levels, providing trainings, consultations and other types of
assistance to facilitate PPP legislation development in relevant areas), P3DP team took part
in the number events (see Table 1).
4
Table 1. P3DP participation in events during Y3Q1 (Activity 1.3.3)
Date Event Participating
organizations Topic Results
2012-11-15 Meeting with Clean
City National Project Clean City
Discussion of the last legal
developments and P3DP support
of Clean City activities
P3DP addressed inconsistencies in
adopted laws in SWM area
2012-11-30
Simferopol
Municipality PPP
Working Group
meeting
Simferopol
Municipality, Land
Agency, Land
Inspection Agency
Discussion of legal issues of land
allocation and designation under
PPP Projects
A compromise reached regarding land
allocation procedure and asset transfer
under PPP
2012-12-11
Meeting at the
National Commission
on Communal Services
Regulation
NCCSR
Discussion of National
Commission role and plans
regarding SWM regulation
Agreement on cooperation and provision
of TA on SWM tariff regulations
development, and on organization of a
round table
2012-12-12
GIZ Seminar on
Energy Efficiency pilot
projects
MRDCH,
municipalities,
international donors
Legal and technical obstacles to
implementation of the Energy
Efficiency Project
Donors learned about technical
complexity of energy efficiency
measures and legal peculiarities of
projects in municipal buildings
2012-12-17
Meeting with possible
investors of City
Lightening Projects
SWARCO, Energy
Consulting
Discussion of institutional PPPs
and technical peculiarities of city
lightening projects
Applicability of institutional PPPs to city
lightening projects established
2012-12-18
Meeting with Kyiv
Department of
Education
Kyiv City Department
of Education
PPP Project in kindergarten area:
legal peculiarities and viability
Several methods of project
implementation agreed upon
5
Additionally, P3DP team drafted several amendments/proposals to legal documents of
central and local government and submitted them to relevant government bodies:
1) on 2012-11-01, proposals to the Draft Law “On amendments to the Law “On reforming
Health Care Sector in Ukraine to facilitate investments to the Health Care Sector”
completed;
2) on 2012-11-22, proposals to the Draft Law “On amendments to some Laws regarding
SWM” completed and submitted to the MoEDT;
3) on 2012-12-17, amendments to the Kyiv City “Draft Regulations on Investment Tenders
Procedures” drafted and submitted to the City Council.
Performance indicators for Objective 1 are presented in the Table 2.
Table 2. Performance indicators for Objective 1
# Definition Y3Q1
actual Y3 target
% of target
implement
ation
POI
1.1
Draft Concept Paper, Strategy and Strategy
Implementation Plan on PPP Development
developed and submitted to GOU for approval
YES YES +
POI
1.2
# of actions implemented under PPP Strategy
Implementation Plan 0 TBD -
POI
1.3
# of policy reforms/regulations/ administrative
procedures drafted and presented for public/
stakeholder consultations to enhance sector
governance and/or facilitate private sector
participation and competitive markets as a result
of USG assistance (F 4.4.1-13)
1* 4 25
POI
1.4
# of P3DP legal reforms (based in part on the
GIDE review) that are submitted in final
recommendation form to the relevant GOU
(state) entity
1** 6 17
* Draft Strategy on PPP Development in Ukraine for 2012-2017 and Strategy Implementation Plan
** Draft Decree on Strategy on PPP Development in Ukraine for 2012-2017 and Strategy
Implementation Plan
Although some activities are slightly behind the schedule, generally implementation of
Objective 1 proceeds according to the Year 3 plan, and planned performance indicators are
likely to be achieved.
6
Objective 2. PPP Unit(s) Establishment.
Within this Objective, P3DP assists the development of a national PPP Unit within the
MoEDT, which could coordinate PPPs on the national level and promote PPP-friendly
policies.
In Y3Q1, the following activities were planned and performed within Objective 2:
Activity 2.1 foresees a year-round participation of P3DP team members in Working Groups
organized under different GOU bodies, namely, the Interagency Working Group, the WG
under the parliamentary Committee for Industrial Policy and Entrepreneurship, SWM
working group under MRDCH, and working groups under other government committees.
During Y3Q1 P3DP did not participate in the meetings of the working groups:
- PPP WG within parliamentary Committee for Industrial and Regulatory Policy and
Entrepreneurship did not meet due to elections and post-election activities related
to formation of Verkhovna Rada administrative units. By the end of December
2012, the mentioned Committee was reorganized into Investment Committee,
hence the WG will be re-established and P3DP plans to apply for membership in
January 2013;
- SWM WG within the MRDCH did not met during Y3Q1 due to elections;
- Committee on Sector Reforms within MRDCH met once (on 2012-12-06) but the
agenda did not include any PPP issues, therefore, P3DP did not participate in the
meeting.
At the round table on SIP (Activity 2.2.1.1, also mentioned under Activity 1.3.1), extensive
consultations on SIP were provided to MoEDT during the presentation and discussion of
the draft GOU PPP Development Concept and Strategy (including SIP).
Activity 2.2.2 foresees the pursuit of the awareness campaign on PPP Unit functions and
responsibilities, procedures and guidance tools. Within this activity, P3DP planned to
conduct five workshops/round tables (in November 2012, January, March, May and July
2013) on the usage of PPP Appraisal Methodology. However, November seminar was not
conducted.
The outline leaflet on a PPP Unit, its role and responsibilities (Activity 2.2.2.2) was
developed in Y3Q1 and is currently being agreed with the MoEDT.
Activity 2.2.3.1. On 2012-12-19, P3DP held a study tour follow-up workshop (also
mentioned under Activity 1.3.1), in which 12 (5M/7F) representatives of central
government (MoEDT, MRDCH and NCCSR) took part.
Activity 2.2.3.3. P3DP signed a MoU with IBSER (also mentioned under Activity 1.1.5.1).
Activity 2.2.4.1. For Year 3 it is planned to conduct three training workshops on
international PPP experience for MoEDT representatives. The first workshop was planned
for December 2012. The workshop was held ahead of planned scheduled (on 2012-11-21),
7
at the Business Seminar on Municipal Public-Private Partnerships in Ukraine (Activity
3.3.1). At the workshop, MoEDT officials presented their vision of PPP development
perspectives and forecasts for Ukraine based on the draft GOU PPP Development Concept,
Strategy and SIP.
Activity 2.2.4.2 stipulated for a practical workshop on how to effectively use the “Practical
Guide for PPP Appraisal Methodology” for representatives of the PPP Unit (MoEDT) and
local officials. However, due to extension of the deadline for incorporation of MoEDT
comments and suggestions to the “Practical Guide…” and further harmonization of these
changes with MoEDT, the workshop was rescheduled for the end of January 2013.
Activity 2.4.1.1 specifies the P3DP participation in the WG activities at the Crimean
MoEDT during the year. During Y3Q1, this WG has met once – on 2012-11-30 it
discussed land allocation for the Simferopol Park project (this meeting is also mentioned
under Activity 1.3.3). At the meeting, Crimean MoEDT and P3DP agreed on land
allocation procedure, asset transfer mechanism, and discussed some issues of Western
Crimea SWM project. These results are reflected in the corresponding Minutes of the
meeting.
Activity 2.4.2.1.The training on PPP “Practical Guide…” for ARC officials planned for
December 2012 was rescheduled for January 2013 due to already mentioned extension of
the deadline for “Practical Guide…” approval by MoEDT.
Activity 2.4.2.2. As the ARC officials did not request to support their participation in the
international PPP conferences, the support stipulated in the Work Plan was not provided.
Activity 2.5.1 includes year-round consultations with MRDCH representatives on
operational issues related to PPPs. Within this activity, P3DP and MRDCH specialists
discussed changes to the legislation on licensing, waste management, tariffs on solid waste
management operations (on 2012-12-19, at the study-tour follow-up workshop mentioned
under Activity 2.2.3.1). On 2012-12-26, P3DP discussed the draft changes to the legislation
on licensing and waste management with MRDCH representatives at the round table
hosted by the National Project Agency.
Table 3 presents the performance indicators for the Objective 2 for Y3Q1.
To sum up, almost all activities planned for Objective 2 were conducted. Annual targets are
likely to be met for majority of indicators. Moreover, annual target for the indicator POI
2.3 has been already met. The underperformance on indicator POI 2.1 is explained by the
fact that familiarization tours are scheduled for the Q3 of Year 3.
8
Table 3. Performance indicators for Objective 2.
# Definition Y3Q1
actual Y3 target
% target
implemen
tation
POI
2.1
# of top level participants in familiarization study
tours re: PPP Unit(s) implementation and
operations
0 30 0
POI
2.2
# of drafted legislative acts/regulations specifying
PPP Unit(s) activities 1* 5 20
POI
2.3
# of analytical documents related to PPP
transaction design, implementation and monitoring
drafted together with the PPP Unit(s)
5** 5 100
POI
2.4
# of desired Operational Polices drafted for the
PPP Unit(s) 1
† 3 33
POI
2.5
# project ideas submitted by public bodies (line
ministries/municipalities) to the designated
responsible GOU PPP entity (MoEDT/NPA)
2‡ 8 25
DC
2.1
# of stakeholders (lawmakers, public officials)
attending consultations, conferences annually re:
regulatory operations/implementation of the
designated responsible PPP GOU entity and PPP
Strategy Implementation Plan or modification
12
(5M/12F,
12P/0R)
N/A -
*PPP Strategy Implementation Plan
** see table 4 for details †PPP Practical Guide ‡ (1)Sea Port, submitted by Port Ochakiv LLC in October 2012; (2) airlines, submitted by
the SPA on behalf of the “Motor Sich” plant in November 2012.
Documents related to POI 2.3 are presented in Table 4 below:
Table 4. Analytical documents related to PPP transaction design, implementation and
monitoring drafted together with the PPP Unit(s)
Date Name of the document
2012-11-01 Proposals to the Draft Law “On amendments to the Law “On reforming of
the Health Care Sector in Ukraine to facilitate investments to the Health
Care Sector”
2012-11-22 Proposals to the Draft Law on amendments to some Laws regarding SWM
(submitted to the MoEDT)
2012-11-30 PPP Practical Guide to Appraisal Methodology
2012-12-06 Proposals to the Draft Law On amendments to the Budget Code (presented
to IBSER for further discussion)
2012-12-19 Aide Memoire defining further steps of cooperation with GOU
9
Objective 3. Awareness and Capacity-Development.
P3DP conducts capacity development and awareness events to provide representatives of
selected pilot municipalities with knowledge and skills needed to identify, launch and
manage successful PPP projects, while also inviting representatives of private and NGO
organizations to join.
Within this Objective, P3DP organized several events on PPP awareness and capacity
development: PPP training in Kyiv, market sounding event in Zaporizhzhya and Business
seminar on PPP. Below these events are described in more detail.
Activity 3.1.3. The general PPP training for Kyiv City Administration representatives to
support the development of its pilot projects related to kindergartens in Kyiv was organized
on 2012-10-03. One-day training session was attended by 32 participants (13F/19M)
including representatives of the Chief Department for Communal Services, Chief
Department for Energy Use and Energy Saving, Chief Department for Construction and
Architecture, Department for Industrial, Scientific and Innovation Policy, Chief
Department for Economics and Investments, Law Department, Kyiv City State
Administration, Center for Investments and Development and Kyiv City rayon
administrations.
The participants were familiarized with the most important areas of PPP development, such
as
- international experience of implementation of PPP projects;
- challenges and opportunities for Ukraine;
- peculiarities of various PPP forms, such as concession, lease, consortium, joint
venture etc.
Within Activity 3.2, P3DP planned to assist municipalities that pursue pilot PPP projects to
conduct awareness campaign.
Activity 3.2.1. Due to the timing of pilot project preparation, P3DP did not conduct the
survey/focus group planned for December 2012 (quarterly public attitude surveys and
focus groups with elements of “willingness/ability to pay” are being considered in order to
help shape communication strategy for a pilot city and contribute to a respective feasibility
study).
Activity 3.2.3. On 2012-12-21, P3DP organized a Market Sounding Event in Zaporizhzhya.
At this event, P3DP presented financial model for the hospital PPP project and tested it
against assumptions and expectations of both public sector and potential private investors.
The event provided a valuable feedback on the feasibility of the financial model and helped
to identify market players for this P3DP flagship project. It was attended by 12
participants.
Activities 3.2.5 and 3.2.6. Quarterly media monitoring was conducted by P3DP
implementing partners, and their web-sites are regularly updated.
Activity 3.3.1. Business Seminar on Municipal Public-Private Partnerships in Ukraine was
held on 2012-11-21. The purpose of the event was to identify private investors and
10
financiers interested in projects involving delivery of communal services and developing
municipal infrastructure in Ukraine through the public-private partnership mechanism. In
addition, this seminar was aimed at presenting existing and developing opportunities
supported by the P3DP and other donors, engaging potential partners and identifying the
best ways to develop effective partnerships in Ukraine.
To expand the network of invited private companies, P3DP engaged in a partnership with
the two major business associations in Ukraine: US-Ukraine Business Council (USUBC)
and American Chamber of Commerce in Ukraine (ACC) in order to use their extensive
membership base to reach P3DP target audience: investors, operators and financiers
interested in PPP projects. Out of 70 seminar participants (M42/F28), 17 were investors
and operators, 4 – financiers, 17 – transaction advisors, 6 – representatives of public sector;
7 – donors.
The Business Seminar became an important milestone for P3DP in terms of involving
private sector into P3DP activities on PPP development. It helped to identify and target
companies that can become important players in the PPP area in Ukraine. The next step in
engaging private sector will be market sounding events organized by P3DP on each pilot
project, were the proposed PPP project structure and financial model results will be
presented.
Activity 3.4.1. P3DP planned to issue a collection of the best PPP practices in Ukraine by
the end of January 2013. P3DP started collecting case studies illustrating PPP practices in
Ukraine. During Y3Q1 its implementing partner (AUC) was working with its members
requesting information about private sector participation in delivering services traditionally
provided by the public sector. The work is expected to be completed in time.
Performance indicators for Objective 3 are presented in the Table 5.
Table 5. Performance indicators for Objective 3
# Definition Y3Q1 actual Y3 target
% target
implement
ation
POI
3.1
# of individual events held to promote
PPP understanding 3 15 20
POI
3.2
# of persons attending major events held
to promote PPP understanding
102
M61/F41
U38/R41/N23
350 29
POI
3.3
# of targeted government trainees
completing PPP training sessions during
the reporting period
6
M6/F0 250 2
POI
3.4
# of targeted non-government trainees
completing PPP training sessions during
the reporting period
64
M36/F28
R41/N23
150 43
POI
3.5
# of individuals who received USG-
assisted training, including management
skills and fiscal management, to
strengthen local government and/or
102
M61/F41
350
M245/F105 29
11
decentralization (F - 2.2.3-1)
POI
3.6
# of sub-national government entities
receiving USG assistance to improve
their performance (F 2.2.3-5)
3 30 10
POI
3.7
# of people receiving training in global
climate change (clean energy) as a result
of USG assistance (4.8.2-6a)
0 200 0
DC
3.1
Index of development in capacity of the
public sector representatives to prepare
and implement PPP projects. Survey
based data
- - -
DC
3.2
Index of raised awareness about PPPs
among key stakeholders. Survey based
data
- - -
The indicators for Objective 3 demonstrate that almost all activities are implemented as
planned. However, indicators POI 3.6 and POI 3.7 raise some concerns whether their
annual targets are achievable.
12
Objective 4. Pilot Project Transactions.
Within this Objective, P3DP helps local officials to implement PPP projects – from idea
selection and evaluation to tendering and contraction.
In the Year 3, P3DP team will concentrate on six projects, for which the most progress has
been achieved in Year 2, as well as new PPP Pilot Project opportunities.
Top-6 active PPP Pilot Projects include:
1) Zaporizhzhya Healthcare
2) Simferopol Urban Park Renewal
3) Vinnytsia Solid Waste Management
4) Ivano-Frankivsk Solid Waste Management
5) Lviv City Parking Management
6) Crimea Solid Waste Management
In the first quarter of Year 3, three new projects were added to P3DP portfolio:
1) Kyiv kindergartens
2) Dnipropetrovsk ESCO in street lighting
3) Zhytomyr biofuel heat production
The ideas for the first two projects were delivered to P3DP at the end of Year 2, while the
last project appeared in Year 3.
Lviv SWM project pursued together with IFC is currently awaiting resolution of the land
allocation issue.
Table 6 outlines the stages at which different pilot projects of the current portfolio of P3DP
projects are. It also contains information on the indicators for Obejctive 4.
Other activities not covered in Table 6 are presented below:
Activity 4.2.1. Initially it was planned to finalize Concept Papers for 3-5 new projects by
the end of 2012. This target was probably too ambitious, since a Concept Paper is the third
stage of a project and it is drafted after the USAID approval. In Y3Q1, Concept Papers for
two “older” projects were finalized, which constitutes 2/3 of the annual target.
Activity 4.2.2. According to the Work plan for Year 3, Environmental Reviews for four
projects (Lviv Parking, Simferopol Park, Vinnytsia SWM and Zaporizhzhya Healthcare)
had to be completed by the end of November 2012. Two reviews – for Vinnytsia SWM and
Zaporizhzhya Healthcare – were completed in Y3Q1, which nevertheless constitutes a half
of the annual plan.
In Y3Q1, three new projects passed the stage of the USAID approval, which is 100% of the
annual target.
13
For Zaporizhzhya Healthcare project:
- a financial model was prepared and presented to the project stakeholders and city
administration at the working group in Zaporizhzhya;
- a business model description was finalized and provided to the project stakeholders for
information purposes;
- an awareness event for hospital staff was held in Zaporizhzhya (mentioned under Activity
3.2.3).
For Simferopol Park project:
- P3DP team participated in two working group meetings (with the Council of Ministers of
ARC and with the Simferopol City administration) concerning land issues and property
transition. Meetings resulted in resolutions with approval of further activities (mentioned
under Activity 2.4.1.1);
- P3DP assisted in obtaining expert analysis of the State Committee for Land Resources
related to land issues in the Simferopol Park;
- P3DP assisted in drafting of the ARC Council of Ministers Resolution related to transfer
of assets from different stakeholders to Simferopol Municipality for the project.
For Vinnytsia solid waste management project:
- a technical concept paper was drafted, specifying additional details for the PPP Pilot
Project;
- an updated financial model with more extended input data was finalized.
For Ivano-Frankivsk SWM project
- a concept paper was finalized, provided to the City and discussed during the meeting
with the Mayor; further steps on the project have been agreed during the meeting.
For Lviv parking project:
- an updated financial model with four scenarios was prepared for Lviv Parking PPP pilot
project and sent to the city officials for review. The model specifies possible tariff and PPP
contract duration if the City decides to only choose project of one large with 400-places
off-street parking facility;
- P3DP held discussions/consultations with three interested foreign private city parking
operators to learn about transaction issues and desired scope of the project.
For ARC solid waste management project:
- a business model was drafted and made available to the ARC officials for review.
For Kyiv kindergarten project:
- a brief business model was finalized and made available to the working group;
- possible budgetary and legal structure of the project was subject to the detailed
verification by P3DP and relevant recommendations were provided to the City.
For Dnipropetrovsk ESCO project:
- consultations with possible private partners started in order to verify the business model
of the project.
14
Table 6. Projects under P3DP consideration
POI Project stage Lviv City
Parking
Simfero-
pol Park
Vinnytsia
SWM
Zaporizh
zhya
Healthcar
ARC
SWM
Ivano-
Frank.
SWM
Kyiv
kindergar
tens
Dniprope
trovsk
ESCO
Zhyto-
myr
biofuel
Y3Q1
act.
Y3
plan
%
plan
impl.
Sta
ge
1 4.1 PIB prepared Y2Q1 Y2Q1 Y2Q2 Y2Q1 Y2Q1 Y2Q2 Y2Q4 Y3Q1 Y3Q1 2 3 67
4.2 PPP initiative
approved by
USAID
Y1 Y1 Y2Q1 Y2Q1 Y1 Y2Q1 Y3Q1 Y3Q1 Y3Q1 3 3 100
Sta
ge
2
4.3 Concept paper
prepared Y2Q3 Y2Q3
Y3Q1
technical
CP
Y2Q4 Y2Q3 Y3Q1 Expected
in Y3Q2 2 3 67
4.4 Environmental
review prepared Y2Q3 Y3Q1 Y3Q1 2 4 50
4.5 Feasibility report
(FR) initiated Y2Q4 Y2Q4 Y2Q4 0 3 0
4.6 FR completed
in
progress
in
progress
in
progress 0 3 0
Sta
ge
3
4.7 Effectiveness
report submitted 0 2 0
4.8 Tender package is
being drafted 0 2 0
4.9 Tender issued 0 2 0
4.10 PPP contract
executed 0 1 0
Sta
ge
4
4.11 Project under P3DP
monitoring 0 0 0
DC
4.1 # of jobs created - N/A -
DC
4.2
Investment, $
equivalent - N/A -
15
Concluding remarks
Despite delays in a few activities that occurred because of the parliamentary elections and
post-electoral issues (distribution of deputies by parliamentary committees, election of
speaker and voting for new government etc), P3DP team conducted almost all activities that
were planned for the Y3Q1. P3DP team is actively working on the pilot projects, annual
targets for majority of the indicators are likely to be met.
18
Annex B
Concept of Public Private Partnership Development in Ukraine for 2012-2017
Public Private Partnership Development Program 44 Khreschatyk Str, 3
rd Floor,
Kyiv, Ukraine +380442794481
FHI Development 360 1825 Connecticut Avenue, NW
Washington, DC 20009 United States
Concept for Public Private Partnership Development in Ukraine
for 2012-2017
This research was made possible with the generous support of the American people through the United States Agency for International Development (USAID) The Author’s views expressed in this publication do not necessarily reflect the views of the USAID or the United States Government
Contents
І. DESCRIPTION OF THE PROBLEMS TO BE ADDRESSED
BY THE CONCEPT
ІІ. GOAL OF THE CONCEPT AND IMPLEMENTATION
TIMEFRAMES
ІІІ. PROBLEM SOLUTION WAYS AND METHODS
IV. EXPECTED RESULTS
V. RESOURCE SUPPORT FOR THE CONCEPT
I. DESCRIPTION OF THE PROBLEMS TO BE ADDRESSED BY THE
CONCEPT
The progress of the modern economy creates the need to establish a permissible degree
of state intervention in the functioning of markets to ensure their competitiveness. In the 21st
century, the entrepreneurial sector is acquiring the status of an equal partner of the
government in resolving strategic tasks of the country's socio-economic development.
The anti-crisis action plans and plans of post-crisis economic revival implemented in
many countries envisage efforts to expand cooperation between the state represented by
public executive authorities, the business sector, and civil society, which is only possible on
the basis of forming partnership relations known as state-private partnerships and/or public
and private partnerships (PPP)1 intended to become an effective mechanism of infrastructure
development and public services. The significant spread of the PPP in the world is connected
not only with the desire of the government to attract financial resources of the private sector
to address socially important tasks of social and economic development, but also with the
need to use complex organizing, management, and production technologies.
The importance of PPP as a mechanism stimulating the social and economic development of a
country is attested by numerous conceptual, programmatic, regulatory, and methodological
documents at both the national and international levels, specifically: G202 summit declarations
aimed at developing anti-crisis response actions; special laws and other legislative acts
regarding PPP3,4,5,6,7,8
(Bosnia and Herzegovina, Brazil, Greece, Egypt, Zambia, Kyrgyzstan,
Latvia, Mexico, Germany, Poland, the Republic of Korea, the Russian Federation, Romania,
Slovenia, the USA, the Philippines, Croatia, an so on); PPP development concepts and
programs9,10,11
(Australia, India, Ireland, Kazakhstan, African countries,
1 The term "state and private partnership" is used in this document in accordance with Law of Ukraine No. 2404-17 “On State-
Private Partnerships,” dated July 1, 2010. In the subsequent legislative activities it would be appropriate to use the term "public-
private partnership" which to a fuller extent reflects the range of relations within this social phenomenon, taking into account the
involvement of local self-government bodies and the public 2 World Economic Forum Annual Meeting 2011. - [Electronic resource]. – Available at:
http://www3.weforum.org/docs/AM11/WEF_AM11_ExecutiveSummary.pdf 3 PPP in Infrastructure Resource Center. - [Electronic resource]. – Available at: http://ppp.worldbank.org/public-private-
partnership/legislation-regulation/laws/ppp-and-concession-laws#examples 4 Michael E. Pikiel, Lillian Plata A Survey of PPP Legislation Across the United States. - [Electronic resource]. – Available at:
http://www.ncppp.org/resources/State%20PPP%20Legislation%20Survey_2008.pdf 5 Report on the Public Consultation on the Green Paper on Public-Private Partnerships and Community Law on Public Contracts
and Concessions, Commission of the European Communities, Brussels, 2005.
6. Law No 80/2011-ОЗ of the Moscow Oblast "On the Participation of the Moscow Oblast in Public-Private Partnerships," dated
June 8, 2011. 7 Law of Saint Petersburg “On the Participation of Saint Petersburg in Public-Private Partnerships," dated December 20, 2006.
8 Draft federal law "On Public-Private Partnerships.” - [Electronic resource].– Available at:
http://www.economy.gov.ru/minec/about/structure/depregulatinginfluence/doc20120622_015 9 Program of Public-Private Partnership Development in the Republic of Kazakhstan for 2011 – 2015 - [Electronic resource].–
Available at: http://www.minplan.kz/economyabout/8011/38376/ 10
Shendi, Riham “Towards Better Infrastructure: conditions, constraints, and opportunities in financing public-private
partnerships”, PPIAF, 2011. 11
Vickram Cuttaree, Cledan Mandri-Perrott “Public-Private Partnerships in Europe and Central Asia”, The World Bank, 2011.
3.
3
Germany, Thailand, and so on); PPP Codes12
(for local self-government bodies in the
Philippines), and PPP project implementation manuals13,14,15,16,17,18
.
The post-crisis recovery and the efforts to ensure the competitive socio-
economic development of Ukraine call for accelerated modernization of the national
economic infrastructure. In the current situation characterized by a shortage of
needed state financing to implement new progressive mechanisms of cooperation
among the government, local authorities, and businesses, private investments in the
traditionally public economic areas are an imperative of time for Ukraine. Public-
private partnerships are regarded as a way to resolve the said problems.
The adoption of the Law of Ukraine “On State-Private Partnerships”
(hereinafter referred to as the Law) and numerous bylaws is proof of the intention to
implement PPP in Ukraine on a large scale.
As of the moment of adoption of the Law in 2010, Ukraine had a legislative
basis for contractual relations between the public and the private sector in the areas
of concessions, lease, joint venture operations, and so on, but there was no uniform
approach to the PPP principles-based interaction between the public and private
sectors.
At the same time, Ukraine had some experience attracting business to the
development of national economic sectors. According to the World Bank, in the
period of 1990–2011, Ukraine implemented 40 infrastructure projects involving the
private sector, and investments in those projects totaled USD 12.1 billion, 90.0
percent of which was accounted by the telecommunications sector19
. In other
countries with personal income below average, investments in infrastructure projects
involving the private sector in 1990–2011 equaled USD 588.5 billion. Taking into
account the fact that the aforementioned category of the countries includes primarily
African countries, the least developed countries of Southeast Asia and the CIS, the
shown level of involvement of the private sector in infrastructure projects in Ukraine
should be recognized as unsatisfactory.
For comparison, it is especially worth mentioning among the countries with
personal income above average such countries as Brazil (where 27.1 percent of
investments in infrastructure projects come from the private sector), the Russian
Federation (10.0 percent), China (9.7 percent) and Turkey (6.4 percent)20
.
11
Vickram Cuttaree, Cledan Mandri-Perrott “Public-Private Partnerships in Europe and Central Asia”, The World
Bank, 2011. 12
Proposed PPP Code for Local Governments, Philippines, 2012. 13
Guidebook on Promoting Good Governance in Public-Private Partnerships. – United Nations Economic Commission
for Europe, New York and Geneva, 2008. 14
The Guide to Guidance “How to Prepare, Procure and Deliver PPP Projects”, European PPP Expertise Centre EPEC,
2011. 15
Public-Private Partnership Handbook. – Asian Development Bank, Manila, 2008. 16
Guidelines for Successful Public – Private Partnerships, European Commission, Brussels, February 2003. 17
Public Private Partnership Handbook, Ministry of Finance of Singapore, October 2004. 18
Formulation, Appraisal and Approval of Public Private Partnership Projects, The Secretariat for the Committee on
Infrastructure, Planning Commission, Government of India, New Delhi. 19
Private Participation in Infrastructure Database. - [Electronic resource]. – Available at:
http://ppi.worldbank.org/explore/ppi_exploreCountry.aspx?countryID=97 20
Private Participation in Infrastructure Database. - [Electronic resource]. – Available at:
http://ppi.worldbank.org/explore/Report.aspx?mode=1.
4.
4
Despite some experience of involving business in infrastructure projects in
Ukraine, there were some unsuccessful attempts of this kind, especially in the
housing and communal sector. The general business difficulties existing in Ukraine
and the lack of preconditions for long-term and mutually beneficial cooperation
between the government and private partners got in the way of developing civilized
forms of interactions between them.
The adoption of the Law of Ukraine “On State-Private Partnership” along with
relevant bylaws also contributed to the activation of PPP projects.
The key reasons behind the slow PPP development in Ukraine are:
1. No consistent PPP state policy and no developed PPP promotion
management system.
The efforts to implement the national PPP policy have been inconsistent,
lacking systematic steps toward forming PPP development conditions, vaguely
outlined functions of the public authorities engaged in promoting PPP, and
ineffective coordination of work of the relevant public authorities. In fulfillment of
the strategic tasks set in the Economic Reforms Program for 2010–2014, the nation-
wide and local documents concerning the socio-economic development of the
country highlight the importance of PPP, but the provided state management
mechanisms and instruments in the said area are mutually contradictory and need to
be reconciled. Specific forms of cooperation in this area are developed separately by
different state and local authorities without sufficient coordination and observance of
the requirements of the Law.
According to Decree No 634/2011 of the President of Ukraine, dated May 31,
2011, the authorized central executive body responsible for developing proposals
and carrying out measures to form and implement a uniform national PPP policy is
appointed the Ministry of Economic Development and Trade of Ukraine whose
purview includes: 1) preparation and implementation of PPP development programs;
2) support for the PPP implementation at the central and local levels; and 3)
monitoring the PPP performance of state authorities and local self-government
bodies.
The state bodies that are authorized to implement specific PPP projects and
also have a significant influence on the development of the PPP institutional
environment are the Cabinet of Ministers of Ukraine, the Ministry of Regional
Development, Construction, Housing and Communal Services of Ukraine, the
Ministry of Energy and Coal Industry of Ukraine, the Ministry of Infrastructure of
Ukraine, the Ministry of Education and Sciences, Youth and Sports of Ukraine, the
Ministry of Health of Ukraine, the State Agency on Investments and Management of
National Projects of Ukraine, the State Agency of Motor Roads of Ukraine, the State
Property Fund of Ukraine and others. The State Agency on Investments and
Management of National Projects of Ukraine has its own powers as regards PPP. Its
central tasks are working out a national policy for attracting foreign investments, as
well as preparing and implementing “national projects” that can be based on the PPP
principles. It is also worth mentioning in this connection the State Property Fund of
Ukraine, a state authority responsible for privatization and state property
management.
5.
5
The functions and powers of specific public bodies regarding state property
and asset management are based on different legislative and regulatory acts, a factor
that in some cases makes it more difficult to select a public partner when starting and
carrying out PPP projects.
2. A low level of institutional capacity for state-private partnerships in pubic
authorities and the private sector
The institutional capacity of public authorities and the private sector in Ukraine
is characterized by a low level of mutual trust, lack of public trust in public
authorities, non-governmental, and political organizations, underdeveloped ideology
of partnership in society, underestimation of the potential of PPP projects on the part
of specialists working for public and local self-government authorities, low public
awareness of the advantages and risks of PPP mechanisms, a shortage of PPP
specialists on the staffs of public authorities and local self-government bodies, and
insufficient financing of the real sector of economy.
3. The unattractive investment climate and difficult conditions of business
under PPP projects
The relations between the government and business in Ukraine are burdened
with numerous problems in such areas of public governance as licensing and permit
obtaining, land ownership, protection of investors’ property rights, and settlement of
commercial disputes. The low transparency in budget relations complicates the
attraction of domestic and foreign investments to the infrastructure of national
economy and public services on the basis of PPP principles.
4. The contradictory and inconsistent legal regulation of the state-private
partnership relations
In the situation of the existing ramified legislation on concessions in various
areas, property lease, joint venture operations and investment activities, which to a
certain extent can be classified as PPP forms, a framework law has been adopted in
Ukraine. This document, known as the Law of Ukraine “On State-Private
Partnerships,” is intended to summarize and systematize the area of state-private
partnerships.
According to this Law, a state-private partnership is the cooperation between
the government of Ukraine, the Autonomous Republic of Crimea, territorial
communities represented by appropriate central and local self-government authorities
(public partners) and legal entities, except state and communal enterprises, or
individual (private) entrepreneurs (private partners) carried out on a contractual basis
under the procedure established by this Law and other legislative acts. The Law
provides a long and rich list of PPP application areas, including in particular the area
of mineral production, which is rarely regarded as a traditional PPP application area.
The Law does not provide clear-cut criteria prioritizing such areas for PPPs, unlike
the international experience according to which PPPs cover the market segments
connected with infrastructure creation, reconstruction, and modernization, or delivery
of public services.
The Law has introduced the PPP principles and approaches, stressed the
importance of a feasibility study of PPP projects and competition-based selection of
private partners, and envisaged special state support for PPP projects.
6.
6
The broad definition of the term “state-private partnership” and the variety of
contractual relations within the PPP framework provided by the Law make it
difficult to work out a common approach to the development of organizational and
methodological support to promote PPPs in Ukraine. The issue of correlation of the
Law with the special laws concerning PPPs remains is yet to be properly settled, as
well. The Law permits the state partner to use its discretion as regards applying this
Law to a specific project. According to the Law, any projects that formally bear PPP
traits may be implemented without applying the principles, approaches, and
procedures provided by this Law, if there is a decision of the state partner to that
effect. In such cases, the Law “On Concessions” is directly applied, which does not
regulate the application of PPP principles outside its area of regulation in a
concession, lease, joint venture operations, etc. The Law has other shortcomings21
. In
particular, it does not clearly outline the circle of persons that have the right to act as
public partners in projects of a national level, does not provide for the application of
institutional partnership, does not contain a provision allowing two and more public
authorities (or municipalities) to act simultaneously as one state partner, and limits
the participation of state and communal companies in PPP projects.
In execution of the Law, an array of bylaws have been worked out to regulate
the methodological, organizing and management aspects of PPPs, but their
effectiveness remains low due to the shortcomings of the Law and some of the said
acts.
5. No effective mechanisms of state support for state-private partnerships
International experience proves that domestic legislation does not give a
decisive impulse to intensive development of PPP projects. The state support
mechanism is a common instrument of drawing private investments to PPP-based
infrastructure projects in the world. The main problems plaguing state support for
PPPs are the single year budgeting and annual changes in the financing directions
and priorities of budget programs, which means there is no guarantee that the budget-
financed programs will continue throughout the entire PPP project term; no clearly
established methodology of state budget support for PPP projects; the principles and
approaches applied in this area are different from international ones; and the limited
possibility of obtaining state guarantees for PPP projects at the local level (a paid
basis, required counter-guarantees, impossibility of using state budget money to
repay a loan).
6. Complicated and inconsistent tariff regulation and economically ungrounded
tariffs
The tariff formation mechanism plays an important role in ensuring successful
PPP projects, because it directly supports the possibility of repayment of private
investments. However, some areas of the national economy are still not based on free
market principles and the tariff does not work as an economic regulator. Communal
utility tariffs in most regions of Ukraine fail to cover the cost of the provided
services and almost every tariff lacks an investment component, which does not
21
Diagnostic Overview of the Public-Private Partnership Legislation. - Public-Private Partnership Development
Program (PPPDP), USAID, October 20, 2011.
7.
7
encourage enterprises to operate efficiently and save energy. The inability of the
private partner in an PPP project to influence the tariffs substantially complicates the
repayment of investments. The outlined problems along with the absence of an
effective mechanism of reimbursing for the difference in tariffs22
do not make it
possible for companies to plan and carry out measures to modernize equipment and
networks.
The foregoing proves that the PPP implementation process has generally been
launched in Ukraine, and basic principles of effective cooperation between the
public and private sectors created, but the specifics of economic and political cycles
resulted in the PPP regulation lacking in proper coordination in general and in the
part related to anti-crisis regulation of economic processes in particular.
In view of the lack of a developed state PPP ideology in Ukraine and a lack of
progress in the area of PPP investment projects implementation at the national and
local levels, it appears necessary to work out a public-private partnership
development concept for Ukraine for 2012-2017 (hereinafter referred to as the
Concept).
The Concept forms the PPP development methodology on the basis of the
relevant priority goals of social and economic progress of Ukraine determined by the
Economic Reforms Program for 2010-2014 "Prosperous Society, Competitive
Economy, Efficient State", National Plan of Action for 2012 regarding the
implementation of the Economic Reforms Program for 2010-2014, Annual Address
of the President of Ukraine to the Parliament of Ukraine “On the Internal and
External Situation for Ukraine in 2012,” and other program documents.
The Concept has been developed on the basis of a study of international PPP
experience of developed countries, post-socialist countries, and transition economies,
taking into account the results obtained within the framework of the Public-Private
Partnership Development Program (PPPDP) for Ukraine, Ukrainian-Dutch
Intergovernmental Project “Ukraine: Studying and Implementing European
Experience of Development and Realization of Public Private Partnership
Mechanisms in Ukraine” (G2G10/UA/8/4),” ESBS Project “Complementary
Technical Assistance to the EU-funded Budget Support to Ukraine's Energy Strategy
Implementation (EuropeAid/128260/C/SER/UA),” and the World Bank’s Project
“Public-Private Partnership Framework Development. Ukraine (2010).”
The obtained results proved the need to form a national PPP model taking into
account the institutional specifics and modern condition of investment and innovation
development of Ukraine.
22
K. Shugart. PPP and Tariff Regulation in the Water Supply, Drainage, and Heating Supply Sectors. - VIII Ukrainian
Municipal Forum, USAID. – Yalta. – 2012.
8.
8
II. GOAL OF THE CONCEPT AND IMPLEMENTATION
TIMEFRAMES
The goal of this Concept is to work out a uniform approach to the formation
of an efficient mechanism of interaction among the government, private business
entities, civil society institutions, and the expert community on the basis of PPPs to
ensure the successful implementation of projects aimed at improving the standard of
life for Ukrainian people and the environment, and developing the infrastructure of
the national economy and public services.
Concept implementation timeframe – 2012–2017
The tasks of the Concept, in view of its goal and existing PPP development
barriers in Ukraine, are:
– working out a uniform approach to the development of the PPP
institutional environment, identifying the priority areas for PPP development and
spread and the specifics of PPP development in various areas;
– improving the PPP legislative and regulatory framework;
– establishing a clear distribution of powers in the state management of PPP;
– determining directions for improving the mechanisms of state support and
guarantees;
– determining directions for improving the interaction between the government
and the private sector as regards initiating and implementing PPP projects;
– increasing the institutional capacity of state executive authorities and local
self-government bodies as regards the use of modern PPP mechanisms; and
– creating conditions fostering the involvement of non-governmental
associations in the efforts to form the necessary institutional environment and
implement PPP projects.
The Concept provides general PPP development basics and principles that
will form a ground for partnership relations between the public and private sectors in
Ukraine. The key provisions of the Concept will be detailed in the Public-Private
Partnership Development Strategy for 2012–2017 and the Strategy Implementation
Plan, the documents that will describe the measures, mechanisms, stages, resources,
and expected results in the institutional, financial, legislative, and information areas.
III. PROBLEM SOLUTION WAYS AND METHODS
The aforementioned problems should be addressed with an orientation to the
best European and world practice, considering the current crisis trends by identifying
priority areas for PPPs in Ukraine, improving the investment climate and business
environment in the context of the efforts to promote state-private partnerships,
establishing an authorized state body responsible for the promotion of state-private
partnerships in Ukraine, strengthening the functions of local self-government bodies
in the PPP area, improving the PPP project financing mechanisms, intensifying the
activities of enabling institutions in the PPP management system, eradicating
contradictions and faults in the PPP legislative and regulatory base, and improving
cooperation between the government (local self-government bodies) and civil society
institutions with regard to PPP projects.
9.
9
1. Identifying priority areas for state-private partnerships in Ukraine
The identification of priority areas in the national economy for implementing
PPP mechanisms should be carried out on the basis of the following criteria, taking
into account international experience:
- socio-economic potential of the given area;
- social significance of the project (national project), the role of this area in
ensuring economic, financial and humanitarian safety of the nation;
- availability of methodological and organizing support for PPPs;
- availability of qualified personnel and experience of attracting the private
sector to investment infrastructure projects; and
- implementation transparency and relative simplicity of pilot projects.
Taking into account the said criteria, as well as the importance of the issues
that need to be addressed and no good reason for privatizing specific public and
communal facilities that require modernization and create the need for resources
from the private sector, the priority areas for PPPs in Ukraine are:
1. production infrastructure and high-tech manufacture (transport and transport
infrastructure, energy sector, energy saving, machine building, and
communications).
2. construction and the housing and communal services sector (development of
the market of affordable housing, technical re-equipment, resource and energy
efficiency improvements in the housing and communal services sector, water supply,
domestic wastes disposal, outdoor improvements).
3. social infrastructure and human development (healthcare, education, culture,
tourism and sport, and environment protection).
In its further development stages, PPPs should be populated to:
- R&D and innovations sector;
- information sector;
- agro-industrial complex; and
- forestry.
The spread of PPP should be conducted taking into account the level of
development of free market relations in every economic sector and the accumulated
project implementation expertise.
2. Improving the investment climate and business environment in the
context of the efforts to promote state-private partnerships in Ukraine
The further development of PPPs in Ukraine depends to a great measure on the
investment climate and business conditions in the country. An improvement in the
business climate and attraction of private investments to PPP projects requires:
- efforts to improve the transparency of the permission system and lower
bureaucratic barriers;
- putting in order the inspection and technical regulation procedures
(standardization and certification);
- simpler property registration procedures;
- favorable conditions for land use within the PPP framework;
- transparency in the relations between the private partner and the public
partner in preparing and implementing PPP projects;
10.
10
- focusing efforts of the government on implementing PPP projects and
ensuring effective feedback in the relations of the government with the private
sector.
3. Establishment of an authorized state body responsible for the development
of state-private partnerships in Ukraine
The leading state policymaker developing the national economic policy and
responsible for PPP promotion in Ukraine, the Ministry of Economic Development
and Trade of Ukraine is obligated to ensure:
- the formation of strategic development directions of PPPs in Ukraine, which
requires a relevant strategy to be worked out along with legislative, regulatory, and
organizing support;
- methodological and consultative project support that envisages keeping a
record of PPP agreements at the central and local levels by regions, territories, and
types of economic activity, approving PPP feasibility studies for projects
implemented by central executive bodies; and PPP project fulfillment monitoring and
control;
- a mechanism of clear coordination of work of central executive bodies with
regard to the PPP projects implemented at the national level. The management
function of the ministry should be reinforced with an administrative mechanism of
the ministry’s interaction with the said executive bodies as regards PPP project
implementation issues, which mechanism is provided in the appropriate regulatory
act of the Cabinet of Ministers of Ukraine that will contain a provision establishing
the degree of functional subordination or mandatory requirement for central
executive bodies to agree their PPP-related decisions with the Ministry of Economic
Development and Trade of Ukraine; and
- transparency of its PPP activities, including by creating a public council
under the Ministry of Economic Development and Trade of Ukraine as an instrument
of coordination of the Ministry’s interaction with local self-government bodies and
representatives of business and the expert community
Taking into account the global experience of running state PPP promotion
centers, the list of the functions assigned to the Ministry of Economic Development
and Trade of Ukraine as the authorized body, and the need to raise the coordinating
role of the ministry in preparing and implementing PPP projects at the level of central
executive bodies, it appears reasonable to increase the staff of the relevant
department of the ministry.
The State Agency for Investments and National Projects of Ukraine should
gradually evolve within the limits of its purview into a full-fledged enabling
institution in the investment field, whose role should be the provision of
methodological and organizing support for national projects.
4. Strengthening the functions of local self-government bodies in the area of
state-private partnerships
The central task of developing PPP mechanisms at the level of local self-
government bodies is to ensure the effective implementation of projects by
developing a uniform algorithm of selecting, subjecting to the expert examination,
11.
11
agreeing, and implementing such projects, engaging specialists with the required
qualifications.
The implementation of PPP projects at the local level should involve the use of
financial resources from oblast and municipal budgets that are responsible for
constructing, operating, and maintaining large infrastructure projects.
The legislative regulation of the relations between local self-government
bodies and the authorized state body responsible for PPP development in Ukraine
will provide the right granted to the said bodies to be exercised within their
respective purviews and applicable law to make independent decisions on the
expediency and implementation of PPP projects, and to obtain consultative and
methodological assistance from the authorized state body, as well as the obligation to
agree their actions with appropriate central executive bodies if PPP projects involve
state support.
5. Intensification of the activities of enabling institutions in the state-private
partnership management system of Ukraine To improve the PPP management system, the government should establish
relations with international enabling institutions and promote more intensively the
formation of national enabling institutions whose activities should be oriented to the
priorities of innovation-based modernization of the national economy, using the
latest risk management approaches. The establishment of enabling institutions should
be carried out observing the financial sustainability, resource diversification,
investment risks minimization, administrative pressure and corruption risks
elimination requirements.
The role of enabling financial institutions (universal and targeted development
banks, export-import banks, state venture and leasing companies, innovation funds,
regional development funds and agencies, etc.) will be financial, advisory and
information support for PPP projects.
Non-financial enabling institutions (techno parks, industrial parks, business
incubators; technical implementation and industrial manufacture, as well as tourism
and recreation, special economic zones; research centers, centers of technology
transfer, sub-contraction, design development, energy saving, and others) will
advance the development of business infrastructure within the PPP framework,
improvement in the qualifications of state officials, and integration of PPP
problematics into the academic programs for specialists prepared for state authorities
and local self-government bodies, and organize PPP training sessions, seminars, and
roundtables.
6. Improving the financing mechanisms of state-private partnership projects
in Ukraine
The efforts to improve the PPP project financing mechanisms should focus on
improving the effectiveness of public budget financing, intensified involvement of
enabling institutions in PPP projects, extending the range of instruments of long-term
project financing, and so on.
12.
12
The public budget financing of PPP projects and the participation of the
government in PPP projects should be based on the principles of medium- and long-
term program and targeted planning, and program and project financing.
The state financial support for PPPs should envisage:
- outright financial support through subsidies; reimbursement for the cost of
construction, participation in tender competitions, capital repairs, and investment in
authorized capital;
- using taxation leverage to encourage investments, introducing mechanisms of
state crediting and insuring imports of investment equipment;
- reimbursing from the state budget for payments for the services provided to
consumers;
- providing state guarantees for loans, reimbursing for losses from exchange
rate fluctuations, assuming obligations to acquire products.
- using contemporary market financing instruments (securities).
7. Eradicating the contradictions and faults in the legislative and regulatory
base of public and private partnerships in Ukraine
When addressing the legislative regulation improvement issue, it is necessary
to include in this process as a specific line of activity the efforts to collate and
systematize the PPP legislation and harmonize the domestic legislation with the rules
provided by the legislation of the European Union.
In view of the available contradictions in the legislative and regulatory base
and the actual impossibility of fast implementation and harmonization of the
provisions of the Law of Ukraine “On State-Private Partnerships” with other special
laws that regulate the business relations between the public and the private sector, it
is necessary to develop PPP mechanisms on the basis of this Law, which should
serve as a framework law, which requires:
- improving the Law to ensure a clearer outlining of the powers of the
authorities that become involved in PPP projects at all stages at both central and
local levels; extending the timeframe for PPP relations; more accurate formulation of
PPP characteristics as regards delegating the functions and powers of the government
related to infrastructure development and provision of public services to the private
sector; improving the list of PPP agreement application areas; introducing the
possibility of institutional partnership, including the creation of a public-private
project joint venture (intended to implement a specific project); and granting the
right to state (communal) enterprises to act as a state partner;
- harmonizing the provisions of the Law with the provisions of the special laws
that regulate the contractual relations between the state and the private sector in the
field of concessions, joint venture operations, lease, product distribution, and so on;
- introducing instruments of methodological support for PPP projects for
specific PPP forms; such instruments should be of an advisory nature and developed
by the authorized body;
- legal regulation of issues of title to assets created under an PPP project;
- improving the mechanism of settling disputes arising out of any PPP
agreement entered with a non-resident or an enterprise with foreign investments,
13.
13
which mechanism should include the possibility of the dispute to be referred to an
international court of commercial arbitration;
- improving the budget and tax legislation (including in the part regarding
financial support for the rights and obligations of state and municipal entities acting
as parties to PPP agreements) to improve the investment climate and form an
effective mechanism of state support for PPPs; and
- further legislative efforts to introduce stimulating tariff regulation.
8. Improving cooperation between state authorities (local self-government
bodies) with civil society institutions with regard to PPP projects in Ukraine
The development of PPP relations requires more active involvement of the
public in the preparation and implementation of PPP projects at the national and local
levels. In this context, it is necessary to promote the development of the mechanisms
of state interaction with civil society institutions in the direction of inviting the public
to take part on a permanent basis in discussions on PPP projects and their expert
examination and implementation.
IV. EXPECTED RESULTS
The adoption and implementation of this Concept is expected to produce the
following results:
a worked-out uniform approach of all stakeholders to developing the PPP
legislative and regulatory framework and the institutional environment;
an improved organizing mechanism of public management of PPP development;
prepared and implemented PPP projects;
a more effective mechanism of state support for PPPs and a more efficient use of
public resources; and
an improved level of training and upgraded qualifications of specialists of state
executive and local self-government authorities, business entities, and representatives
of civil society in issues related to the application of PPP mechanisms.
The expected results of the Concept implementation are presented in the draft
Public-Private Partnership Development Strategy for 2012–2017 as quantitative
target indicators.
V. RESOURCE SUPPORT FOR THE CONCEPT
PPP development is planned to be financed until 2017 for the account of the
state and local budgets within the budget allocations for each specific year and by
funds from business entities and international organizations.
The legislative, institutional, informational, scientific, HR, and other support
for the implementation of this Concept is planned to be provided within the
framework of the day-to-day work of the Ministry of Economic Development and
Trade of Ukraine, with the involvement of representatives of the expert and research
communities.
19
Annex C
Strategy on Public Private Partnership Development in Ukraine for 2012-2017 and Strategy Implementation Plan
Public Private Partnership Development Program 44 Khreschatyk Str, 3
rd Floor,
Kyiv, Ukraine +380442794481
FHI Development 360 1825 Connecticut Avenue, NW
Washington, DC 20009 United States
Strategy on Public-Private Partnership Development in Ukraine for 2012-2017 and Strategy Implementation Plan
November 20, 2012
This research was made possible with the generous support of the American people through the United States Agency for International Development (USAID) The Author’s views expressed in this publication do not necessarily reflect the views of the USAID or the United States Government
1
Contents
Preface 3
І. Implementation Mechanism of the Public-private Partnership
Development Concept for 2012-2017 7
1.1 Institutional Part 7
1.2 Financial Part 11
1.3 Legal Part 12
1.4 Informational Part 15
ІІ. Implementation Stages and Resources 16
ІІІ. Implementation Results 22
IV. Implementation Monitoring and Evaluation 236
V. Strategy Implementation Plan 31
2
Preface
Public-private partnerships (PPP) are one of the key mechanisms of development
of the national economy’s infrastructure, improvement in the standard of life of the
nation on the basis of better quality public services and an enhanced business climate
and better investment environment, recognized as priority tasks of the socio-economic
development of Ukraine in the Program of Economic Reforms for 2010–2014 titled
“Wealthy Society, Competitive Economy, Effective Government” and the Annual
Address of the President of Ukraine to the Parliament of Ukraine titled “On the Internal
and External Situation for Ukraine in 2012.” The PPP mechanism has gained ground in
most world countries of the world where it is regarded as a key instrument of economic
progress. Public-private partnerships allow the public and private sectors to join their
financial, administrative, and technological resources to achieve common benefits by
combining the efforts to resolve socially significant tasks of the nation’s socio-
economic development with the interests of business and the community.
Mission: to create a modern mechanism of effective PPP-based interaction
between the public and the private sector in implementing innovation investment
projects aimed at infrastructure development and delivery of public services to achieve
the strategic goal of sustainable development of Ukraine.
The priority areas for fostering PPPs in Ukraine are manufacturing infrastructure
and high-tech production (transport and transport infrastructure, energy sector, machine
building, and telecommunications); construction and the housing and communal sector
(HCS) (formation of the market of affordable housing; technical upgrade and the efforts
to improve the resource and energy efficiency of the HCS; municipal waste disposal,
and municipal outdoor improvements); social infrastructure and human development
(healthcare, education, culture, tourism, and sports).
In future, PPP mechanisms should be extended to the technical research and
innovation area; information area; agriculture and village infrastructure; environment
protection; and forestry.
Implementation Results of the Strategy (Values):
improved PPP legislative and regulatory framework;
improved organizational mechanism of PPP development public management;
PPP projects prepared and launched;
improved PPP public support mechanism;
increased institutional capacity of the public and private sectors in terms of better
application of modern PPP mechanisms; and
created conditions for involving enabling institutions and non-governmental
associations in the efforts to form the necessary institutional environment and
implementing PPP projects.
International experience knows three basic PPP development phases for a
country: the preparation, implementation, and improvement. The preparation phase
3
involves studying international experience and the current legislative and regulatory
framework and determining the configuration of the PPP national policy. The
implementation stage is about forming a PPP legislative and regulatory framework,
developing a methodological basis, creating a special authorized body, expanding the
PPP area of application, and so on. The improvement stage is characterized by
intensified PPP activities and increased complexity of PPP projects, and envisages
further efforts to improve the legislative-regulatory, methodological, and organizational
support for PPP.
The PPP development process in Ukraine is now in the implementation stage
characterized by the presence of a PPP legislative and regulatory framework and
methodology and the lack of a systemic approach to public management of the
development of PPPs and pilot PPP projects.
Despite the lack of PPP ideology and a uniform PPP project implementation
mechanism, there have been some isolated attempts in Ukraine to involve business in
the efforts to develop national economic sectors. According to the World Bank, 40
infrastructure projects involving the private sector have been implemented in Ukraine in
the period of 1990–2011, and investments in those projects totaled USD 12.1 billion,
with nearly 90.0 percent of the amount in the telecommunications sector1. Of the said 40
projects, only 18 actually had PPP project traits and were implemented in the form of
concessions, greenfield projects, management and lease agreements.
The key problems holding back the development of PPP in Ukraine are:
- low investment attractiveness of the national economy and a difficult business
environment;
- contradictory and inconsistent legislative and regulatory framework for PPPs;
- no effective PPP public support mechanism;
- complicated and inconsistent tariff regulation;
- poor qualification level of public sector workers and low awareness of the private
sector as regards PPP specifics;
- the lack of a consistent PPP development national policy and governance;
- poorly developed PPP risks management system, and so on.
The indicated problems are possible to overcome if there was a comprehensive
national policy and a systemic approach to PPP development in Ukraine. The Public-
Private Partnership Development Strategy for Ukraine for 2012–2017 (hereinafter
referred to as the Strategy) should become an important component of such a policy. It
is a political and legal document, according to which the central executive body
authorized to carry out the public PPP policy in Ukraine determines its medium-term
(long-term) development prospects and directions in accordance with the provisions of
the Public-Private Partnership Development Concept for Ukraine for 2012-2017.
1 Private Participation in Infrastructure Database. - [Electronic resources]. – available at:
http://ppi.worldbank.org/explore/ppi_exploreCountry.aspx?countryID=97
4
Strategy implementation indicators
These indicators are required to be included in the mandatory reports of economic
entities operating in the public and private economic sectors, prepared to the standards
of international and national statistic and financial reporting:
- number of PPP projects per economic sector (units);
- amount in financing for PPP projects (mln UAH);
- gross investment in fixed capital for the account of PPP projects (mln UAH, % of
the total investment);
- amount in loans for PPP projects (mln UAH);
- Proceeds generated by PPP projects to budgets of all levels in taxes, duties, and
fees (mln UAH);
- value of assets created under PPP projects (mln UAH);
- number of jobs created under PPP projects (units); and
- the level of public satisfaction with the prices for and quality of public services
(conventional units).
Financial indicators of Strategy implementation
No Indicator
1 Fulfillment of the spending part of budgets of all levels to finance PPP-based
programs (as compared with the approved and adjusted year-end data), %
2 Actual share of budget outlays intended to support PPP projects, as compared
with the approved budget, %
3 Actual fulfillment of the PPP projects financing plan by private entities, %
4 Amount in debts to PPP projects incurred by private partners, thous. UAH
5 Amount in debts to PPP projects incurred by public partners, thous. UAH
6 Changes in amounts in PPP project financing by financing sources, thous.
UAH
7 Volume of operations financed from public and private sources, mln UAH
8 Cost estimate of the financial risks associated with PPP projects, according to
feasibility studies, thous. UAH
9 Estimation of available funds to assume the obligations to support financial
commitments of PPP participants, %
10 Payroll under PPP projects, mln UAH
11 Average salary under PPP projects, UAH
The legal foundation of the Strategy is the Constitution of Ukraine, Commercial
Code of Ukraine, Civil Code of Ukraine, Law of Ukraine “On Local Self-Governance,”
Law of Ukraine “On Public-Private Partnership,” and other legislation regulating
economic activities of and interrelations among state executive authorities, local self-
government bodies, business entities, and civil society institutions.
5
І. Implementation Mechanism of the Public-Private Partnership
Development Concept for 2012-2017
1.1 Institutional Part.
Problems
The quality of the PPP institutional environment in Ukraine is characterized by a
low level of personal-to-person trust and trust of the citizens in public authorities, non-
governmental and political organizations, no partnership ideology in the society,
underestimation of the potential of PPP projects on the part of specialists working for
state authorities and local self-government bodies, no specialized PPP enabling
institutions, a low level of public awareness of the advantages and risks of PPP
mechanisms, a lack of PPP specialists working with state authorities, insufficient
crediting in the real sector of economy, and so on.
The result of the said problems is the untapped potential of PPPs as a mechanism
ensuring the infrastructure development of the national economy and improvement in
provided public services. The national PPP policy is characterized by inconsistency, no
systematic steps towards creating PPP favoring conditions, unclearly described
functions of the public authorities involved in the PPP promoting efforts, ineffective
coordination of the activities of the relevant state authorities, and insufficient attention
to PPP development problems at the local level.
International experience proves that the body responsible for PPP development in
the country may be a governmental institution, public enterprise, state agency, and so
on2. The activities of such bodies may be financed both from the state budget and for
the account of contributions made by the private sector. According to the European
Investment Bank, the staff of such an authorized body responsible for PPPs in the EU
countries ranges from one person to 45 persons, and averages 8–10 persons3. The
functions of such authorized bodies vary substantially from country to country, ranging
from forming and ensuring the implementation of the PPP national policy to passing the
final approval of contracts, directly supervising and controlling the project
implementation, and providing PPP training sessions and courses4. The effectiveness of
the management of PPP processes is secured by reliable and transparent budgeting
mechanisms and fiscal control over the flow of obligations and debts at various project
implementation stages and those reflected in the results presented in financial
statements.
The authorized state body responsible for PPP development in Ukraine is the
Ministry of Economic Development and Trade of Ukraine whose terms of reference
include working out proposals and carrying out measures to form and implement a
uniform national PPP policy, preparing and implementing PPP development programs,
changing current programs; supporting the PPP implementation at the central and local
levels; performance monitoring of state executive authorities and local self-government
authorities as regards PPPs.
2 Dedicated Public-Private Partnership Units. A Survey of Institutional and Governance Structures, OECD, 2010.
3 Stein В. РРР Units and Related Institutional Frameworks. Lessons Learned. - European Investment Bank, Kyiv, 2012.
4 In the same place.
6
The public bodies that are not only authorized to undertake specific PPP projects but
also have a significant influence on the development of the PPP institutional
environment are the Cabinet of Ministers of Ukraine, the Ministry of Regional
Development, Construction, Housing and Communal Services of Ukraine, the Ministry
of Energy and Coal Industry of Ukraine, the Ministry of Infrastructure of Ukraine, the
Ministry of Education and Sciences, Youth and Sports of Ukraine, the Ministry of
Health of Ukraine, the State Agency on Investments and Management of National
Projects of Ukraine, the State Agency of Motor Roads of Ukraine, the State Property
Fund of Ukraine, just to name some. The main task set for the State Agency on
Investments and Management of National Projects of Ukraine is working out a national
policy of attracting foreign investments, as well as preparing and implementing national
projects that can be based on PPP principles. The State Property Fund of Ukraine is the
state authority responsible for privatization and state property management.
The activities of the said authorities in the PPP field are not systemic, not
sufficiently coordinated by the authorized state body, and the functions and powers of
specific state bodies as regards public property management are based on different
legislative and regulatory acts that need to be reconciled and as such, in certain cases,
do not make it possible to identify a state partner for a PPP and an appropriate method
of coordinating the interrelations between the parties.
The efforts of local self-government bodies to engage the private sector in PPP
projects remain at an extremely low level, whereas the bulk of the potential of
infrastructure development and improvements in the quality of public services is at the
local level. The poorly developed PPP processes at the local level in Ukraine are
connected with systemic shortcomings of applicable legislation, little knowledge of PPP
mechanisms in local authorities and businesses, limited investment resources in
business support programs, a lack of qualified staff in local self-government authorities
to prepare and perform PPP projects, and so on. The level of preparedness of the private
sector for active participation in PPP-based infrastructure and public services projects in
Ukraine remains low, a fact supported by the results of a poll completed under USAID
sponsorship5. According to this poll, only 3.0 percent of the polled business
representatives have taken part in projects bearing PPP traits and only 39.0 percent of
the polled business representatives are actually interested in PPP projects, an indicator
that is significantly below the same indicator showed by local authorities (62.0 percent).
Goal and Tasks:
To improve the quality of the PPP public management system, creating an
effective organizational structure of interaction among executive authorities, business,
civil society institutions, and representatives of the expert community by way of:
- extending the powers of the authorized state body in charge of PPP development
management;
5 O. Besiedina, D. Nizalov, R. Semko “Basic Opinion Poll Regarding Public-Private Partnership Awareness” – Public-
Private Partnership Development Program, USAID. – Kyiv, 2012.
7
- effective and transparent coordination of the authorities responsible for
developing the national policy in this area and authorized to control the
preparation and implementation of PPP projects;
- forming institutional principles for the financial sector of the economy to provide
support for PPP projects; and
- creating conditions to attract private investors to PPP-based infrastructure
development and public services projects.
Steps to be taken 1) Increasing the administrative role of the Ministry of Economic Development
and Trade (MEDT) as an authorized state body in the part concerning its interaction
with line ministries and other state executive bodies that are authorized to take part in
PPP projects as partners, which implies:
- concretizing the functions and powers of the MEDT in the part related to its
administrative role in the PPP area; incorporating the administrative components of the
Strategy in the functions and powers of the management and units of the MEDT;
- singling out within the MEDT’s current special PPP unit the functions and structural
units engaged in the formation of the public PPP policy, expert examinations of PPP
projects, and provision of PPP projects with a methodological basis;
- establishing quantitative and qualitative performance criteria for the PPP unit of the
MEDT;
- providing methodological and consulting support for projects that includes keeping
records of PPP agreements at the central and local levels by regions, territories, and
types of economic activity;
- applying the MEDT’s functions related to approving a PPP feasibility study at the
preparation stage exclusively to projects implemented by central executive bodies; and
- monitoring and controlling PPP projects at the central and local levels.
2) Implementing the coordination of administrative functions at the national and
local levels to ensure the steady orientation of PPP projects to the strategic goals of
national economic development by:
- determining the functions and powers of central executive bodies in the part related to
executing and supporting PPP agreements, taking into account the strategic planning
role of the MEDT;
- at the instruction of the Cabinet of Ministers of Ukraine, assigning the functions of the
preparation and feasibility study of PPP projects involving the Cabinet of Ministers of
Ukraine as a partner to the appropriate central executive bodies; and
- creating a public council under the Ministry of Economic Development and Trade of
Ukraine for consultations regarding the MEDT’s interaction with local self-government
bodies and representatives of the business and the expert community.
3) developing institutional principles for the financial sector of the national
economy to support PPP projects, including in particular:
- identifying institutional entities of the financial sector for long-term financing of PPP
projects and changing the functional structure of their activities to minimize the
involved risks;
8
- developing a system of re-financing credit organizations by public PPP project
promotion institutions within the framework of applicable law; and
- developing measures to stimulate the engagement of joint associations of enabling
institutions operating in various activity areas on association conditions (consortiums,
provisional joint projects, associations).
4) creating favorable conditions to attract private investors to PPP-based
infrastructure development and public services projects, specifically:
- promoting the forms of state non-financial support for PPP projects;
- measures to be carried out by central and local authorities to spread information about
promising regional development investment projects involving the private sector;
- providing clear rules, procedures, an exhaustive list of required documents, and permit
issue deadlines, as well as supporting private partners in obtaining all permits required
for PPP projects;
- allotting land plots for PPP projects to the public partner in PPP projects; and - implementing pilot projects to create a foundation for increasing public trust in private
capital and outline development directions for the PPP legislative and regulatory
framework in Ukraine.
9
1.2 Financial Part
Problems
The financial capacity of PPP projects depends on the investment potential of the
private sector, fiscal scope of the state, lending capacity of financial institutions, and
effective interaction between the project parties.
A widespread factor in the world to draw private investments to PPP-based
infrastructure development and public services delivery projects is the mechanism of
public financial support. The national policy as regards financial support for PPPs
should be aimed at supporting innovative technologies of infrastructure development
and delivery of public services. In the conditions of increased pressure on budgets of all
levels, the public financing of PPP projects should be supported by private investments.
The state financial support for PPPs should consist of the following components: direct
financial support through subsidies; reimbursement for the expenses for construction,
participation in tenders, and maintenance of PPP projects; investments in the authorized
capital; application of taxation leverage to encourage investments, introduction of
mechanisms of state crediting for and insurance of investment equipment imports;
reimbursements from the state budget for payments for services provided to consumers;
state guarantees for loans, reimbursement for currency exchange rate fluctuation losses,
commodity acquisition commitments, and so on.
The main problems plaguing public PPP support in Ukraine are the single year
budgeting and annual readjustment of the financial directions and priorities of budget
programs, which means there is no guarantee that the budget-financed programs will
continue throughout the entire PPP project implementation term; no clearly established
methodology of state budget support for PPP projects; the principles and approaches
applied in this area are different from international ones; the limited possibility of
obtaining state guarantees for PPP projects at the local level (a paid basis, counter-
guarantee requirements , impossibility of using state budget money to repay loans).
In addition, when executing long-term PPP agreements, the parties may encounter
the problem of the public partner's default on its financial obligations due to the
imperfect legislation, especially in the part related to budget process regulation.
Enforcing the financial commitments of a public partner through a court is a
problematic issue as such financing is made primarily within the limits of the budget
allocations for the purposes of satisfying payment enforcing decisions of courts.
Goal and Tasks
To improve the PPP financial support mechanisms through:
- improving the effectiveness of budget spending and avoiding the fiscal risks
while financing PPP projects;
- intensifying the process of involving enabling institutions in financing PPP
projects; and
- implementing modern long-term project financing instruments for PPP.
Steps to be taken
10
1) Improving the effectiveness of budget spending and avoiding fiscal risks in
financing PPP projects by way of:
- planning budget allocations for the entire implementation term of PPP
investment projects, taking into account the dynamics of prices and privileged taxation
sources in accordance with the approved budget programs; and
- annual approval of state financial support amounts for PPP projects, taking into
account their implementation results on the basis of an introduced register of PPP
investment projects6 which will specify the public support amounts and forms.
2) Intensifying the process of involving enabling institutions in financing PPP
projects.
The engagement of enabling financial institutions in this process should be
carried out observing the requirements for financial stability, resource diversification,
and investment risk mitigation, as well as administrative influence and corruption risks.
To provide support for PPP projects and optimize budget spending for investment
purposes, it makes sense to:
- create a public bank for reconstruction and development and authorize it to
provide financial support within the limits of its authorized capital for PPP projects and
assist project participants in the financing support procedure;
- encourage public banks to provide consultancy as regards evaluation of the PPP
projects fulfillment and crediting effectiveness; and
- create specialized leasing centers based on the public-private partnership
principles to stimulate investments in the real sector on a leasing basis, providing a
simplified procedure for the privileged importation of high-tech equipment and
improvements in the legislation that regulates leasing operations.
3) The implementation of modern instruments of long-term PPP project financing
implies:
- improving the mechanism of state and local guarantees for PPP projects by
limiting the application of the paid-basis terms and counter-guarantee requirements;
setting specific limits of the local debt and debt guaranteed by the Autonomous
Republic of Crimea and local self-government bodies by adjusting the standards
introduced by the budget legislation;
- developing the market of local loans by diversifying repayment sources which
are currently dominated by proceeds from communal property alienations and non-
farming land sales; introducing a list of activities which are allowed to be financed by
foreign currency and hryvnia loans;
- forming mechanisms of assuming by a public partner (a local self-government
body) long-term budget obligations (which exceed the current budget) and their
fulfillment under PPP agreements; providing a fair reimbursement to a private partner
for the account of the public partner (a local self-government body) for any documented
losses incurred by the private partner as a result of early termination of a PPP
agreement;
6 The register of PPP investment projects in Ukraine may be a part of the State Register of Investment Projects and Project
(Investment) Proposals whose keeping procedure is approved by Resolution No 650 of the Cabinet of Ministers of Ukraine,
dated July 18, 2012.
11
- cash flow securitization within PPP projects (financing the assets of a project
company through securities issued by this company), which requires appropriate
amendments to be made to the Law of Ukraine “On Securities and Stock Market” and
singling out the functions of using financial instruments in the PPP area to improve the
regulation of and supervision over the financial sector in Ukraine.
12
1.3 Legal Part.
Problems
In an effort to further the legislative regulation that have generally standardized
the relations between the government and business in Ukraine, an attempt was made to
improve the legislative and regulatory framework regulating the state-business relations,
legally establishing the PPP institute by adopting the Law of Ukraine “On Public-
Private Partnership.” This law outlines the public-private partnership principles and
basic provisions based in international practice. However, these efforts proved to be of
little effect from the viewpoint of PPP project implementation support.
As of the moment of adoption of this law in 2010, Ukraine had a legislative
framework regulating contractual relations between the public and the private sector in
the areas of concession, lease, joint venture operations, and so on, but it had no holistic
vision of the interaction between the public and the private sector on the basis of the
PPP principles. The adopted law was intended to create framework conditions for the
establishment of the PPP institute in Ukraine.
Pursuant to Article 5, the PPP law is the basic legislative act applicable to all PPP
forms, including concession agreements, joint venture agreements, and other
agreements (in particular, lease and property management ones). At the same time, each
of the said types of agreements is subject to a separate law.
The PPP law as a framework law contains many referenced provisions. When
selecting a specific PPP form for their project, stakeholders need to study numerous
mutually contradicting legislative acts. The great number of law regulating the PPP
relations and the contradictions among them make the implementation of PPP projects
in Ukraine a difficult task. In addition, at the local self-government level, investment
projects bearing PPP traits are subject to numerous local acts that often contradict the
provisions of the PPP law.
The major contradictions and shortcomings of the legislative regulation of PPPs
in Ukraine include:
- the discretion powers of the public partner as regards application of the PPP law
provisions, which allow the public partner to arbitrarily decide whether to apply critical
provisions of the PPP law to specific projects or not;
- the lack of reconciliation between the PPP law provisions and the provisions of
the special laws regulating concessions, lease, joint venture operations, and other PPP
forms recognized by the effective PPP law; no effective mechanism of fair
reimbursement for losses incurred by the partners as a result of early termination of PPP
agreements;
- no effective mechanism regulating the public partner’s assumption of long-term
budget obligations and their fulfillment;
- no effective mechanism of reimbursing the private partner for the difference
between the approved and economically reasonable tariffs, considering that the tariff
regulator is obligated to cover this difference;
- no effective mechanism of replacing the private partner if it defaults on its
assumed obligations;
13
- the need for local self-government bodies to obtain approval for a PPP project
from the authorized state body responsible for PPP development, which contradicts the
principles of local self-governance;
- the impossibility for the parties to set prices for public services and correct them
on the basis of PPP agreements; and
- imperfect regulation of public support for PPP projects, including for the
medium and long term.
Goal and tasks
The creation of an effective system of legislative regulation of PPP relations
implies a series of tasks to be resolved. These are:
- putting in order the PPP project management legislation at the central and local
levels;
- improvement in the legislative regulation of state financial support for PPP
projects; and
- putting in order the legislative and regulatory framework regulating the creation
and functioning of enabling institutions within the PPP framework.
Steps to be taken
1) Putting in order the PPP legislation at the central and local levels by:
- improving the PPP law by defining more clearly the powers of the authorities
that become involved in PPP projects at all stages at both central and local levels;
extending the timeframe for PPP relations; more accurate formulation of PPP specifics
as regards delegating the functions and powers of the government related to
infrastructure development and public services to the private sector; improving the list
of PPP agreement application areas; introducing the possibility of institutional
partnership, including the creation of a public-private joint venture for a specific
project; and granting the right to public (communal) enterprises to act as parties to PPP
agreements;
- reconciling the provisions of the PPP law with the provisions of the special
laws that regulate the contractual relations between the public and private sectors in the
field of concessions, joint venture operations, lease, and so on by appropriately
amending the Laws of Ukraine “On Concessions,” “On Concessions for the
Construction and Operation of Motor Roads,” “On the Specifics of Leasing Out or
Granting Concessions for Communal Centralized Water and Heating Supply and
Drainage Facilities,” “On the Specifics of Leasing Out or Granting Concessions for
Public Fuel and Energy Facilities,” “On Lease of State and Communal Property,” “On
Financial Leasing,” “On Land Lease,” “On Management of Public Properties,” On
Seaports,” “On Local Self-Governance,” “On Housing and Communal Services,” “On
Heating Supply,” “On Drinking Water and Drinking Water Supply,” “On Wastes,” “On
Natural Monopolies,” “On Public Procurement,” the Civil Code of Ukraine, and others;
- making amendments to bylaws in execution of the Law of Ukraine “On Public-
Private Partnership” to improve the Methodology of Public-Private Partnership
Feasibility Study7, Methodology for Identifying and Assessing the Risks Associated
7 Approved by Order No 255 of the Ministry of Economic Development and Trade of Ukraine, dated February 27, 2012
14
with Public-Private Partnership and Determining the Management Approach to Them8;
abolishing the provision that requires the Ministry of Economic Development and
Trade of Ukraine to approve a PPP feasibility study for projects implemented by local
self-government bodies for the account of local budgets 9; improving the mechanism of
public support for PPP projects10
and the procedure for competitions to select private
partners for PPP purposes11
, and so on;
- improving the legislative and regulatory basis of the sectoral competition
procedures intended to select private partners for PPP projects;
- introducing instruments of methodological support for PPP projects under
agreements of specific types; these instruments should be of an advisory nature,
developed by the authorized body, and include model agreements, and PPP project
selection, preparation, financing, implementation, and monitoring manuals;
- legislatively regulating the issues of title to any assets created under a PPP
project; and
- improving the mechanism of settling disputes arising out of any PPP agreement
entered with a non-resident or an enterprise with foreign investments, which mechanism
should include the possibility of the dispute to be referred to an international court of
arbitration;
2) Improving the legislative regulation of state financial support for PPP projects by:
- improving the fiscal legislation (including in the part regarding financial support
for the rights and obligations of state and municipal entities acting as parties to PPP
agreements) to improve the investment climate and form an effective mechanism of
public support for PPP;
- improving bylaws (including Resolution No 279 of the Cabinet of Ministers of
Ukraine, dated March 17, 2011) to simplify the mechanism of public support for PPP
projects.
3) Putting in order the legislative and regulatory framework regulating the
creation and functioning of enabling institutions within the PPP framework, including
by:
- legislatively forming the structure and operating fundamentals of PPP enabling
financial institutions;
- revising and preparing amendments to the provisions of domestic legislation
which regulate the operation of universal and special development banks, export-import
banks, pubic leasing companies, development foundations and agencies, and so on.
8 Resolution No 232 of the Cabinet of Ministers of Ukraine “On Approving the Methodology for Identifying and Assessing
the Risks Associated with Public-Private Partnership and Determining the Management Approach to Them,” dated
February 16, 2011 9 Public-Private Partnership Feasibility Study Procedure approved by Resolution No 384 of the Cabinet of Ministers of
Ukraine, dated April 11, 2011. 10
Public-Private Partnership State Support Procedure approved by Resolution No 279 of the Cabinet of Ministers of
Ukraine, dated March 17, 2011. 11
Competition Procedure to Select Private Partners for Public-Private Partnerships Regarding Facilities of Public and
Communal Ownership and Facilities Belonging to the Autonomous Republic of Crimea approved by Resolution of the
Cabinet of Ministers of Ukraine No 384, dated April 11, 2011
15
1.4 Informational Part.
Problems
One downside of the process of national policy implementation and formation of
a PPP management system is the low level of professional qualifications of public
officials, which is explained by the absence or inconsistency of steps to ensure the
proper PPP management organization and logistics on the part of central executive
bodies and local self-government authorities.
The ineffective information exchange covering the PPP implementation practice
within the framework of applicable law between central executive and local self-
government bodies adds to the inconsistence of the legislative regulation of PPP
relations. The misbalances in the existing communication models, a lack of systemic
approach to gathering information needed for effective PPP management have a
negative impact on the quality of decisions made at all hierarchical levels of state
governance.
Inconsistency is plaguing the implementation of communication networks that
link the government and the public together by information flows. The underdeveloped
connections and mechanisms among the government, business circles, and non-
governmental organizations, as well as poor usage of technical means and information
technologies, do not allow unleashing to the full extent the potential of the private sector
as a positive partner of the government in terms of PPP implementation and make it
impossible for business representatives to establish partnership relations with the
government, and for government representatives with business and civil society.
Goal and Tasks
To form an information environment to support the interaction among
stakeholders interested in PPP projects employing modern information instruments and
communication technologies by addressing the following tasks:
- forming a modern professional and interpersonal communication culture in public
officials at all governance levels as regards studying PPP experience as a change
management component in the economic reform process;
- implementing the most effective communication connections and overcoming
information barriers throughout the entire cycle of the creation and
implementation of the PPP institute in Ukraine; and
- introducing information models as part of PPP management mechanisms, which
will allow systemic monitoring of information needed for decision-making,
excluding unnecessary duplication of information and any redundant information
that reduces the efficiency of business operations in PPP projects.
Steps to be taken
1) Forming a modern professional and interpersonal communication culture in
public servants at all governance levels as regards studying PPP experience as a change
management component in the economic reform process through the introduction of a
systematic study by public servants of the world’s best PPP practices, which includes
the following measures:
16
- familiarizing public servants with analytic materials produced by leading
research, expert, and professional organizations;
- arranging visits for them to leading PPP centers operating within public
authorities in European countries;
- providing opportunities for them to upgrade their PPP qualifications, including
within the framework of special PPP training programs for public workers and workers
of local self-government authorities;
- holding regular information and experience exchanges at conferences,
roundtables, forums, and so on.
2) Implementing the most effective communication connections and overcoming
information barriers throughout the entire cycle of creation and implementation of the
PPP institute in Ukraine through:
- putting in order formal communications between the government and the public
by introducing organizational (for example, based on organizational charts) and
functional (for example, based on structural unit regulations) arrangements both at the
vertical and horizontal levels of the governance hierarchy;
- supporting the system of informal communications between representatives of
state institutions and institutions of civil society on grounds provided by PPP promoting
non-governmental organizations and public authorities, and arrangement by local
authorities for the possibility of public feedback with regard to the preparation and
implementation of PPP projects.
3) Introducing information models as part of PPP management mechanisms,
which will allow systemic monitoring of flows of information needed for decision-
making, excluding unnecessary duplication of information and any redundant
information flows that affect the effectiveness of business operations in PPP projects
through:
- regular coverage of the completion of key stages of PPP projects in mass media,
with accents on social, economic and organizational effects;
- improving the quality of the technological process of PPP information exchange
within the framework of applicable law between the authorized state body, central
executive bodies, and local self-government bodies through more intensive application
of technical means and information technologies, as well as interpersonal
communications in the process of implementing PPP projects; and
- information support for management decisions regarding the implementation of
the PPP strategy.
ІІ. Implementation Stages and Resources
1. As of the beginning of 2012, Ukraine had formed the PPP institute as an
important instrument of strategic development and modernization of the national
economy, which allowed starting actions of a strategic nature in this direction.
The first instances of activity within PPP projects in Ukraine took place in the 90s
as part of the attempts to build mechanisms of long-term economic cooperation between
the government and business as partners, facts supported by information sources of the
17
World Bank12
. The further progress of interaction between business entities and public
authorities of all levels allowed developing PPPs in Ukraine from the early 2000s as an
institute of state governance. After the national PPP legislation was adopted to replace
various quasi-PPP forms, a uniform conceptual and terminological framework meeting
the standards of international practice was introduced.
2. After the Public-Private Partnership Development Strategy for Ukraine for
2012-2017 was adopted in 2012 following years of searches for the right approaches to
using PPP mechanisms in the system of state governance and the adoption of a
framework law (first stage of PPP establishment in Ukraine), a new groundbreaking
stage of PPP development began in the country. This second stage will make it possible
to ultimately formalize the criteria and implementation conditions of PPP projects,
outline the PPP application areas, and create PPP enabling institutions and
infrastructure by way of:
2.1 adopting administrative documents of the Cabinet of Ministers of
Ukraine (CMU AD) that include provisions introducing functional
subordination degrees or a mandatory requirement for central executive
bodies to agree PPP decisions with the MEDT, and amending the
provisions on central executive bodies, dividing state authorities by
specific activities in the PPP area;
2.2 passing administrative documents by central executive bodies in
fulfillment of the aforementioned CMU AD, containing a detailed
description of the functional distribution in the area of PPP project
management among structural units and established positions;
2.3 preparing amendments to Law of Ukraine No 280/97-ВР “On Local
Self-Governance in Ukraine,” dated May 21, 1997.
Since approving relevant administrative decisions is a prerogative of the President of
Ukraine, the CMU AD provide the possibility of formulating proposals to be submitted
to the President of Ukraine in accordance with the applicable regulations of legislative
and regulatory initiative.
By the end of 2012, the MEDT has to:
analyze the performance status of the functions of the central authorized body
in charge of PPP issues and prepare a Strategy Implementation Plan to
reinforce the relevant units of the MEDT to ensure the functional capacity of
the authorized body.
3. Coinciding with 2013, the third stage of the Public-Private Partnership
Development Strategy for Ukraine for 2012-2017 envisages steps to be taken to make
more effective and transparent the coordination of the activities of the authorities
responsible for developing the national policy in this area and authorized to control
PPP project preparation and implementation. For this purpose,
3.1 by issuing CMU AD, a list will be compiled of attractive national PPP
projects to be financed by international enabling financial institutions;
12
Private Participation in Infrastructure Database. - [Electronic resource]. – available at:
http://ppi.worldbank.org/explore/ppi_exploreCountry.aspx?countryID=97
18
3.2. amendments will be worked out to CMU resolutions issued to detail and
concretize the Law of Ukraine “On Public-Private Partnership” to improve the
procedures for a feasibility study and risk assessment, public support for projects, and
competition procedures, bringing them into compliance with international practice and
applicable law;
3.3 amendments to the Laws of Ukraine “On Public-Private Partnership” and “On
Public Procurement” will be prepared and submitted to the Parliament of Ukraine to
implement a transparent competition procedure for private partners expressing a desire
to take part in PPP projects; outline the powers of the authorities that become involved
in PPP projects at all stages at both central and local levels; extend the timeframe for
PPP relations; provide a more precise formulation of PPP specifics as regards
delegating the functions and powers of the government related to infrastructure
development and public services to the private sector; improve the list of PPP
agreement application areas; introduce the possibility of institutional partnership,
creating, as a result, a special public-private project joint venture; and grant the right to
state (communal) enterprises to act as parties to PPP agreements;
3.4 the provisions of the Law of Ukraine “On Public-Private Partnership” will be
harmonized with the respective provisions regulating the powers of local authorities to
improve the legislative and regulatory basis of competition procedures intended to
select private partners for PPP projects at the local level;
3.5 to amend the domestic legislation to improve the mechanism of settling
disputes arising out of any PPP agreement entered with a non-resident or an enterprise
with foreign investments, which mechanism should include the possibility of the dispute
being referred to an international court of arbitration;
3.6 amendments will be made to the financial legislation to improve the
effectiveness of budget spending and avoid fiscal risks in financing PPP projects, and a
section will be made in the draft Law of Ukraine “On Public Support” that describe
preparation procedures for administrative decisions concerning PPP development; and
3.7. the provisions of the framework PPP legislation will be harmonized with the
provisions of the special laws that regulate the contractual relations between the public
and private sectors in the field of concessions, joint venture operations, lease, and so on.
In addition:
- amendments will be made to the applicable legislation, and administrative
documents of the MEDT, Ministry of Finance, and other central executive bodies will
be issued to provide methodological principles of PPP project monitoring and control at
the level of central executive bodies; - preparations for approving administrative documents of local self-government
authorities will be made, observing the MEDT’s recommendations regarding PPP
project monitoring and control; - the public council under the MEDT will acquire advisory functions as regards the
MEDT’s interaction with local self-government bodies and representatives of business
and the expert community; - a network of PPP project support institutes will start to develop;
19
- due to the joint administrative documents to be submitted by the supervision
authorities in charge of the financial sector, measures will be implemented to encourage
the involvement of joint associations of enabling institutions in various activity areas on
association conditions (consortiums, provisional joint projects, associations);
- an information environment will be formed for supporting interaction among all
stakeholders interested in PPP projects on the basis of modern information instruments
and communication technologies by issuing administrative documents of the MEDT,
Ministry of Finance, and other central executive bodies, approving administrative
documents of local self-government authorities, observing the MEDT recommendations
regarding summarization of the best international experience, and holding training
events, upgrading the qualifications required for implementing PPP mechanisms,
sorting out formal communications between state authorities and civil society by
introducing organizational (for example, based on organizational charts) and functional
(for example, based on structural unit regulations) arrangements both at the vertical and
horizontal levels of the governance hierarchy and quality information support for
administrative decisions concerning the implementation of the PPP Strategy.
4. The central task of the fourth stage of the Public-Private Partnership
Development Strategy for Ukraine for 2012-2017 will be further formation of PPP
enabling financial institutions and creation of an effective system of legislative
regulation of PPP relations.
The plans for 2014 include:
4.1. issuing a relevant CMU AD providing basic principles of planning and
monitoring selected financial indicators for the MEDT, Ministry of Finance of Ukraine,
and State Statistics Committee of Ukraine to implement systemic measures ensuring
PPP financing predictability and control;
4.2 amending the legislation and bylaws that regulate the legal relations of
property use and disposal to legislatively regulate the issues of state ownership of assets
created under PPP projects;
In addition, the following is in the plans:
- promoting various forms of state non-financial support for PPP projects by
amending legislative acts and bylaws to improve the application of PPP mechanisms to
stimulate innovation activities: innovation clusters and networks, innovation enabling
institutions (business incubators, techno parks, investment banks, and so on), and
national targeted programs, and create joint innovation companies, including public
corporations;
- completing in general the formation of state institutes aimed at creating favorable
conditions attracting private investors to PPP-based infrastructure development and
public services projects.
5. The fifth stage of the Public-Private Partnership Development Strategy for
Ukraine for 2012-2017 to be held in 2015 will focus on polishing the financial leverage
of PPP management and forming a PPP institutional system in Ukraine.
For this purpose, it is necessary to:
20
5.1 by amending the Budget Code of Ukraine, improve the mechanisms of state
and local guarantees for PPP projects by limiting the application of the paid-basis terms
and counter-guarantee requirements; setting specific limits of the local debt and debt
guaranteed by the Autonomous Republic of Crimea and local self-government bodies
by adjusting the standards introduced by the budget legislation;
5.2 amend the Law of Ukraine “On Public-Private Partnership” to reconcile the
powers of the authorities that become involved in PPP projects at all stages at both
central and local levels with the provisions of the fiscal legislation;
5.3 amend the regulatory acts that govern the process of assuming by a public
partner (a local self-government body) long-term budget obligations and their
fulfillment under PPP agreements, according to which such partners could assume
payment obligations (direct or conditional) that exceed the current budget; providing a
fair reimbursement to the private partner for the account of the public partner (a local
self-government body) for any documented losses incurred by the private partner as a
result of early termination of a PPP agreement (based on the termination reasons);
5.4 issue NBU (National Bank of Ukraine) and CMU AD to authorize public
banks to provide consulting assistance in evaluating the PPP effectiveness and credit
PPP projects.
In addition, it is necessary to:
- create a Public Bank for Reconstruction and Development (PBRD) to provide
financial support for PPP projects; and
- continue amending the applicable legislation to polish the procedure for channeling
budget funds through the Public Bank for Reconstruction and Development to PPP
projects.
6. Within the framework of the final stage of the Public-Private Partnership
Development Strategy for Ukraine for 2012-2017 to be held in 2016-2017, the creation
of a holistic national system of PPP institutions will be finalized, as well as their
formalization within applicable legislation, in particular:
6.1 amendments will be made to the applicable legislation regarding the
procedures for indirect financing of investment PPP projects through the acquisition of
securities and the PBRD’s provision of loans and guarantees;
6.2 administrative documents issued by the CMU and bodies in charge of financial
sector regulation and supervision will provide for cash flow securitization under PPP
projects (financing the assets of a project company through securities issued by this
company);
In addition, the plans include:
- identifying institutional units of the financial sector for long-term financing of PPP
projects and changing the functional distribution of their activities to minimize the risks;
- creating a network of specialized leasing centers to stimulate investments in the
real sector of the economic on the conditions of leasing as a PPP form;
- creating a market of local borrowings by diversifying repayment sources and
introducing a list of activities which are allowed to be financed by foreign currency and
hryvnia loans;
21
- developing a national legislation in the PPP area to regulate business relations
between the public and private sectors in the context of supranational economic
agreements; and
- legislatively establishing the structure and operating fundamentals of PPP enabling
financial institutions;
Financial sources should be identified on an annual basis in accordance with the
indicators of the cumulative, state, and local budgets for the medium-term and long-
term, and sources of private investments should be identified on the results of expert
evaluations and statistical studies.
The volume of logistic resources is determined on the basis of the amount in
declared needs of ministries, departments, and local self-government bodies (in relevant
quantitative units of measure) and for private enterprises and non-governmental
organizations - on the results of expert evaluations and statistical studies.
The amount of workforce is determined on the basis of the number of specialists
engaged in state governance, according to the organizational, structural, and staff
changes in ministries, departments, and local self-government bodies, and for private
enterprises and non-governmental organizations - on the results of expert evaluations
and statistical studies.
22
ІІІ. Implementation Results
The implementation results of the Strategy are determined on an annual basis in
accordance with the indicators of the cumulative, state, and local budgets for the
medium-term and long-term, and for private sector performance indicators - upon the
results of expert evaluations and statistical studies.
№ Indicator Unit of
measure Forecast by Strategy stages
2012 2013 Accrued
total
2014 Accrued
total
2015 Accrued
total
2016 Accrued
total
2017 Accrued
total
1 Number of PPP
projects by economic sectors
Unit
2 Total amount in
PPP project financing
mln UAH
3 Gross investments
in fixed capital as
a result of PPP projects
mln UAH, %
of total
investment
4 Total loans
extended for PPP projects
mln UAH
5 Total fiscal
proceeds (taxes, duties, fees) to
budget of all levels
from PPP projects
mln UAH
6 Value of assets created and
transferred to the
state under PPP projects
mln UAH
7 Number of jobs
created under PPP
projects
unit
8 Level of public
satisfaction with
the price and quality of
provided public
services
conventional
unit
23
ІV. Implementation Monitoring and Evaluation
The monitoring of PPP processes requires a specially set up standing system of
observations, information gathering, analysis, and dissemination, and prediction of key
Strategy implementation processes.
1. Combining the goal, tasks, and methods, including monitoring planning and
implementation arrangements, the MEDT, central executive bodies, local self-
government bodies, and other authorized state bodies should provide in their
administrative documents, in accordance with the key goals and tasks of the Strategy:
- the general PPP processes performance and financial indicators that are
provided in the text of the Strategy, taking into account their annual values and totals
accrued from project commencement to completion, per economic sector and per PPP
project; and
- a legislative acts and bylaws preparation schedule in accordance with the
Strategy Implementation Plan.
2. By gathering, analyzing, and interpreting the data envisaged in Clause 1, the
said bodies should evaluate on an annual basis the current progress status of each
project and the Strategy in the part related to their terms of reference, and so on. For this
purpose, it is necessary to:
- identify and evaluate intermediate results and achievements;
- identify any deviations from the set targets;
- ensure publication of the results of completed Strategy measures;
- create conditions to ensure regular feedback at all levels (between the
decision-making and decision fulfilling levels); and
- make corrections to the Strategy Implementation Plan as necessary and
within their powers.
3. Within the framework of strategic management, the MEDT is required to
timely assess any changes threatening to slow down the fulfillment of the Strategy
Implementation Plan, taking into account factors of external and internal influence.
Reasonable and grounded critical ideas should be included in the Strategy
Implementation Plan as direct corrections. Acting within its powers, the MEDT should
forecast and evaluate events, including crisis ones, which affect the fulfillment of the
Strategy, threatening any deviations temporary and permanent, local and systemic,
extensive and intensive by nature. The quantitative assessment of the aforementioned
changes should be envisaged within the Strategy implementation indicators presented in
the introductory part of this document. Any additional indicators introduced to reflect
changes in the Strategy should correspond to the adopted statistical characteristics of
economic processes, including, crisis and emergency ones, at both supranational and
national levels.
4. The Strategy implementation effectiveness indicators and Strategy
implementation cost-effectiveness indicators should be predicted for the period until
2017, with annual adjustment of their values. General indicators are entered into the
sections of documents that reflect the quantitative characteristics of strategic goals
(Address of the President of Ukraine), and financial indicators are entered into the target
and forecast indicators of documents passed by the government. At the same time, the
24
aforementioned quantitative indicators are entered into relevant statistic and financial
reporting forms which economic agents operating at the public level and in the business
environment are required to complete. The fulfillment evaluation of the indicators is
done on an annual basis. If factual indictors deviate substantially from the forecast
values, the MEDT is required to submit its evaluation of such deviations to the CMU
for consideration and making tactical or strategic administrative decisions, depending
on the deviation degree. The MEDT should determine in its administrative document
the approach to managing potential changes in the Strategy on the basis of the following
components:
4.1 Realizing the changes and the need to take specific actions to carry them out
This component requires that measures should be taken to ensure the collection of
trustworthy, all-round, objective, and updated information for systemic analysis and
evaluation to prepare grounds for proposals and decisions to correct the PPP Strategy.
4.2 Realizing the differences in the management style and forms under normal
and emergency conditions.
5. As the MEDT, central executive bodies, and local self-government bodies
monitor the Strategy implementation process, they will be noticing deviations from the
set targets. Such a situation dictates two scenarios 1) continuing with the Strategy
implementation into the coming periods without any revision of the projected targets,
tasks, and measures (in this case the Strategy differs from other documents that
determine the socio-economic policy for the short-term only by the term for which it
has been developed); 2) thorough correction of the Strategy for the whole future period
at every moment of its revision (in this case, the revised Strategy will by no means be
linked to the implementation results of the previous periods, which means that a new
Strategy has actually been adopted).
6. Central executive and local self-government bodies are obligated to prepare
correction proposals for the Strategy to change its indicators and measures planned for
remote future periods as the correction moment approaches them.
7. The MEDT is obligated to evaluate the degree and tactics of such changes at
various Strategy implementation stages.
7.1 The identification of the degree and character of changes that require editing
the Strategy at the macro and micro levels, as well as the selection of specific steps, will
be carried out with respect to the below types of strategic changes:
- partial active changes (non-strategic management components) which
allow correcting the completion status of specific stages and items of the Strategy
Implementation Plan without any sharp changes;
- partial reactive changes (tuning in) which allow adjusting the Strategy
Implementation Plan to changes in the external and internal environment.
8. The MEDT and other state authorities will track a specific set of key Strategy
fulfillment parameters and, if they deviate from the set targeted parameters, influence
these parameters, bringing them back to the target values. The possibility of this
Strategy correction approach implies flexibility of the parameters provided in it, as well
as the powers in the responsible state authority and business partners to immediately
respond to changes in circumstances and independently make corrections to the
25
quantitative parameters of the Strategy. It is necessary to take into consideration the
informational asymmetry risks and identify in this connection special interest groups
that are not interested in providing exhaustive and accurate information.
9. After determining the nature of changes, the MEDT and other authorized state
bodies should select a tactics of changes in the Strategy Implementation Plan. It should
imply the identification and quantity and quality assessment of such parameters,
specifically:
• change timeframes (situation-dependant);
• pitfalls and crisis situations during the time of changes implementation;
• possible solutions;
• expected spending of all resources;
• expected mechanism of changes;
• expected results of changes;
• temporary signals and other assessment parameters;
• changes in the changes implementation sequence (possible channels of
switching from one strategy of changes to another);
• complete or partial involvement of the staff in the process of changes;
• short-term results (benefits); and
• involvement of external experts or forces.
10. Selection and preparation of influence agents in the context of changes in the
Strategy.
After the qualitative and quantitative assessment of the changes tactics, it is
necessary to select and prepare influence agents in the context of changes. If the nature
and character of changes and the changes management process cannot be completely
transparent, it is necessary to formulate a context of changes acceptable for the whole
system. After this it is necessary to select and prepare agents of changes, people who
will support changes in the organization, carry out work to implement the changes, and
implement them professionally.
When introducing changes, it is necessary to communicate the information about
envisioned prospects and changes strategies to public officials through official training
sessions and communication networks, inviting public and private sector representatives
to such events.
11. The procedure for concretizing the Strategy and determining the
psychological and organizational basis of changes should be described in administrative
documents of the MEDT, central executive bodies, and local self-government bodies.
For this purpose, it is necessary to:
11.1 determine a standard set of procedures and elements of management
decisions to make changes and reflect them in appropriate documents as factors of
change arise along with the need to correct the Strategy Implementation Plan;
11.2 compile additional calendar schedules of events involving non-governmental
organizations, if introducing permanent long-term procedures of changes. In this case,
the MEDT and other authorized state bodies should formulate for public sector workers
organizational tasks, targets, and obligations, and the expected effect of the results of
26
the change implementation efforts on public and private partners, reflecting the
aforementioned and personal vision of the prospects in official documents.
11.3 such actions need to be accompanied by the creation of a patronage system
for people without experience and new employees. Patrons may be officially or
informally appointed.
11.4 compile job descriptions for each major area of work to activate public
workers in carrying out the change procedures. Special attention should be paid to those
functions that do not fall within the limits of the existing functional duties, that is, to the
processes that are intended to implement coordination with other units or hierarchical
levels, as well as to effective principles of delegating and vesting powers.
12. Decisions to make changes to the Strategy Implementation Plan will need to
be backed by the MEDT’s public council which will take into account expert opinions
of the society and private partners in view of their possible expectations and the
volumes of information flows that may be necessary for private contractors. For this
reason, using the procedures for passing administrative decisions as necessary,
administrative documents should be used to introduce criteria assessing the needs and
expectations of private contractors on a permanent basis, with appropriate monitoring of
changes in them and expectation trends.
13. The process of making decisions to amend the Strategy Implementation Plan
should be coordinated on the basis of clearly declared priorities and observing the
principle “not everything that can be done adds value.” It makes sense to give priority to
the most important aspects that add to the value of specific PPP measures tangible for
the private partner and producing a measurable socio-economic effect. To achieve such
goals, it is necessary to create favorable conditions for PPP participants, enabling them
to be up to new tasks in the process of changes. It is also necessary to enrich and expand
the area of their production activities, adding responsibility in the areas that require new
skills and capabilities.
V. Strategy Implementation Plan
This Plan should list actions and responsible executors, fulfillment timeframes,
and expected results. The Plan should take into account the need to further agree the
project with responsible executors (ministries, departments, and so on) and
stakeholders; its content should be based on the existing distribution of powers between
ministries and departments, exiting programs and plans of action, expert opinions and
consultations with stakeholders.
The methodology of identifying resources for the Strategy Implementation Plan is
as follows:
І. Using budget financing sources.
According to the approved projected spending of the state and local budgets for
the appropriate years and the medium-term, a list of financing items and amounts to be
invested in state targeted programs should be provided.
Within the established financing limits, the PPP mechanisms application areas
should be concretized. The amounts in required financing from budgets of appropriate
levels are calculated depending on PPP application methods, including drawing budget
27
money to finance the project, increasing the chances of contracting loans for projects by
securing state guarantees, and so on.
ІІ. Using private financing sources
According to the list of investment state targeted programs which envisages the
application of PPP mechanisms, the amounts in needed financing from private sources
are calculated.
ІІІ. Unified cost estimates of investment state targeted programs (of the national
and local levels) should be compiled, envisaging the application of PPP mechanisms.
In these cost estimates, it is necessary to highlight
- the direct and indirect expenditures to finance the actions envisaged in the
project documentation, assuring the achievement of the goals set in the state and/or
local targeted programs; and
- the expenses required to cover specific items of the Strategy Implementation
Plan.
These unified cost estimates of PPP programs should list sources of national,
local, and private financing, which are determined individually for each target
fulfillment indicator. The amounts in budget and other state financing should be within
the limits set by the relevant legislative and other regulatory acts.
Thus, financing sources for the Strategy Implementation Plan will be created as a
result of:
- saving budget and other state financial resources through additional attraction of
private capital; and
- potential profits of private business as a result of an expanded space for free
flows of capital and its penetration into earlier inaccessible areas, transaction savings
due to simplified licensing and permissive documentation obtaining procedures,
favorable opinions of supervisory bodies, elevated project statuses thanks to the
participation of the government, and a created positive image of the involved company.
The flows of national and local funds should be documented in accordance with
the budget legislation, and the flows of mixed and private financial resources in
accordance with the rules similar to those that regulate the use of funds of public
corporations and special budget funds. The financial reporting to reflect cash flows
related to the fulfillment of PPP projects and the Strategy Implementation Plan
envisages specific entries to be created in the fiscal and statistical databases. The
provision of relevant information is based on the mandatory reporting procedures
established for economic entities of the private and public sectors.
28
Implementation Plan of the Public-Private Partnership Development Strategy for Ukraine for 2012-2017
No Goal Tasks and measures Responsible executor Fulfillment
time
Fulfillment indicator
I. Institutional part
To improve the quality of the PPP state management system, creating an effective organizational structure of interaction among executive authorities,
businesses, civil society institutions, and representatives of the expert community
1 Extending the powers of
the authorized state body
in charge of PPP
development
management
1.1 Concretization of the functions and
powers of the MEDT regarding its
strategic administrative role in the PPP
area
Adopted administrative
documents of the
Cabinet of Ministers of
Ukraine (CMU AD) that
include provisions
introducing functional
subordination degrees or
a mandatory requirement
for central executive
bodies to agree PPP
decisions with the
MEDT, and amending
the regulations of central
executive bodies,
dividing state authorities
by specific activities in
the PPP area (including
in accordance with the
procedure for advancing
proposals to Presidential
Decrees, if the relevant
provisions are subject to
Presidential Decrees)
Prepared amendments to
to the Law of Ukraine
1.1.1 Identification and formation of
closed lists of powers, functions, and
administrative services in the PPP area for
the MEDT, including in the context of
determining distinctions in management
functions of strategic nature
Prime Minister of Ukraine
MEDT
November
2012
1.1.2 Identification and formation of
closed lists of powers, functions, and
administrative services in the PPP area for
central executive bodies
Prime Minister of Ukraine
MEDT
central executive bodies
November
2012
1.1.3 Establishment of the strategic
planning role of the MEDT when local
self-government bodies exercise their
powers to make their own decisions
regarding the expediency and
implementation of PPP projects
Prime Minister of Ukraine
MEDT
Local self-government bodies
December 2012
1.2 Introduction of the managerial
components of the Strategy in the
functions and powers of the management
and organizational units of the MEDT
MEDT
Deputy minister with the
appropriate functions
December 2012
1.3 Singling out within the present special
PPP unit of the MEDT the functions and
MEDT
Deputy minister with the
December 2012
29
structural units engaged in forming the
state PPP policy, expert examinations of
PPP projects, and provision of a
methodological basis of PPP projects
appropriate functions No 280/97-ВР “On
Local Self-Governance
in Ukraine,” dated May
21, 1997
Passed administrative
documents of central
executive bodies in
execution of the
aforementioned CMU
AD, determining the
PPP project management
functional distribution
among structural units
and established positions
Amendments made to
Law of Ukraine No
2404-VI "On Public-
Private Partnership,”
dated July 1, 2012
1.4 Introduction of quantitative and
qualitative performance criteria fir the PPP
unit of the MEDT
MEDT
Deputy minister with the
appropriate functions
December 2012
1.5 Application of the MEDT’s functions
related to approving PPP feasibility study
at the preparation stage exclusively to
projects implemented by central executive
bodies
CMU
MEDT
December 2012
1.6 Provision of methodological and
consulting support for projects, involving
accounting for PPP agreements at the
central and local levels by regions,
territories, and types of economic activity
MEDT
Ministry of Justice
December 2012
1.6.1 Determining legal and organizational
forms and directions of public support for
PPP projects
MEDT
Ministry of Justice
December 2012
1.6.2 Implementation of the PPP forms
application criteria: execution of PPP
project agreements, creation of appropriate
PPP institutional entities, and so on
MEDT
Ministry of Justice
December 2012
1.6.3 Implementation the procedure for
obligatory evaluation of competitive
advantages of applied PPP mechanisms as
compared with other technologies of
organizing and financing investment
projects
MEDT
Ministry of Finance
December 2012
1.7 Organizing PPP project fulfillment
monitoring and control at the central and
local levels
MEDT
Ministry of Finance
Ministry of Justice
central executive bodies
local self-government bodies
March 2013
30
1.7.1 Development of methodological
principles of PPP project fulfillment
monitoring and control at the level of
central executive bodies
MEDT
Ministry of Finance
Ministry of Justice
central executive bodies
March 2013 Issued administrative
documents of the
MEDT, Ministry of
Finance, and central
executive bodies on the
consent of the Ministry
of Justice
Approved administrative
documents of local self-
government bodies, with
observed
recommendations of the
MEDT for the Strategy
refinement methodology
and PPP project
fulfillment monitoring
and control
1.7. 2 Development of methodological
principles of PPP project fulfillment
monitoring and control at the level of local
self-government bodies, observing the
principle of the strategic planning role of
the MEDT
MEDT
Ministry of Finance
Local self-government bodies
March 2013
1.7.3 Implementation of the Strategy
refinement methodology
MEDT
central executive bodies
local self-government bodies
March 2013
2 Making more effective
and transparent the
coordination of the
activities of the
authorities responsible
for developing the
national policy in this
area and authorized to
control PPP project
preparation and
implementation.
2.1 Determining the functions and powers
of central executive bodies in the part
related to executing and supporting PPP
agreements, taking into account the
strategic planning role of the MEDT
MEDT
Ministry of Finance
Ministry of Justice
central executive bodies
March 2013 Issued administrative
documents of the
MEDT, Ministry of
Finance, and central
executive bodies on the
consent of the Ministry
of Justice
2.2 At the instruction of the Cabinet of
Ministers of Ukraine, assigning the
functions of preparation and feasibility
study of PPP projects involving the
Cabinet of Ministers of Ukraine as a
partner to the appropriate central executive
bodies
MEDT
Ministry of Finance
Ministry of Justice
central executive bodies
March 2013
2.3 Assigning the advisory functions to the
Public Council under the MEDTU
MEDT March 2013 Issued administrative
document of the MEDT
31
regarding coordination of the MEDT’s
interaction with local self-government
bodies and representatives of business and
the expert community
on the composition and
activities of the Public
Council under the
MEDT
3
Formation of
institutional principles
for the financial sector of
the economy to provide
support for PPP projects
3.1 Identification of institutional units of
the financial sector for long-term
financing of PPP projects and changing
the functional distribution of their
activities to minimize the risk factors
3.1.1 Increasing the capitalization of
insurance companies and at the same time
introducing insurance supervision
principles meeting international standards,
and creating a system of guaranteeing
insurance indemnification to attract long-
term investments
State Commission for Regulation
of Financial Services Markets of
Ukraine
Ministry of Finance
MEDT
2016-2017 Development of
conceptual principles for
the planned draft Law of
Ukraine “On Insurance”
3.1.2 Introduction of a set of measures to
improve financial stability of banking and
non-banking financial institutions, in
particular joint investment institutions,
ensuring operational transparency of stock
market operators and encouraging
investments
NBU
State Commission for Regulation
of Financial Services Markets of
Ukraine
Ministry of Finance
MEDT
2016-2017 Amendments to the
Laws of Ukraine “On
Business Companies,”
“On Securities and Stock
Market,” “On Institutes
of Joint Investment (Unit
and Corporate
Investment Funds),” and
certain laws of Ukraine
as regards toughening
requirements for the
authorized capital of
professional stock
market players and
financial institutions
3.2 Development of a system of re-
financing credit organizations by public
enabling institutions within the framework
of applicable law to ensure resource
32
support for PPP projects
3.2.1 Consideration of the issue of
expediency of a venture investment state
institute to be created to secure the results
by increasing capitalization of investments
in sectoral targeted funds and further
reinvestment of earned proceeds in new
development projects
MEDT
Ministry of Finance
December 2013 Issued CMU AD
determining the
organizational status of
the public company
whose mission is to
stimulate the creation of
Ukraine’s own venture
financing industry and a
substantial increase on
the financial resources of
venture funds
3.2.2 Development of cooperation with
international enabling financial institutions
MEDT
Ministry of Finance
Ministry of Foreign Affairs
September
2013
Issued CMU AD
providing a list of
attractive national PPP
projects for international
enabling financial
institutions to finance
Passed joint
administrative
documents of financial
sector supervisory
authorities
3.3 Development of measures to stimulate
the engagement of joint associations of
enabling institutions operating in various
activity areas on association conditions
(consortiums, provisional joint projects,
associations)
MEDT
Ministry of Finance
NBU
State Commission for Regulation
of Financial Services Markets of
Ukraine
SSMSCU
September
2013
4 Creation of favorable
conditions for attracting
private investors to PPP-
based infrastructure
development and public
services projects
4.1 Promotion of the forms of state non-
financial support for PPP projects
Passed administrative
documents of central
executive bodies based
on the uniform
methodology of the
MEDT regarding
assessment and
avoidance of the risks of
negative effects on PPP
projects at the macro and
micro levels
4.1.1 Supporting the viability of programs
and projects, taking into account the risk
classification and levels and correlation
between external and internal factors
CMU
MEDT
State Agency for Investment and
National Projects
Ministry of Justice
Ministry of Finance
March 2014
4.1.2 Creation of universal consulting
organizations to provide quality PPP
services to state institutions and
CMU
MEDT
State Agency for Investment and
March 2014
33
departments National Projects
Ministry of Justice
Ministry of Finance
Passed documents of
central executive and
local self-government
bodies based on the
common methodology of
the MEDT regarding
PPP projects
implementation
standards, as well as
prepared proposals to
improve the legislative
basis
Passed documents of
central executive and
local self-government
bodies based on the
common methodology of
the MEDT regarding
specifics of marketing
actions to intensify the
attractiveness of PPP
projects for the private
sector
4.1.3. Application of PPP mechanisms to
stimulate innovation activities: innovation
clusters and networks, infrastructure
development projects (business incubators,
techno parks, investment banks, and so
on), and national targeted programs, and
create joint innovation companies,
including public corporations
CMU
MEDT
State Agency for Investment and
National Projects
Ministry of Justice
Ministry of Finance
March 2014
4.2 Measures to be carried out by central
and local authorities to spread information
about promising regional development
investment projects involving the private
sector
MEDT
central executive bodies
local self-government bodies
March 2014
4.3 Providing clear rules, procedures, an
exhaustive list of required documents, and
permit issue deadlines, as well as
supporting private partners in obtaining all
permits required for PPP projects
First Vice Prime Minister of
Ukraine
MEDT
State Service of Ukraine for
Regulatory Policy and
Entrepreneurship Development
If necessary:
Local authorities
March 2014 Approved law of
Ukraine on amendments
to be made to the Law of
Ukraine "On the List of
Permissive Documents
Required in the Business
Sphere" and other
legislative acts of
Ukraine regarding
cutting the list of
permissive documents
34
by at least 70 percent,
and an issued CMU AD
cutting by at least 40
percent the list of the
types of business
activities to which the
declarative principle is
not applicable
4.4 Implementation of pilot projects to
create a foundation for increasing public
trust in private capital and outline
development directions for the PPP
legislative and regulatory framework in
Ukraine
MEDT December 2013 Issued CMU AD
formulating the basic
status principles of pilot
PPP projects, which will
create a foundation for
increasing public trust in
private capital and
outline development
directions for the PPP
legislative and
regulatory framework in
Ukraine
II. Financial Part
Improving the PPP project financing mechanisms
5 Improvement in the
effectiveness of budget
spending and avoidance
of fiscal risks in
financing PPP projects (Comment: the effective
financing mechanisms of state
targeted programs do not take
into account the specifics of
5.1 Planning budget allocations for the
entire implementation term of PPP
investment projects, taking into account
the dynamics of prices and privileged
taxation sources in accordance with the
approved budget programs
Amendments made to
the Budget Code of
Ukraine, Law of Ukraine
No 1621-IV “On
Targeted State
Programs,” dated March
18, 2004, and to the draft
Law of Ukraine “On
State Strategic Planning”
5.1.1 Approving budget programs and
datasheets of budget programs in all areas
of budget investment from the national
MEDT
Ministry of Finance
March 2014
35
planning, using, and
controlling funds of the state
and local budgets when using
them as a PPP financing
source. Clause 5 contains
goals whose promises a
transparent mechanism of
public PPP financing and
explains the difference
between the financing of a
usual targeted budget
program and the financing
involving the PPP
mechanism)
and local budgets for the medium-term
(taking into account PPP mechanisms) Singled out section on
relevant preparatory
procedures for
management decisions in
the draft law “On Public
support”
5.1.2 Approving the methodology of
budget programs fulfillment monitoring,
effectiveness evaluation, and efficiency of
local budgets (taking into account PPP
mechanisms)
MEDT
Ministry of Finance
March 2014
5.2 Annual approval of the amounts in
state financial support for PPP projects,
taking into account the results of their
implementation based on the introduction
of a register of investment PPP projects13
in which the public support amount and
form will be specified
MEDT
Ministry of Finance
March 2014
6 Intensification of the
process of involving
enabling institutions in
financing PPP projects
6.1 Using the mechanisms for
reorganizing the existing enabling
institutions, to create a public bank for
reconstruction and development (PBRD)
and authorize it to provide financial
support within the limits of its authorized
capital for PPP projects and assist project
participants in the financing support
procedure
Amendments to the
Budget Code of Ukraine
Issued CMU AD
approving the amount in
authorized capital,
functions and procedure
for the interaction with
executive bodies and
business entities
Issued CMU AD
describing the forms of
direct and indirect
financing of investment
PPP projects in priority
areas
6.1.1 Using the mechanisms for
reorganizing the existing enabling
institutions, to create a public bank for
reconstruction and development (PBRD)
to provide financial support for PPP
projects
Prime Minister of Ukraine
MEDT
March 2015
6.1.2 to provide the procedures for
channeling budget money through the
PBRD to PPP projects
MEDT
Ministry of Finance
June 2015
13
The Register of Investment PPP Projects in Ukraine may be a part of the State Register of Investment Projects and Project (Investment) Proposals the keeping procedure for which
is approved by Resolution No 650 of the Cabinet of Ministers of Ukraine, dated July 18, 2012
36
6.1.3 to provide the procedures for indirect
financing of investment PPP projects
through the acquisition of securities and
the PBRD’s provision of loans and
guarantees
MEDT
Ministry of Finance
2016-2017
6.2 to authorize public banks to provide
advisory assistance in evaluating the PPP
performance and credit PPP projects
Prime Minister of Ukraine
MEDT
Ministry of Finance
NBU
June 2015 Issued CMU and NBU
AD
6.3 to create specialized leasing centers
based on the public-private partnership
principles to stimulate investments in the
real sector
Prime Minister of Ukraine
MEDT
Ministry of Finance
2016-2017
Issued CMU AD
7 Implementation of
modern instruments of
long-term PPP project
financing
7.1 Improvement of the mechanism of
nation-wide and local guarantees for PPP
projects by limiting the application of the
paid-basis terms, counter-guarantee
requirements; setting specific limits of the
local debt and debt guaranteed by the
Autonomous Republic of Crimea and
local self-government bodies by adjusting
the standards introduced by the budget
legislation
Prime Minister of Ukraine
MEDT
Ministry of Finance
March 2015 Amendments to the
Budget Code of Ukraine
7.2 Development of the market of local
loans by diversifying repayment sources
which are currently dominated by
proceeds from communal property
alienations and non-farming land sales;
introducing a list of activities which are
allowed to be financed by foreign
currency and hryvnia loans
Prime Minister of Ukraine
MEDT
Ministry of Finance
NBU
2015-2016 Amendments to the
Budget Code of Ukraine,
issued CMU and NBU
AD
7.3 Formation of mechanisms of
assuming by a public partner (a local self-
government body) long-term budget
obligations (which exceed the current
Prime Minister of Ukraine
MEDT
Ministry of Finance
NBU
2015-2016 Amendments to the
Budget Code of Ukraine,
issued CMU and NBU
AD
37
budget) and their fulfillment under PPP
agreements; providing a fair
reimbursement to a private partner for the
account of the public partner (a local self-
government body) for any documented
losses incurred by the private partner as a
result of early termination of a PPP
agreement
7.4 Cash flow securitization within PPP
projects (financing the assets of a project
company through securities issued by this
company)
NBU
State Agency for Investment and
National Projects
Ministry of Justice
Ministry of Finance
State Commission for Regulation of
Financial Services Markets of
Ukraine
SSMSCU
2016-2017 Amendments made to
the Law of Ukraine “On
Securities and Stock
Market” and singling out
the functions of using
financial instruments in
the PPP area to improve
the regulation of and
supervision over the
financial sector in
Ukraine
8
III. Legal part
Creating an effective system of legislative regulation of PPP relations
8 Putting in order the PPP
project management
legislation at the central
and local levels
8.1 Preparation, adoption, and further
improvement of the PPP framework
legislation to reconcile its rules with fiscal
provisions; clearer formulation of the
powers of the authorities that become
involved in PPP projects at all stages at
both central and local levels; extending
the timeframe for PPP relations; more
accurate formulation of PPP specifics as
regards delegating the functions and
powers of the state related to
infrastructure development and public
services to the private sector; improving
MEDT
Ministry of Justice
2013-2015 Amendments to the Law
of Ukraine “On Public-
Private Partnership” as
well as the Laws of
Ukraine “On
Concessions,” “ On
Concessions for the
Construction and
Operation of Motor
Roads,” “On the
Specifics of Leasing Out
or Granting Concessions
for Communal
38
the list of PPP agreement application
areas; introducing the possibility of
institutional partnership, including the
creation of a special public-private joint
venture for a specific project; and
granting the right to state (communal)
enterprises to act parties to PPP
agreements
Centralized Water and
Heating Supply and
Drainage Facilities,”
“On the Specifics of
Leasing Out or Granting
Concessions for Public
Fuel and Energy
Facilities,” “On Lease of
State and Communal
Property,” “On
Management of Public
Properties,” and others
8.2 Reconciliation of the provisions of the
framework PPP legislation with the
provisions of the special laws that
regulate the contractual relations between
the public and private sectors in the field
of concessions, joint venture operations,
lease, and so on
MEDT
Ministry of Justice
2013-2015 Amendments to the Law
of Ukraine “On Public-
Private Partnership” as
well as the Laws of
Ukraine “On
Concessions,” “ On
Concessions for the
Construction and
Operation of Motor
Roads,” “On the
Specifics of Leasing Out
or Granting Concessions
for Communal
Centralized Water and
Heating Supply and
Drainage Facilities,”
“On the Specifics of
Leasing Out or Granting
Concessions for Public
Fuel and Energy
Facilities,” “On
Financial Leasing,” “On
Land Lease,” “On
8.3 Harmonization of legislative and
bylaw provisions in connection with the
implementation of the PPP development
Strategy
MEDT
Ministry of Justice
2013-2015
39
Management of Public
Properties,” “On
Seaports,” “On Local
Self-Governance,” “On
Housing and Communal
Services,” “On Heating
Supply,” “On Drinking
Water and Drinking
Water Supply,” “On
Wastes,” “On Natural
Monopolies,” “On
Public Procurement,”
the Civil Code of
Ukraine, and others
8.4 Preparation, adoption, and further
improvement of the legislative and
regulatory basis of competition
procedures to select private partners for
PPP projects
MEDT
Ministry of Justice
2013-2014 Amendments to bylaws
in execution of the Law
of Ukraine “On Public-
Private Partnership” to
improve the
methodology of
identifying risks
associated with public-
private partnership and
their assessment, and
selecting a form of
controlling them14
in the
part related to the
identification,
assessment, distribution,
and management of risks
associated with PPP
projects; abrogation of
the provision requiring
8.5 Introduction of instruments of
methodological support for PPP projects
under agreements of specific types; these
instruments should be of advisory nature,
developed by the authorized body, and
include model agreements, and PPP
project selection, preparation, financing,
implementation, and monitoring manuals
MEDT
central executive bodies
local self-government bodies
December
2015
8.6 Legal regulation of issues related to
titles to any assets created within the PPP
framework
MEDT
Ministry of Justice
State Agency of Land Resources of
Ukraine
Local self-government bodies
December
2014
8.7 Improving the mechanism of settling MEDT 2013
14
Resolution No 232 of the Cabinet of Ministers of Ukraine “On Approving the Methodology for Identifying and Assessing the Risks Associated with Public-Private Partnership and
Determining the Management Approach to Them,” dated February 16, 2011
40
disputes arising out of any PPP agreement
entered with a non-resident or an
enterprise with foreign investments,
which mechanism should include the
possibility of the dispute to be referred to
an international court of arbitration
Ministry of Justice that the Ministry of
Economic Development
and Trade of Ukraine
approves the PPP
feasibility study for
projects implemented by
local self-government
bodies15
8.7.1 Harmonization of the domestic PPP
legislation PPP that regulates business
relations between the public and private
sectors
MEDT
Ministry of Justice
2013
8.7.2 Harmonization of the domestic
legislation in the context of supranational
economic agreements
MEDT
Ministry of Justice
2013
9 Improvement of
legislative regulation of
state financial support
for PPP projects
9.1 Improvement of the fiscal legislation
(including in the part regarding financial
support for the rights and obligations of
state and municipal entities acting as
parties to PPP agreements and
implementation of the long-term
obligations assumption mechanisms) to
improve the investment climate and form
an effective mechanism of public support
for PPP
MEDT
Ministry of Finance
June 2013 Amendments to the laws
of Ukraine on PPP, on
local self-governance,
and the Budget Code of
Ukraine
9.2 Improvement of bylaws to simplify
the mechanism of public support for PPP
projects
MEDT
Ministry of Finance
June 2014 Amendments to
Resolution No 279 of
the Cabinet of Ministers
of Ukraine, dated March
17, 2011
10 Putting in order the
legislative and regulatory
framework regulating the
creation and functioning
10.1 Legislative formation of the structure
and operating fundamentals of enabling
financial institutions (EFI) in the PPP area
Prime Minister
MEDT
NBU
State Agency for Investment and
2015-2017 Amendments to
applicable legislation to
harmonize the
conceptual and
15
Public-Private Partnership Effectiveness Analysis Procedure approved by Resolution No 384 of the Cabinet of Ministers of Ukraine, dated April 11, 2011
41
of enabling institutions
in the PPP context
National Projects
Ministry of Justice
Ministry of Finance
State Commission for Regulation of
Financial Services Markets of
Ukraine
SSMSCU (Securities and Stock
Market State Commission of
Ukraine)
terminological
framework of FDI
activities, unification of
FDI’s financial support
procedure and
instruments
10.2 Revision and preparation of
amendments to the provisions of domestic
legislation that regulate the operation of
universal and special development banks,
export-import banks, pubic leasing
companies, development foundations and
agencies, and so on
Prime Minister
MEDT
NBU
State Agency for Investment and
National Projects
Ministry of Justice
Ministry of Finance
State Commission for Regulation of
Financial Services Markets of
Ukraine
SSMSCU
2016-2017 Developed draft Law of
Ukraine “On Insurance”
and amendments to the
Law of Ukraine “On
Amending Certain
Legislative Acts of
Ukraine Regarding
Targeted Bonds” (to
improve the mechanisms
of targeted bonds issue
and circulation, vesting
sufficient powers in the
market regulator to
guarantee the protection
of the legitimate rights
of investors)
IV. Informational part
Formation of an information environment to support the interaction among stakeholders interested in PPP projects by employing applying modern information
instruments and communication technologies
11 Formation of modern
professional and
interpersonal
11.1 Familiarization of public workers
with analytic materials produced by
leading research, expert, and
MEDT
central executive bodies
local self-government bodies
December
2013 Issued administrative
documents of the
42
communication culture in
public workers at all
governance levels as
regards studying
experience of PPP as a
changes management
component in the
economic reform process
professional organizations MEDT, Ministry of
Finance, and central
executive bodies.
Approved
administrative
documents of local
self-government
bodies, observing the
MEDT’s
recommendations
regarding the
summarization of the
world’s best experience
and provision of
training events
11.2 Visits of public workers to leading
PPP centers operating within public
authorities in European countries
MEDT
central executive bodies
local self-government bodies
December
2013
11.3 Upgrade of the qualifications
required for the successful
implementation of PPP mechanisms;
MEDT
central executive bodies
local self-government bodies
December
2013
11.4 Regular information and experience
exchange at conferences, roundtables,
forums, and so on
MEDT
central executive bodies
local self-government bodies
December
2013
12 Realization of the most
effective communication
connections and
overcoming information
barriers throughout the
entire cycle of creation
and implementation of the
PPP institute in Ukraine
12.1 Putting in order formal
communications between state
authorities and the public by introducing
organizational (for example, based on
organizational charts) and functional (for
example, based on structural unit
regulations) arrangements both at the
vertical and horizontal levels of the
governance hierarchy
MEDT
central executive bodies
local self-government bodies
December
2013 Issued administrative
documents of the
MEDT, Ministry of
Finance, and central
executive bodies
Approved
administrative
documents of local
self-government
bodies, observing the
MEDT’s
recommendations
regarding organization
of communications
among stakeholders in
the real and virtual
environment within the
framework of clearly
12.2 Support for the system of informal
communications between representatives
of state institutes and institutes of civil
society at grounds provided by PPP
promoting non-governmental
organizations and state authorities, and
arrangement by local authorities for the
possibility of public feedback with
regard to the preparation and
implementation of PPP projects
MEDT
central executive bodies
local self-government bodies
December
2013
43
planned events, taking
into account proposals
of changes made by the
said stakeholders
13 Introduction of
information models as
part of PPP management
mechanisms, which will
allow systemic monitoring
of information needed for
decision-making,
excluding unnecessary
duplication of information
and any redundant
information that affect the
effectiveness of business
operations in PPP projects
13.1 Regular coverage of the fulfillment
of keys stages of PPP projects in mass
media, with accents on social, economic
and organizing effects;
MEDT
central executive bodies
local self-government bodies
December
2013 Issued administrative
documents of the
MEDT, Ministry of
Finance, and central
executive bodies
Adopted administrative
documents of local
self-government
bodies, observing the
MEDT’s
recommendations
regarding the
implementation of
standard models of
business-processes of
information services
(set of roles, their
functions,
interconnections among
the rules, functions
performance rules, and
uniform approaches to
information interaction
of standards models,
including when
applying the conceptual
and terminological
framework and using
an adequate IT services
management)
13.2 Improvement in the quality of the
technological process of PPP
information exchange within the
framework of applicable law between
the authorized state body, central
executive bodies, and local self-
government bodies through more
intensive application of technical means
and information technologies, as well as
interpersonal communications in the
process of implementing PPP projects;
MEDT
central executive bodies
local self-government bodies
December
2013
13.3 Information support for
management decisions regarding the
implementation of the PPP strategy
MEDT
central executive bodies
local self-government bodies
December
2013