ukraine public private parternship development...

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P3DP Quarterly Report for Y2Q1 – Submitted January 30, 2012

UKRAINE PUBLIC PRIVATE

PARTERNSHIP DEVELOPMENT

PROGRAM (P3DP)

QUARTERLY REPORT– Y2Q1

OCTOBER 1, 2011–DECEMBER 31, 2011 USAID Cooperative Agreement # AID-121-A-00-10-00708

January 30, 2012

This document was produced for review by the United States Agency for International Development.

It was prepared by FHI Development 360 LLC under the Public-Private Partnership Development

Program in Ukraine.

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Ukraine Public Private Partnership Development (P3DP) Program

1. Executive Summary

2. Work Plan Tasks During the Reporting Period (focusing on the expected tasks that are

explicit in the Work Plan, including cross-cutting items – the implicit tasks are typically

covered in 3below)

3. Other Activities During the Reporting Period (implicit and unplanned tasks that occur

during the reporting period)

4. Work Plan Tasks for Coming Reporting Period (a “heads up” for the reader as to what to

expect next quarter – essentially, this is where the official Work Plan gets incrementally

migrated with new information, etc.)

5. Administrative and Managerial Issues (this would cover activities such as contractual

issues, draft SOWs for upcoming STTA, particularly if the work was cross-cutting in nature)

6. Exceptional Issues (items here are a. beyond the “heads up” of 4 above, b. a “hook point” for

potential future concerns2, c. visits by guests

3, d. updates from intelligence gathering

4, etc.)

7. Attachments

a. Photos and Captions

b. PPP Conference Report

c. The Most Critical Legislative Issues Relevant to PPP Project Start-ups in Ukraine

d. Training Interest Survey Results

e. Study Tour Workshop Report (PPP Unit Functions, Roles and Responsibilities)

f. Poland Study Tour Report

g. PPP Pilot Projects Tracker

1 FHI Development 360 LLC (FHI 360) is the successor organization (as of July 1, 2011) to AED, the original

Cooperative Agreement partner with USAID. 2 …constrained access to information, etc.

3 …such as security people or US congressional delegations, etc.

4 “…the head of X is rumored to be resigning,” “…there may be exceptional issues with municipality Y,” etc.

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1. Executive Summary

P3DP activities came to fruition during Y2Q1, fueled by the positive influences of a fully-staffed

program office, supportive home office personnel and cooperative “Beneficiaries”; combined impacts

that substantially advanced the development approach and deliverables envisioned in P3DP’s

Cooperative Agreement.

The start of the quarter was highlighted by a P3DP organized PPP conference featuring a

comprehensive diagnostic review of the legal and regulatory framework impacting PPP

implementation in Ukraine, conducted by the distinguished law firm of Gide Loyrette Nouel.

Through the prism of Ukrainian and international best practices, the analysis provided viewpoints

about specific law-related challenges for Ukrainian municipalities, with specific focus on factors

impacting the perceptions of foreign investors. The analysis and recommendations are detailed in the

P3DP published report, “Diagnostic Review of Legal and Regulatory Framework for PPP”. This

report has been used as a reference document for the Verkhovna Rada PPP Work Group and

challenged PPP Unit concepts being developed by MOEDT. Follow-on analysis, conducted by

P3DP’s legal specialists, documents reforms that are needed if Ukraine is to achieve an environment

that is attractive for foreign-based PPP private sector partners. These positions are documented in the

P3DP published report, “Most Critical Legal Issues”. This follow-on report details weaknesses in

Ukrainian laws and regulations that if not addressed and corrected are considered “deal breakers” to

any potential PPP transaction being organized under existing PPP laws.

The quarter saw positive improvements in the working relationship with the Ministry of Economic

Development and Trade (MOEDT), as both a “Beneficiary” and a “Recipient”. Within the context of

Ministry reorganization, previous P3DP counterpart personnel at MOEDT were replaced by Mr.

Vadim Kopylov as First Deputy Minister; Mr. Oleg Gnatsov, Department Head; and, Mr. Pavlo

Pokholko, Deputy Department Head. P3DP coordinates its activities through a new MOEDT

department called "Department of Investment, Innovation and Public Private Partnerships". P3DP

reached agreement with Mr. Gnatsov and Mr. Pokholko on new assistance goals, replacing the

previous MOU that was constructed with the prior management team. The quarter’s deliverables to

MOEDT consisted of meeting their top priorities, which were: 1) Appraisal Methodology; 2) PPP

training and 3) PPP Strategy Outline. MOEDT’s positive evaluation of P3DP’s support was detailed

in a formal “letter of performance” that Mr. Gnatsov sent to USAID.

Building on past working relationships, P3DP received cooperation from the State Agency for

Investments and National Projects Management (National Projects Agency or NPA), under the

leadership of Mr. Kaskiv, to be both “Beneficiary” and a “Recipient” of P3DP. This broadens P3DP’s

national level impact, including representation on NPA’s PPP Working Group. In addition, P3DP is

coordinating activities with the NPA’s Director of “Clean City”, a solid waste solutions program, and

jointly cooperating on solid waste management pilots in three cities. Rounding out P3DP’s national

level impact, Ms. Natalia Korolevska formally requested the participation of P3DP Managers Tatiana

Korotka and Ruslan Kundryk in the Verkhovna Rada PPP Working Group. Through this venue, P3DP

engages in discussions impacting regulatory reforms aimed at improving the PPP legal environment.

P3DP concluded the quarter with assistance plans focusing on six specific pilot PPPs at the sub-

national level. The group of PPP pilots includes three solid waste management projects in Vinnytsia,

West Crimea and Ivano-Frankivsk; parking management in Lviv; city park development and operation

in Simferopol, and a potential medical care facility in Zaporizhya. Capacity development activities

included direct consultations with city leaders, hosting a study tour to Poland highlighting parking

PPP experiences, and organizing consultants to provide short-term technical assistance to city leaders.

During the quarter, P3DP concluded sub-awards with three Implementing Partners: Kyiv Economic

Institute (KEI), Association of Ukrainian Cities (AUC) and East Europe Foundation (EEF). KEI

began conducting a baseline survey to gage the level of PPP awareness in Ukraine. AUC and EEF

will support a wide range of municipal activities, especially in the areas of awareness and capacity

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building. By quarter’s end, EEF had already launched a webpage dedicated to public private

partnerships, as one of the deliverables under its contract. Unfortunately, Irina Zapatrina, Head of

PPPDSC, decided to decline further consideration for a sub-award to serve as an Implementing

Partner for P3DP. Negotiations are still underway with Iryna Shcherbyna, Head of the Institute for

Budgetary and Socio-Economic Research (IBSER), which will be the last Implementing Partner

selected for the foreseeable future.

Excessive bureaucracy coupled with complex, often incoherent laws, continue to be the dominate

problems for PPP implementation in Ukraine, impacting everything from land-use allocation to

country access for potential foreign bidders. These obstacles are at least partially reflective of recent

performance indicators reported in the “Ukrainian Government Performance Report 2011” showing

conditions worsened during the calendar year 2011 on most performance indicators, including

investment climate, conditions for business, small and medium business, corruption and economic

freedom. Ukraine is distinguished as having the worst level of corruption in Europe, and has having

the worst conditions for business in Europe, except for Bosnia and Herzegovina. Compounding this

negative business environment, quality functions performed by the Government, included as part of

the “Democracy Index”, also declined.

As a result of pre-planning and stage setting inY1, P3DP was able to move rapidly to accelerate

implementation of program initiatives. Four of the most significant being:

1. Gide Loyrette Nouel (GLN), an internationally recognized legal firm based in Paris, France,

with an office in Kyiv, completed its Diagnostic Review of Legal and Regulatory Framework

for PPPs in Ukraine, and delivered summary presentations in three venues: USAID, MOEDT

and a public PPP Conference co-sponsored by P3DP and the VR Committee on Industrial

Policy and Entrepreneurship.

2. After extensive visits to multiple cities throughout Ukraine, P3DP staff and experts have

winnowed the 50+ potential PPP pilot projects to a short list of 18, within which 6 have been

designated as “Active” – setting the stage for awareness, capacity development and other PPP

project-related support in Y2 and beyond. The remaining projects on the list will continue to

be evaluated and assessed so as to result in at least 10 being ultimately chosen in Y2.

3. With significant GOU ministerial restructuring affecting the bulk of personnel within

MOEDT with whom the P3DP staff had worked in Y1, in Y2Q1 P3DP was able to quickly

build strong positive ties with the new personnel and regain lost momentum in successfully

delivering TA, training and joint initiative support with its governmental counterparts.

4. Initial formal training delivery under the Program occurred on November 16/17, 2011, at

MOEDT with multiple ministry representatives participating.

Notable administrative and programmatic activities pursued and achieved during Y2Q1 operations

included the following:

Date Activity

October 3, 2011 P3DP executed Implementing Partner sub-agreement with KEI

October 3, 2011 P3DP secures co-sponsorship of the planned PPP Conference from the VR

Committee on Industrial Policy and Entrepreneurship in a meeting with its

Chair, Natalia Korolevska

October 5, 2011 Gide Loyrette Nouel (GLN) representatives present summary of diagnostic

legislative review to USAID in the morning and representatives of MOEDT in

the afternoon

October 7/8, 2011 P3DP representatives attend the Black Sea Economic Forum at which P3DP

executes an MOU with the head of the Council of Ministers of ARC

October 10, 2011 NPA formally adds two P3DP representatives to its Working Group on Solid

Waste Management

October 12, 2011 P3DP COP and others met with Anatoliy Blyznyk, Minister for the Regional

Development, Construction, Housing and Communal Services, to set the stage

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for further cooperation

October 13, 2011 P3DP executed an MOU with the Mayor of Lviv regarding Lviv’s potential

PPP pilot project in parking management

October 14-15,

2011

P3DP representatives participated in the XI International Economic Forum in

Truskavets

October 17, 2011 Characteristics of PPP Baseline Survey discussed between P3DP and KEI

representatives

October 19, 2011 P3DP representatives meet with the new MOEDT liaison Pavlo Pakholko

regarding PPP initiatives and areas of cooperation

October 20, 2011 PPP Conference held to publically present the GLN Diagnostic Review of

Legal and Regulatory Framework for PPPs in Ukraine and several other PPP

implementation-focused presentations

October 21, 2011 Sub-agreement executed with AUC as a P3DP Implementing Partner,

supporting municipal level access, initiatives and promotion

October 28, 2011 Workshop at the Rus Hotel regarding PPP Unit functions, roles and

responsibilities – wrap up for the two previous Study Tours for stakeholders

October 31, 2011 P3DP registration/accreditation documentation amended by MOEDT to reflect

FHI 360 as implementing agent and NPA as both a Beneficiary and Recipient.

The Ukrainian translation of the name of the project was also changed.

November 7, 2011 P3DP’s local Appraisal Methodology Consulting Team meets with MOEDT

November 8-11,

2011

P3DP co-sponsors VII International Congress on Institutional and Technical

Aspects of Reforming Housing and Communal Services, and Alan Pieper, COP

delivered a presentation on the USAID-funded P3DP initiative

November 14/15,

2011

P3DP-sponsored Study Tour to Poland for Lviv representatives seeking PPP

solutions to communal services issues, and to the PPPs in Urban Management

conference

November 16/17,

2011

P3DP delivers case study training to MOEDT and other ministry

representatives, setting the stage for additional technically-focused training in

the future

November 18,

2011

P3DP resolves issues and finalizes amended Work Plan for Year 2 with USAID

November 21,

2011

Tatiana Korotka represents P3DP at the Autonomous Republic of Crimea

Donor Coordination Roundtable

November 29,

2011

Formal letter to Mr. Gnatsov, Head of Investments, Innovation and PPP

Department of MOEDT, finalizing the MOEDT Action Plan with P3DP

November 30,

2011

Coordination meeting with LINC re land issues and experience with various

municipal entities throughout Ukraine

December 7-9,

2011

P3DP representatives meet in Simferopol and Zaporizhya to resolve initial

outstanding issues related to PPP pilot projects in park development/operations,

regional municipal solid waste facilities and healthcare arenas

December 8, 2011 P3DP held a tariff regulation coordination meeting with representative of

MHRP

December 9, 2011 Sub-agreement executed with EEF as a P3DP Implementing Partner,

supporting awareness and capacity development at the municipal level

December 12,

2011

Held initial coordination meeting with local expert sub-contracted to assist

P3DP with certain tariff regulation activities

December 13,

2011

P3DP representatives visit Vinnytsia to assess two potential PPP pilot projects,

confirming acceptance of the SWM initiative as an “active” project

December 20,

2011

Various MOEDT and P3DP comments regarding the draft Appraisal

Methodology document are resolved, with the final results being incorporated

for formal delivery to MOEDT

December 21, P3DP delivers awareness workshop on multiple PPP topics to over 50 people in

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2011 Poltava, including city, rayon and oblast personnel, private sector and NGO

representatives

December 23,

2011

P3DP participates in the USAID/IBSER conference on Improving the

Efficiency of Budget Processes, at which P3DP’s Tatiana Korotka delivered a

presentation on The Use of PPPs for Development of Municipal Infrastructure

December 28,

2011

PPP pilot project summary documents for 2011 transmitted to USAID

The selection of 6 targeted PPP pilot projects throughout Ukraine from the dozens examined and

assessed sets the stage for significant programmatic activities for the balance of the program,

including the ramp-up of awareness and capacity-development activities, both locally- and regionally-

focused, and the pursuit of sector-specific technical assistance (TA) to augment P3DP resources

deployed to support planning and documentation development along PPP pilot project lifelines.

Additional training initiatives will be mounted in direct support of major governmental counterparts.

2. Work Plan Tasks During the Reporting Period

P3DP registration/accreditation documentation was successfully amended during the period to reflect

the FHI Development 360 LLC (FHI 360) legacy status related to the USAID-funded P3DP.

Continuing throughout the quarter and likely into the coming quarter are the several related

administrative actions necessary to fully finalize the transition – such as, comporting local

employment contracts, GDIP documentation, banking documentation, etc. No major obstacles are

contemplated to be encountered in completing this transition.

As noted elsewhere in this report, one of the Implementing Partners with which a sub-agreement was

finalized and executed is the Kyiv Economic Institute (KEI). KEI has begun its provision of technical

assistance to P3DP by its procurement (subsequent to USAID approval) of a local contractor to

conduct the Baseline PPP Awareness Survey. It is expected that the results of this survey will be

forth-coming in early Y2Q2. Further, in Y2Q2, KEI will begin its quarterly collection and reporting

of P3DP Program Monitoring Plan (PMP) data – with this PMP report being a complement to this

Quarterly Report document.

Programmatic design and negotiations related to the concluding of an Implementing Partner Sub-

Agreement with the Institute for Budgetary and Socio-Economic Research (IBSER) continued

through this reporting period with expectations that this Sub-Agreement will be finalized and

executed in Y2Q2, so that the associated TA related to budgetary assistance to PPP pilot project

municipalities.

Summaries of P3DP Objective activities during the reporting period follow; and Attachment 7a,

Photos and Captions, depicts representative applicable points of P3DP engagement with its

stakeholders.

Objective 1

One of the primary accomplishments under Objective 1 oversight during this reporting period is the

formal completion of the “Diagnostic Review of Legal and Regulatory Framework for PPPs” by Gide

Loyrette Nouel (GLN). This report was the primary subject of a PPP Conference cosponsored by

P3DP and the Verkhovna Rada Committee on Industrial Policy and Entrepreneurship on October 3,

2011 at the Intercontinental Hotel in Kyiv. The event featured keynote remarks by Ms. Sarah Wines,

Deputy Mission Director, USAID/Ukraine and Ms. Natalia Korolevska, Chair, Committee on

Industrial Policy and Entrepreneurship. The featured presentation was a summary of the findings of

the report given by Mr. John Crothers and Ms. Yelena Stasyk of GLN offices in Paris and Kyiv,

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respectively. The featured GLN report presentation was followed by several formal presentations

from various local individuals regarding their “real world” experiences in sectors where the PPP Law

and related laws apply. These presentations included remarks from Mr. Igor Zhovkva of the State

Agency for Investments and National Projects (National Projects Agency or NPA). Subsequently,

P3DP developed “The Most Critical Legislative Issues Relevant to PPP Project Start-ups in Ukraine”

which focuses P3DP’s near-term PPP environment activities (see Attachment 7.c).

P3DP Objective 1 and Objective 2 representatives continued their participation in several PPP- and

communal-related working groups under the Committee on Industrial Policy and Entrepreneurship,

the Ministry of Regional Development, Construction, Housing and Communal Services and the

National Projects Agency. These venues offer both official and unofficial opportunities to provide

valuable inputs to activities which may ultimately have significant effects on the ability of Ukraine to

maximize its effective use of the PPP mechanism to provide communal services to its citizens.

In cooperation with Objective 2, Objective 1 began crafting documentation seeking to lead to a terms

of reference for the development of a National PPP Strategy. As discussions throughout the period

matured, it became obvious that the corresponding Strategy Implementation Plan and technical

assistance to “shepherd” both the strategy and the implementation plan through the various levels of

approvals and public roll-out would be needed. Consequently, in Y2Q2, is it expected that

coordination efforts with MOEDT will continue with this expanded development plan for the full

range of technical assistance being defined.

Exchanges of information with potential Implementing Partner PPPDSC during the period

unfortunately resulted in PPPDSC’s declining to accept a Sub-agreement Amended negotiations with

another potential Implementing Partner, IBSER, were adjusted to partially account for the resources

previously expected through PPPDSC, and an Indefinite Quantity Sub-agreement is expected to be

executed with IBSER in Y2Q2.

Objective 2

Building on two study tours conducted in previous quarters, Objective 2 resources designed and

hosted a seminar with available tour participants focused on consolidation of lessons learned and

posing design parameters for further GOU consideration as to the functions roles and responsibilities

of the Ukraine “PPP Unit” as envisioned in the standing a PPP Law (see Attachment 7.e for the Study

Tour Workshop Report). The results of this seminar informed subsequent interactions with the newly-

appointed MOEDT personnel with whom P3DP now engages: namely, Mr. Vadim Kopylov - the First

Deputy Minister, Ministry of Economic Development and Trade; Mr. Oleg Gnatsov - Head of

Department, Department of Innovation and Investment Policy, and Public-Private Partnerships; and

Mr. Pavlo Pakholko -Deputy director, Investment and Innovation Activities and PPP Department, who

is the primary liaison with P3DP.

Significant interactive communications with MOEDT during the period helped the successful design

and delivery of both training and TA to the ministry, certain of its staff and other ministry personnel.

Specifically, (a) a two-day training on a PPP Case Study was delivered, (b) a local professional team

was subcontracted and managed to develop and deliver an Appraisal Methodology document in the

form and specifications as agreed with MOEDT5, and the Action Plan with MOEDT was finalized and

approved, allowing its inclusion in the USAID-approved P3DP Work Plan for Year 2.

Further, Objective 2 resources finalized its Action Plan with NPA for inclusion in the USAID-

approved Work Plan for Year 2; served to represent P3DP on several PPP-related work groups with

the VR and various GOU ministries represented the program in regional venues – such as the ARC

hosted Donor Coordination Roundtable; and assisted the program and USAID with preparation and

5A follow-on set of TA will be designed and procured in Y2Q2 to write the user manual and design and deliver

training as needed for the productive use of the Appraisal Methodology when approved by the GOU.

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support of documentation required for the submittal of an amendment to the P3DP

registration/accreditation documents to include the NPA as both a beneficiary and a recipient of P3DP

technical assistance.

Objective 3

The formal execution of the Implementing Partner agreements with the Association of Ukrainian

Cities (AUC) and the East Europe Foundation (EEF) precipitated significant planning activities in

Y2Q1 which will result in programmatic activities in Y2Q2 and thereafter. Further, during this

period, P3DP began heightened awareness and training activities with delivery of presentations and

awareness events, such as the PPP case study training for MOEDT and its other ministerial invitees,

the presentation delivered at the USAID/IBSER conference on Improving the Efficiency of Budget

Processes, the presentation delivered to the Poltava PPP Work Group, coordination meetings with the

Ministry of Regional Development, Construction, Housing and Communal services, and the active

participation of P3DP representatives on various working groups and committees dealing with PPP

issues.

Objective 3 supported Objectives 1 and 2 with the conduct of the important PPP Conference in

October wherein the summary results of the Gide Loyrette Nouel diagnostic Review of Legal and

Regulatory Framework for PPPs were delivered, along with presentations from Ukrainian

stakeholders as to their current challenges in implementing public services contracts under the

existing legal and regulatory regimes (see Attachment 7.b for the PPP Conference Report). At both

the previously-mentioned PPP case study training for MOEDT and the PPP Conference, P3DP

distributed survey materials seeking input from relevant stakeholders as to their interest (and assumed

value perception) in specific potential training topics in which the respondent is interested. The

results of this survey are included as Attachment 7.d, Training Interest Survey Results.

Substantial Objective 3 resources were spent during the month in the continued gathering of initial

information along with Objective 4 regarding the status of awareness in the potential PPP pilot project

municipalities and regions in order to further inform planning for both awareness and capacity

development initiatives to be forth-coming. Also, Objective 3 resources we used in the direct delivery

of awareness opportunities to the Poltava PPP Working Group.

Objective 4

With its selection criteria as a basis, the bulk of activities under Objective 4 was dedicated to further

winnowing of the 50+ previously identified PPP pilot projects down to 18 “short-listed” projects

within which 6 have been formally designated for direct further TA (see Attachment 7.g for the PPP

Pilot Projects Tracker). Terms of Reference (TORs) for various technical discipline TA have been

developed during the period with awards expected to result in numerous active consultants on the

ground in Y2Q2. Of particular import are TA assignments related to the Lviv parking management

project and the initial assessments and alternatives development for the three projects in solid waste

management in an ARC region, Vinnytsia, and Ivano-Frankivsk. A TOR for legal assistance

supporting the potential development of a healthcare-related project in Zaporizhya should also

produce activities in Y2Q2. And the sixth project being pursued is the development and management

of a central park facility in Simferopol.

A study tour was conducted to Poland for representatives from Lviv regarding potential parking

management alternatives under PPP mechanisms, and to attend a conference, PPPs in Urban

Management (see Attachment 7.f for the study tour report).

P3DP continues its scanning for additional project possibilities and interim assessment of additional

information that will contribute to the selection of additional projects beyond the first set of 6;

however, it is not expected that additional projects will be designated until Y2Q3, as considerable

effort must be dedicated in the interim to completion of additional technical evaluations of the

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selected projects and the beginning of coordination (with Objective 3) of substantial awareness and

training activities with the stakeholders for the initial PPP pilot project municipalities

3. Other Activities During the Reporting Period

Amplifying the theme of emergence are the various peripheral activities during Y2Q1 that support the

direct programmatic provision of technical assistance. With the bulk of the AED-to-FHI activities

passed, P3DP was able to issue sub-agreements to the three primary Implementing Partners of KEI,

AUC and EEF. Other activities begun and results achieved during the period included (a) the securing

of an amendment to the P3DP registration/accreditation documentation affirming the emergence of

FHI 360 as the legacy institution from AED and adding the National Projects Agency as a beneficiary

and recipient of TA from P3DP; (b) P3DP beginning its representative roles on various working

groups with the VR Committee on Industrial Policy and Entrepreneurship, under the Ministry of

Regional Development, Construction, Housing and Communal Services, the National Projects

Agency, etc.; (c) beginning to expand PPP awareness directly and indirectly through the direct

provision of conference or training support and the indirect influence of P3DP participation in various

high-profile events such as the Black Sea Economic Forum, the Autonomous Republic of Crimea

Donor Coordination Roundtable, the XI International Economic Forum in Treskavets, the VII

International Congress on Institutional and Technical Aspects of Reforming Housing and Communal

Services, the UNECE event related to PPP Readiness in Ukraine, the USAID/IBSER conference on

Improving Efficiency of Budgeting Processes, and the PPPs in Urban Management conference in

Poland (d) the execution of the bulk of the PPP Baseline Survey through Implementing Partner KEI;

(e) continual effective coordination meetings with fellow USAID project – CLC, LINC and MHRP;

and (f) the drafting and securing of approval for the P3DP Work Plan for Year 2 with its associated

PMP and budget data.

Additional, proactive oversight of reviews, approvals and support provision through the FHI 360

home office continues to improve. As evidenced by progress made through the date of this report, it

is envisioned that the levels of productivity and P3DP support from the FHI 360 home office will

continue to increase in the coming quarters.

P3DP continues to seek to standardize its use of certain other terms during the period of the

Cooperative Agreement (CA) in order to promote more accurate communications and understandings

among all parties. To that end, the following definitions are under use with P3DP and its partners:

a. “Public-Private Partnerships” for purposes of P3DP - Public-Private Partnerships occur

when public sector entities and private sector entities enter into long-term, comprehensive

contractual arrangements for either (a) the development of public infrastructure and its on-

going related public services or (b) the delivery of social services; and for the transfer

of significant risks and provision for performance rewards to the private sector entities. This

term will be abbreviated “PPP” in oral and written communications.

b. “Program” to be used when referring to P3DP – to attempt to avoid confusion when using a

short-form referral to P3DP, the word “program” [rather than “project”] will be used in oral

and written statements.

c. “Project” to be used when referring to a PPP project (contemplated or actual) – similar to the

above reason, the word “project” will be used in oral and written statements when referring to

an initiative which may become or is a PPP project.

d. “Implementing Partner” –a P3DP “Implementing Partner” is an entity with which P3DP

will have a standing formal scope of work defined that will directly contribute to the

integrated execution of CA initiatives. This relationship is characterized by a mutual, long-

term commitment between P3DP and the entity.

e. “Resource Partner” –a P3DP “Resource Partner” is an entity with which P3DP may/will call

upon from time to time for targeted execution of some service or development of one or more

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deliverables. This relationship is characterized by a short-term contract [purchase] between

P3DP and the entity.

f. “MOEDT Action Plan” – the ever-evolving, annually updated tabulation of MOEDT’s PPP

activities. Many of these activities will be reflected in the Activities Schedule of P3DP as it is

intended to provide technical assistance to MOEDT in various ways.

g. “Strategy Implementation Plan” – the document embodying the long-term implementation

initiatives of the GOU in the broad arena of PPP development. This document was previously

referred to as the “PPP Action Plan” in the P3DP CA with USAID.

h. “Action Plan” - the ever-evolving, annually updated tabulation of activities as agreed

between P3DP and any unique Implementing Partner. Essentially these are the “work plan”

of the respective Implementing Partner regarding the provision of assistance to P3DP or its

recipients.

i. “PPP Project Lifeline” – a pictorial model of the sequence of steps a P3DP PPP pilot project

is expected to pass through from “concept” to “implementation” as based on the existing PPP

Law and best international practice considerations.

4. Work Plan Tasks for Coming Reporting Period

The items following are excerpted from Activities Schedule within the USAID-approved Work Plan

for Year 2. This schedule includes embedded items reflecting the Action Plans as agreed between

P3DP and each of the MOEDT/GOU, NPA and MOEDT/ARC. Of significance during the coming

reporting period are:

a. P3DP will finalize and submit to USAID its Y2Q1 report for each of the Program Objective

Indicators (POIs).

b. An updated budget and certain other issues may for the basis for the submittal of a

Cooperative Agreement Amendment request to USAID.

c. Transition initiatives will begin to contend with the pending departure of the current expat

serving as start-up DCOP and Director of Professional Services.

d. One or more additional sub-agreements are expected to be concluded with P3DP

Implementing Partners.

e. The P3DP Communications Plan and an update to the approved Branding Strategy and

Marking Plan for P3DP are expected during the period in order to comport the evolved use of

certain terms and the revised Ukrainian name for the program resulting from the recent

amendment to the P3DP registration/accreditation documentation with MOEDT.

f. During the first part of Y2Q2, P3DP expects to receive the results of the Baseline Survey

initiated during Y2Q1. These results will inform the design of certain awareness activities

being planned for the balance of Y2 and beyond.

g. Significant legal efforts regarding supporting the program and project activities are expected

to include continued participation on various working groups focusing on amendments to

current GOU laws and sub-laws, and to include specific TA regarding certain land use and

healthcare provision issues associated with PPP pilot projects.

h. P3DP is expected to advise MOEDT in its contemplated restructuring of the PPP Inter-

Agency Working Group.

i. Securing of TA is expected in the area of drafting a GOU PPP Strategy, and significant efforts

will subsequently ensue with the development and roll-out of the related Strategy

Implementation Plan (SIP).

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j. General legal and operational assistance is expected to be delivered to several “governmental”

counterpart entities, including MOEDT/GOU, MOEDT/ARC, NPA, the Ministry of Regional

Development, Construction Housing, and Communal Services, and other ministries with

which the program may jointly participate in relevant work groups, etc.

k. Significant efforts will begin with MOEDT to assist in the formal design of its “PPP Unit”

and the operational and procedural systems required to make it fully functional. Several

specific training topics will be designed during the next quarter for delivery in Y2Q3, per

current agreement with MOEDT.

l. P3DP will coordinate awareness and training activities at the municipal level with both the

NPA and its Implementing Partner AUC so as to maximize the value of impact received from

P3DP resource applications. Further, P3DP will continue to seek appropriate opportunities for

sending appropriate local stakeholders to participate in national and international study tours,

conferences, etc. that will be of value to achieving P3DP’s stated goals.

m. With the finalization of 6 “Active” PPP pilot projects having sufficient PIB data to move

forward to next steps, several parallel avenues of TA will produce significant activities in

Y2Q2: sector-specific STTA secured to assist with preparation of assessments and

evaluations for potential projects; awareness activities at the municipal level – both general

and potentially targeted assessments of local resident/business opinions, etc.; nascent training

of appropriate municipal stakeholders; and continued planning and unique preparations for

subsequent stages of the applicable Pilot Project Lifeline. This will take the form of a “mini-

activities schedule” being designed for each of the 6 PPP pilot projects in Y2Q2.

n. Secure the designation of properly-credentialed person(s) to complete the ER Checklist for

each PPP pilot project per CA requirements.

o. Roll-out initial awareness campaigns at the municipal level; formalize media monitoring

activities; plan for the conduct of regional roundtables and other regional awareness and

capacity development initiatives – especially as may be coordinated with NPA and AUC.

p. Continued “back-burner” review and assessment of other potential PPP pilot projects which

are under “active consideration” by P3DP, and continual vigilance for other potential projects

that might be appropriate to pursue as resources allow.

q. TORs, SOWs or RfAs are expected to be drafted, issued and awarded in several areas such as:

gender baseline study preparation; financial modeling; solid waste management; training

delivery; various legal areas; and follow-on activities with strategy development; and

appraisal methodology documentation and training.

r. Investigate, design and initiate a study tour (likely to Poland) for appropriate municipal

representatives in support of specific PPP pilot project initiatives.

s. Design and deploy initial capacity-development and pilot awareness campaigns and

associated materials as appropriate to support PPP pilot project initiatives and the broader

level of PPP awareness across Ukraine. These activities are now more firmly schedulable

with the 6 active PPP pilot projects being identified.

t. In conjunction with the SWM STTA, prepare, design and conduct a “market sounding” event

for prospective stakeholders in PPPs in the sector.

u. Continue development of understanding and relationships with both international and

Ukrainian financial sector entities to define their potential interests and capabilities in

12


financially supporting PPP pilot projects.

v. Initiate efforts to draft the TOR supporting the investigation of the efficacy of the previously-

conceived “project development facility” as appearing in the CA. This assessment to be

carried out in Y2Q3.

w. Continue to respond to requests from USAID and P3DP beneficiaries as may be appropriate

under the P3DP CA.

1. Administrative and Managerial Issues

An amendment to the registration and accreditation documents for P3DP was formally requested

through USAID on August 31, 2011, and the formal approval was issued by MOEDT to become

effective on October 31, 2011. This amendment resulted in three changes affecting P3DP:

I. The named holder of the Cooperative Agreement with USAID for P3DP was changed to

FHI Development 360 LLC.

II. The State Agency for Investments and National Projects (National Projects Agency or

NPA) was added as both a beneficiary and a recipient of TA from P3DP.

III. The “official” name of P3DP in Ukrainian was changed to Програма розвитку

державно-приватного партнерства.

It is expected that additional amendments to the P3DP registration and accreditation documents will

be sought in Y2Q2 or Y2Q3 to add various municipalities as recipients for which PPP pilot projects

have reached the confirmed, post-concept paper phase of Lifeline development.

The “novation” of the Cooperative Agreement and the change in P3DP registration/accreditation

documentation required concomitant changes in local banking and payroll support documentation.

On December 7, 2011, P3DP concluded new banking relationships, and on November 17, 2011, a

revision to relevant documentation at the General Directorate for International Representative Offices

(GDIP) was finalized, and all P3DP local staff have been “transferred” to new employment

documentation both with FHI 360 and GDIP.

The workload of the full-time local staff has been increasing steadily with the ramping up of both

pilot project and awareness/training activities. During Y2Q2 it is expected that open positions in the

approved P3DP organizational chart will be filled. Further, initiation of transition activities will begin

to support the pending departure of the start-up expat DCOP and Director of Professional Services.

It should be noted that the 2011 changes to the visa requirements affecting expats working in Ukraine

on USAID projects remains unresolved. Case in point, the COP encountered two issues related to his

holiday vacation trip in December 2011:

At the airport, passport officials proposed to fine him for departing the country without

the latest visa requirements being reflected in his passport; however, he produced a

copy of the USAID letter regarding this issue being in process and was allowed to

proceed without having to pay a fine. This is the second time this has happened to the

COP.

Upon reaching the US, the COP’s passport was taken to the Ukrainian embassy in

Washington, DC to effect the supposedly needed updating of visa, etc. – whereupon the

Ukrainian Embassy personnel in Washington, DC denied knowing anything about a

new process and stated that the current visa regime was acceptable for the COP to

return to and enter Ukraine. As of the writing of this report, all known documentation

has been filed with applicable authorities to effect the issuance of residency credentials

to the COP under the new regulations.

13


Clearly, this degree of confusion and lack of responsiveness to resolving this issue are indicative of

other perceptions non-Ukrainian-based investors have formed, – thus potentially impacting

international interests in investing in PPPs in Ukraine.

6. Exceptional Issues

From time to time, P3DP will become aware of issues that bear noting or watching for potential

current or future program impacts. This section of the Quarterly Report documents these issues so

that applicable parties will be cognizant of potential impacts.

During Y2Q1, P3DP notes the following:

1. More and more of the local persons with whom P3DP comes in contact are mentioning the

potential effects in 2012 of its being an “election year” in Ukraine. The noted concerns are

not only the direct implications of potential changes in elected officials and appointees, but

the preliminary effects of the politicians’ actions (or deliberate inactions) so as to supposedly

have a more positive result on their being re-elected. It is speculated that certain initiatives in

the legal, regulatory or tariff arenas may be “avoided” until after elections are completed.

2. Remaining arenas of potential impact to effectively pursuing PPP pilot projects in Ukraine are

Euro 2012 events, the current negative inclinations toward Ukraine being voiced by the EU

and the availability of budget funds. Though no PPP projects related to Euro 2012 are in play

under P3DP and P3DP is avoiding becoming directly entangled with any Euro 2012 activities,

the simple facts that significant events are planned for Lviv and Kyiv potentially limit

mobility and housing access potentially needed in support of the delivery of TA under P3DP

(such as the published closure of Khreschatyk Street to vehicular traffic from May 25 to

July4, 2012). The potential effects related to EU opinions may limit the interest of regional

investors/operators/financers in Ukraine-based PPP projects. And finally, it is understood that

the recently passed state budget contains no provisions for IMF support – thus limiting the

general availability of public funding in a cascading manner throughout Ukraine.

3. From a “personnel” perspective (beyond the direct and indirect elections issues), there are

rumored to be changes in personnel at the Ministry of Regional Development, Construction,

Housing and Communal Service and perhaps changes at NPA, and noted statements in the

press re the emergence of new political players and political parties which may affect the

ability of P3DP to achieve desired results in PPP legal environment improvements.

4. Though initially visible in Poltava as a positive result, the impacts of the recent Presidential

instruction dated November 29, 2011, as further emphasized by the President in the

International Investment Conference held on December 9, 2011, regarding the accelerated use

of the PPP mechanism to address communal services provision at the municipal level are yet

unknown. The Governor of Poltava Oblast recently took an initiative to issue an order

regarding the intensification of the consideration of the use of PPPs for communal sector

modernization, including a quarterly reporting requirement. It is hoped that this newly-voiced

GOU interest in PPPs produces positive emphasis and consideration at the municipal levels in

Poltava and elsewhere in Ukraine; however, it could also provoke actions of “show” rather

than true consideration of the potential value of the mechanism.

14


7. Attachments

a. Photos and Captions

Olena Maslyukivska, P3DP’s Manager of Awareness and Capacity Development, delivers awareness

presentation in Poltava on the advantages of PPPs for municipal infrastructure. 58 people

participated, among which 32 – rayon and city level representatives; 15 – heads of departments at the

Poltava Oblast State Administration; 9 private businesses and 2 NGOs.

Jason Czyz, FHI 360 Project Director, and P3DP staff representatives meet with Mr. Konstantin

Grivakov, Director of Project Development and Implementation Department and Ms. Svetlana

Timshina, Development Expert, each from the Crimean Regional Development Agency (RDA) to

discuss P3DP training support and coordination of potential PPP pilot project initiatives in ARC.

15


Alan Pieper, P3DP COP, and Pavel Burlakov, First Deputy Prime Minister of the Autonomous

Republic of Crimea (ARC), execute an MOU between P3DP and the ARC Council of Ministers

regarding mutual cooperation in the area of PPP development and TA within ARC.

Chris Shugart, P3DP PPP Expert, delivers PPP training at MOEDT for representatives of

multiple GOU ministries using a case study approach to demonstrate the integrated nature of

successfully developing and completing a PPP transaction.

16


Tatiana Korotka delivers an awareness presentation on the use of PPPs to improve municipal

infrastructure to the 35-40 attendees at the USAID/IBSER Conference on Improving the Efficiency of

Budget Processes.

Valeriy Dobrovolskiy and Jason Czyz look on as Igor Korolchuk, Chief of Department of Communal

Services of Vinnytsia displays the various items of documentation supporting the proposed site for the

new municipal solid waste handling facility, which is designed to support the needs of Vinnytsia and

several surrounding villages.

17


P3DP’s PPP Conference included opening session remarks by USAID Deputy Mission Director

Sarah Wines and VR MP Natalia Korolevska (whose VR Committee on Industrial Policy and

Entrepreneurship co-sponsored the event with P3DP). The key presentation was delivered by John

Crothers of Gide Loyrette Nouel, TA providers to P3DP who authored the report “Diagnostic Review

of Legal and Regulatory Framework for PPPs.”

…COP Alan Pieper opens session with Ms. Korolevska (VR) and Mr. Zhovka (NPA) waiting to

deliver their remarks.

…Mr. Crothers delivers his summary of the findings of the Diagnostic Review.

18


…conference participants to the right of the speaker’s podium.

…conference participants to the left of the speaker’s podium.

19


Alan Pieper delivers awareness presentation on PPP activities to the VII International Congress on

Institutional and Technical Aspects of Reforming Housing and Communal Services, co-sponsored by

P3DP and the Ministry of Regional Development, Construction, Housing and Communal Services.

20


b. PPP Conference Report

The report following provides general parameters of the PPP Conference held at the Intercontinental

Hotel on October 20, 2011. The many annexes, including copies of the Gide Loyrette Nouel

document and presentation and the several presentations from other parties are available at P3DP. In

essence, the next attachment to this Quarterly Report for Y2Q1 provides a summary of the applicable

findings from the conference and informs P3DP’s efforts, particularly in the area of legislative

strengthening to support the use of PPPs in Ukraine, for the balance of the program timeline.

MAKING UKRAINIAN

PUBLIC PRIVATE PARTNERSHIPS WORK:

NEXT STEPS FOR LEGAL AND REGULATION

REFORMS

Final Conference Report

Conference Hall of the InterContinental Hotel

20 October 2011

Prepared by:

Olga Petrenko, Operations and Senior Project Coordinator

Olena Maslyukivska, Manager of Awareness and Capacity Development

21


1. INTRODUCTION

P3DP works closely with the Ministry of Economic Development and Trade with a primary

role being to advise the Ministry on PPP matters and promote the Government’s policy on

PPPs, including recommendations for legal reform and for the successful establishment of the

envisaged PPP Unit.

P3DP issued a tender and subsequently selected the distinguished law firm of Gide Loyrette

Nouel to conduct a “Diagnostic Review of the Legal and Regulatory Framework for Public

Private Partnerships in Ukraine.” The objective of this review, in the light of international

good practice, was to identify significant obstacles, deficiencies, and problem areas that could

inhibit or constrain the development, procurement, financing, or implementation of sound and

bankable PPP arrangements.

In order to present and disseminate the results of this groundbreaking and very important

study for Ukraine, a conference “Making Ukrainian Public Private Partnerships Work: Next

Steps for Legal and Regulation Reforms” was organized on October 20, 2011 at the

Conference Hall of the InterContinental Hotel, 2A Velyka Zhytomyrska Street, Kyiv,

Ukraine. The main objective of the conference was to offer views of specific potential PPP-

related challenges for Ukrainian municipalities through the prism of Ukrainian and

international best practices (see Invitation in Annex 1). The morning session was devoted to a

summary presentation on the Review; while the afternoon sessions were called to illustrate

on-the-ground experiences in Ukraine in contending with legal and regulatory challenges

with PPP-type projects.

The conference received co-sponsorship of the Verkhovna Rada of Ukraine Committee for

Industrial and Regulatory Policy and Entrepreneurship, in which P3DP also actively

participates on drafting amendments to various laws and sub-laws affecting the PPP

environment in Ukraine. A letter from the Committee can be found in Annex 2.

2. PARTICIPANTS

The conference brought together representatives of the Government of Ukraine, Verkhovna

Rada of Ukraine, various ministry representatives, NGO members, etc. Presidential

Invitations were sent to 179 individuals from which 97 registered for the event and 75

attended (Annex 3). Out of 75 attendees 43 were male (57.33%) and 32 female (42.67%).

The table 1 below presents a brief summary of the distribution of the participants’ attendance:

Table 1 - Conference participants distribution by organization type

Organization Invited Confirmed Attended

USAID 6 4 4

P3DP 9 9 9

Parliament of Ukraine 5 4 3

GOU 27 16 10

Private companies 51 25 18

Public enterprises 13 9 5

International organizations, embassies, and NGOs 68 30 26

Total 179 97 75

22


3. SESSIONS OVERVIEW

Conference Agenda was comprised of the morning and afternoon sessions (Annex 4). Some

photos from the event could be found in Annex 11. The sessions were opened by Sarah

Wines, USAID / Ukraine Deputy Mission Director and Natalia Korolevska, Member of

Verkhovna Rada of Ukraine, Head of the Committee on Industrial and Regulatory Policy and

Entrepreneurship at the Verkhovna Rada of Ukraine.

3.1. Morning Presentation

The opening remarks were followed by the presentation delivered by GLN representatives,

who conducted the P3DP-commissioned diagnostic review. Through the prism of Ukrainian

and international best practices, the session offered views of specific potential PPP-related

legal and regulatory challenges for Ukrainian municipalities (Annex 6.0). The main focus of

the presentation included a summary of the findings, as well as recommendations provided in

a priority order of implementation:

First Priority: necessary to successfully implement pilot projects.

Second Priority: necessary to increase the attractiveness of the PPP framework.

Third Priority: necessary to increase the long-term efficiency of the PPP framework.

The presentation was followed by the Q&A session, moderated by P3DP Manager for

Objective 1, Mr. Ruslan Kundryk.

Both the Report and the Presentation were made available to the participants in Ukrainian and

English as part of the registration package.

3.2. Afternoon Session

The afternoon session provided participants in the conference with on-the-ground experiences

in Ukraine in contending with legal and regulatory challenges with PPP-type projects. The

session was moderated by Ms. Alyona Babak, Project Senior Expert, USAID/Municipal

Heating Reform Project.

The presentations were grouped by sectors which were of the utmost interest to P3DP at the

time: parking management; district heating and energy efficiency; and solid waste

management. Speakers included representatives of the central and local authorities, as well as

private sector advisors, and USAID projects, which all together provided a relatively holistic

view of the sectors discussed. Each presentation was followed by the questions from the

audience, which additionally reinforced and highlighted the many important issues in the

Ukrainian legal framework regarding PPPs.

Kyiv City was represented by Mr. Roman Kachur, the Deputy Head of the Economic and

Investment Policy Department of the Kyiv City State Administration. Mr. Kachur presented

previous experiences in the arena and the city’s further openness towards use of PPPs,

including the presenting of several project ideas in municipal infrastructure. These ideas

included i) a forth branch of the metro line; ii) certain automobile road tunnels; iii)

construction of transportation transfer points and parking facilities; and iv) updates desired

for the city water and sewerage systems (Annex 6.1).

23


Parking Management was represented by Mr. Dmytro Petsiy, deputy head of the legal

department of the Lviv City Council; and a managing partner of the Arzinger law firm, Mr.

Timur Bondaryev, who is also an advisor to the Lviv Mayor. While Mr. Petsiy provided a

positive view on the possibilities of implementing an E-Ticketing System and Parking

Management through PPPs and reported on the current progress Lviv has made, Mr.

Bondaryev provided a list of obstacles, which appear to hinder further progress, namely: i)

absence of applicable existing models of street parking management through PPPs; ii)

limitations of the private sector ownership rights of the objects created under a PPP

framework; iii) the fixed profit margin on the level of 12%, which potentially makes

municipal PPPs commercially unattractive; iv) low parking fees; v) undefined or

cumbersome conditions for land plots use for the PPPs; and vi) lack of the mechanisms for

investor protection (Annex 6.2).

Legal issues in District Heating and Energy Efficiency were presented by Mr. Andriy

Mitskan, Deputy COP of the USAID/Municipal Heating Reform Project and Mr. Ihor

Murashko, Director of the energy consulting company ITCON.

Mr. Mitskan identified barriers and opportunities for PPPs in the Municipal Heating Sector.

In particular, he emphasized that PPPs can be one of the important sources of funding for

district heating modernization in Ukraine. Among important barriers for PPPs in the sector,

he listed the following: i) undefined model for regulatory responsibility, whether apartment

or building; ii) outdated principles for pricing regulations defined by the Law of Ukraine “On

Natural Monopolies”; iii) lack of clarity related to tariff components and thus the lack of the

price formation methodology; and iv) the absence of mechanisms of adjusting tariffs to the

external factors (Annex 6.3).

Mr. Murashko presented the idea of using the “energy performance contract” as a mechanism

for PPPs in energy efficiency improvement of the public buildings. He presented the idea, its

current state of development in Poltava, and illustrated his thoughts with concrete calculation

from assessments made in the Poltava region (Annex 6.4).

Municipal solid waste management sector was presented by Mr. Andriy Artazei, Director

of the State Enterprise “Clean City” Project of the State Agency of Investment and National

Projects. He reported on the recent developments in the consideration of use of PPPs as an

instrument for implementing National Project “Clean City” and listed problems his

organization has encountered: i) negative investment climate; ii) difficulty attracting

commercial financing; iii) perceived political and economic risks for the investor; iv)

bureaucracy and corruption; v) virtual impossibility of using national bonds to support

needed financing requirements; vi) inconsistent legislation; vii) unsettled public and private

relations; and viii) a currently unfeasible waste processing tariff regime (Annex 6.5).

The afternoon session was concluded by Mr. Chris Shugart, P3DP PPP Consultant. In his

summary presentation, Mr. Shugart reflected on the issues raised during the Conference and

his experiences with international PPP practices. He highlighted three significant areas where

changes are needed: i) remuneration to the PPP company (e.g. tariffs and payments by public

authorities, especially multi-year commitment and budget issues); ii) lenders’ concerns (e.g.

step-in rights and access to international arbitration); and iii) state and municipal financial

support. Mr. Shugart also summarized three broad objectives of good PPP legislation: i)

facilitation, liberalization and flexibility; ii) regulation focused on protecting the public

interest; and iii) the potential provision of state financial support (Annex 6.6).

24


4. CONFERENCE MATERIALS

Conference materials were comprised of the following package, made available both in

Ukrainian and English:

1. Program (Annex 2)

2. Speakers’ Bios (Annex 5)

3. GLN presentation (Annex 6.0)

4. Diagnostic Review Report

5. Conference Evaluation Questionnaire (Annex 7)

6. Training Needs Questionnaire (Annex 8)

5. CONFERENCE EVALUATION

5.1 Conference Feedback

Each participant was provided with a questionnaire assessing the conference (Annex 7).

Altogether, 16 surveys were submitted. Overall the feedback was very positive but the

participants expressed a desire to have more discussions. Among the sectors the participants

liked the district heating and energy efficiency presentations the most, followed by parking

management and Mr. Shugart’s summary take-away section. On the individual presentations,

John Crothers was reported to be the most successful meeting the audience expectations (4

respondents), followed my Mr. Mitskan (3 respondents). The feedback results are presented

below.

Responses to the Questionnaire

1. How useful for your work was the presented by Gide Loyrette Nouel report on the diagnostic

review of existing legislative and regulatory environment for the implementation of PPP in

Ukraine? (1 = not useful at all, 5 = very useful).

1 2 3 4 5

Total # of

questionnaires Average

Quality of research 3 4 8 15 4,33

The format of presentation material 1 1 3 8 13 4,38

Discussions and answers 2 6 3 11 4,09

Comments:

Not enough time for discussions

Moderator has to be more confident in leading the session

2. How useful for your work were sectoral issues raised and discussed: (1 = not useful, 5 = very

useful).

1 2 3 4 5

Total # of

questionnaires Average

Urban transport system 1 9 4 14 4,21

Heating and Energy Efficiency 1 3 10 14 4,64

Management of solid waste 1 1 7 3 12 4,00

The use of international

experiences 3 5 6

14 4,21

Discussion and Question 10 2 12 4,17

Comments:

25


Would like to hear PPP example from Ukraine in other sectors

Would like to hear more about problems, which arise during PPP implementations and the

solutions within the current legal framework

3. What presentations to your opinion were most successful in terms of covering issues related

to the PPP legal framework in Ukraine and prospects of their solution?

John Crothers 4

Andriy Mitskan 3

Dmitro Petsiy 2

Ihor Murashko 2

Andrei Artazei 2

Timur Bondaryev 2

Chris Shugart 2

Typical comments included some form of the following:

Every presentation was interesting and useful in a sense, for the PPP implementation in

Ukraine, will try to use this experience in our work

5.2 Training Needs Questionnaire

P3DP used this conference event to assess self-perceived stakeholder training needs.

Anonymous questionnaires, designed by the P3DP consultant Mr. Chris Shugart, were

distributed during the conference (Annex 8).

26 responses were received. Summarized results are provided in a table below. The topics are

ranked according to the stated preferences, which put the most desired training topics first,

first three being:

PPP risks and incentives; risk identification, assessment, and allocation; PPP

contracts;

The PPP preparation, appraisal, and approval process; preparing and vetting a “PPP

feasibility report;”

In-depth look at the PPP financial model: preparation, structure, and uses.

It was surprising to see that some very important topics received low ranking, while the

conference speakers and GLN have clearly identified these topics as very important for the

successful PPP implementations. This means that more training and awareness needs to be

done to explain to PPP stakeholders the needed knowledge and skills required in such

important topics noted following.

Dispute resolution in PPPs: arbitration and expert determination

What is “bankability”?

Tariff adjustments in PPP contracts

Detailed look at contract provisions for payments to be made in the event of the early

termination of a PPP (more specialized topic)

26


Responses to the Questionnaire

1. Would you be interested in attending these two introductory seminars (Basic concepts

and In-depth case study)?

Yes 20

No 1

May be 4

N/A 1

2. Please place a check mark in the appropriate box beside each proposed topic to indicate

the degree of your interest: (“0” means you are not interested; “1” means you are mildly

interested; “2” and “3” indicate greater interest; and “4”means that you are strongly

interested in the topic)

0 1 2 3 4 not

filled total Mean

PPP risks and incentives; risk identification,

assessment, and allocation; PPP contracts 0 0 1 9 16 26 3,58

The PPP preparation, appraisal, and approval

process; preparing and vetting a “PPP

feasibility report”

0 1 2 9 14 26 3,38

In-depth look at the PPP financial model:

preparation, structure, and uses 0 0 3 10 13 26 3,38

State (and municipal) guarantees in the context

of PPPs 0 0 4 9 11 24 3,29

Methodologies for financial and economic

appraisal of a PPP 1 0 3 7 14 1 26 3,19

The “public sector comparator” and its

problems; “value for money” 0 2 5 7 12 26 3,12

Introduction to “project finance” (the usual

method of financing those PPPs that are set up

using a “special purpose company”)

0 0 6 12 8 26 3,08

PPP institutions. “PPP units”: What are they

and what do they do? 0 2 4 8 11 1 26 3,00

Fiscal issues: state budget liabilities arising

from PPPs; how to assess and monitor; fiscal

sustainability

0 0 8 7 10 1 26 2,96

Case studies of PPPs in other countries in

various sectors: power, roads, ports, health

care, etc.

0 3 6 7 10 26 2,92

What is “bankability”? 0 3 7 9 6 1 26 2,62

Brief introduction to (or review of) discounted

cash flow methods (e.g. net present value and

internal rate of return). (This is a prerequisite

to being able to fully appreciate some of the

following seminars concerning financing.)

1 2 6 7 8 2 26 2,58

Tariff setting by utility regulators: best

international practice; “revenue requirement”;

affordability and subsidies

0 5 5 7 7 2 26 2,46

27


The PPP procurement process, including EU

practices 1 6 2 8 7 2 26 2,38

Tariff adjustments in PPP contracts 2 5 5 6 7 1 26 2,35

Detailed look at contract provisions for

payments to be made in the event of the early

termination of a PPP (more specialized topic)

2 4 5 6 7 2 26 2,31

Overview of changes in PPP financing since

the financial crisis began in 2008 2 3 11 5 5 26 2,31

Dispute resolution in PPPs: arbitration and

expert determination 1 5 9 4 6 1 26 2,27

6. MEDIA COVERAGE

Prior to the Conference, a Press Release was prepared, approved by the USAID, and

distributed through available channels. The Press Release and Press Note can be found in

Annex 9. Press packages were prepared for the press representatives’ use. These packages

included the press release and also contained a summary of the diagnostic review and

additional information about USAID/P3DP (Annex 9.1).

The channels of their distribution were the following:

1. Through the media contacts of P3DP Implementing Partners: East Europe Foundation

and Association of Ukrainian Cities.

2. Direct emailing and faxing to the media provided by Ms. Valentina Numenko from

the USAID Kyiv Office ([email protected]; 537-4679 or 050-448-6251).

TV stations (faxes were sent)

1. 288-2157 (ICTV)

2. 501-9898 (STB)

3. 490-7671 (1+1)

4. 207-0313 (Inter)

5. Ukrainian Business Channel (UBC): Volodymyr Veselovskyi, Head of the

Financial Markets Program [email protected]; [email protected] 536-

9230,

Printed media (emails were sent)

1. Newspaper Ukrayina Moloda: Solomiya Skoryk [email protected];

454-85-78, 454-85-99;

2. Newspaper Dzerkalo Tyzhnya: Nataliya Petrivna Yatsenko,

[email protected]; 521-1660, 529-7822;

3. Newspaper Facty: Liliya Povolotska [email protected];

[email protected] 484-60-95, 211-8394;

4. NewspaperDen’: Vitaliy Knyazhanskyi (Editor of Economic Department)

[email protected], 414-5946

The press monitoring was conducted via internet. The following pages contained information

about the Conference, which in essence repeated the press release.

1. AUC

http://www.auc.org.ua/news/%C2%ABspriyannya-realizatsii-mekhanizmu-derzhavno-

privatnogo-partnerstva-v-ukraini-neobkhidni-kroki-

http://www.auc.org.ua/news/%C2%ABspriyannya-realizatsii-mekhanizmu-derzhavno-privatnogo-partnerstva-v-ukraini-neobkhidni-kroki-

http://www.auc.org.ua/news/%C2%ABspriyannya-realizatsii-mekhanizmu-derzhavno-privatnogo-partnerstva-v-ukraini-neobkhidni-kroki-

28


2. «Україна комунальна» / Ukraine Communal

http://jkg-portal.com.ua/ua/news-gkj/jkgrizne/13289-amerikancz-mayut-namr-dopomogti-

ukran-u-stvorenn-strateg-dpp

3. Media Pulta

http://www.mediapulta.com/show/release/2267_spriyannya_realzatsi_mehanzmu_derjavno_p

rivatnogo_partnerstva_v_ukrain_neobhdn_kroki_z_reformuvannya_zakonodavstva

4. BizRelease: news of companies and markets

http://bizreliz.info/index.php?option=com_content&view=article&id=2636:2011-10-27-09-

14-06&catid=91:2010-05-20-18-21-30&Itemid=184

5. Search engine meta.ua

http://pr.meta.ua/read/21399

7. CONCLUSIONS AND FOLLOW UP

The Conference became an important milestone for both identifying further steps in P3DP

activities in the legal support of the GOU and awareness and training activities under P3DP’s

Objective 3. It also provided useful checkpoints of which potential users of the PPP

mechanism should be aware. For example, P3DP has followed the Conference with

engagements to perform a tariff study and prepared a summary of the most Critical

Legislative Issues relevant to Public-Private Partnership project startups. These materials

will be used by P3DP to design and provide PPP awareness and training initiatives for

municipal representatives in the coming months and years of the program.

Regarding follow-up activities, “thank you” letters were sent to all speakers during the week

after the conference.

In addition, conference presentations were uploaded on the Association of Ukrainian Cities

(AUC) website and are freely available for downloading

(http://www.auc.org.ua/news/%C2%ABspriyannya-realizatsii-mekhanizmu-derzhavno-

privatnogo-partnerstva-v-ukraini%C2%BB). In addition, AUC requested the Ukrainian

version of the Diagnostics Review to be uploaded (Annex 10), and the file was provided and

subsequently uploaded to the above AUC webpage.

In January 2012, a summary of the report and conference findings will also be published in

the monthly Bulletin of AUC, which is disseminated to about 1000 of its municipal members

throughout Ukraine.

http://jkg-portal.com.ua/ua/news-gkj/jkgrizne/13289-amerikancz-mayut-namr-dopomogti-ukran-u-stvorenn-strateg-dpp

http://jkg-portal.com.ua/ua/news-gkj/jkgrizne/13289-amerikancz-mayut-namr-dopomogti-ukran-u-stvorenn-strateg-dpp

http://www.mediapulta.com/show/release/2267_spriyannya_realzatsi_mehanzmu_derjavno_privatnogo_partnerstva_v_ukrain_neobhdn_kroki_z_reformuvannya_zakonodavstva

http://www.mediapulta.com/show/release/2267_spriyannya_realzatsi_mehanzmu_derjavno_privatnogo_partnerstva_v_ukrain_neobhdn_kroki_z_reformuvannya_zakonodavstva

http://bizreliz.info/index.php?option=com_content&view=article&id=2636:2011-10-27-09-14-06&catid=91:2010-05-20-18-21-30&Itemid=184

http://bizreliz.info/index.php?option=com_content&view=article&id=2636:2011-10-27-09-14-06&catid=91:2010-05-20-18-21-30&Itemid=184

http://pr.meta.ua/read/21399

http://www.auc.org.ua/news/%C2%ABspriyannya-realizatsii-mekhanizmu-derzhavno-privatnogo-partnerstva-v-ukraini%C2%BB

http://www.auc.org.ua/news/%C2%ABspriyannya-realizatsii-mekhanizmu-derzhavno-privatnogo-partnerstva-v-ukraini%C2%BB

29


c. The Most Critical Legislative Issues Relevant to PPP Project Start-ups in Ukraine

30


31


32


33


34


35


36


37


38


39


40


d. Training Interest Survey Results

The excerpted tabulation below presents the “top 12” topics of interest expressed by attendees of the

PPP Conference and the PPP Case Study training delivered at MOEDT during Y2Q1.

Results of training interest from October 20 PPP Conference and October 28 workshop

Total number of questionnaires submitted

22 including those from Oct. 28 workshop 7

including those from MOEDT training 4

Would you be interested in attending these two introductory seminars?

EXPECTED ON 12/05/11 3

Yes 20 No 1 May be 4 N/A 1

0 1 2 3 4

not filled total Mean

PPP risks and incentives; risk identification, assessment, and allocation; PPP contracts

0 0 1 9 16 26 3.58

The PPP preparation, appraisal, and approval process; preparing and vetting a “PPP feasibility report”

0 1 2 9 14 26 3.38

In-depth look at the PPP financial model: preparation, structure, and uses

0 0 3 10 13 26 3.38

State (and municipal) guarantees in the context of PPPs 0 0 4 9 11 24 3.29

Methodologies for financial and economic appraisal of a PPP 1 0 3 7 14 1 26 3.19

The “public sector comparator” and its problems; “value for money”

0 2 5 7 12 26 3.12

Introduction to “project finance” (the usual method of financing those PPPs that are set up using a “special purpose company”)

0 0 6 12 8 26 3.08

PPP institutions. “PPP units”: What are they and what do they do?

0 2 4 8 11 1 26 3.00

Fiscal issues: state budget liabilities arising from PPPs; how to assess and monitor; fiscal sustainability

0 0 8 7 10 1 26 2.96

Case studies of PPPs in other countries in various sectors: power, roads, ports, health care, etc.

0 3 6 7 10 26 2.92

What is “bankability”? 0 3 7 9 6 1 26 2.62

Brief introduction to (or review of) discounted cash flow methods (e.g. net present value and internal rate of return). (This is a prerequisite to being able to fully appreciate some of the following seminars concerning financing.)

1 2 6 7 8 2 26 2.58

11/21/2011

by OM & TK

41


e. Study Tour Workshop Report

During Y1, P3DPdesigned and managed two study tours for stakeholders in the ultimate design of

PPP Unit functions, roles and responsibilities within Ukraine. These two tours encompassed meetings

with and presentations by the relevant personnel of PPP Units in Zagreb, Croatia and St. Petersburg,

Russia – giving the study tour participants experience with significantly different forms of unit

organization in the region. The report following summarizes the workshop held in Y2Q1, subsequent

to the study tours.

FOLLOW-UP WORKSHOP

ON STUDY TOURS FOR UKRAINIAN NATIONAL GOVERNMENT OFFICIAL

Kiev, October, 28, 2011

OUTLINE

Introduction

Primary objective

Key findings

Value creation

Annex A. Presentation

Annex B. Selected photos

INTRODUCTION

The Law of Ukraine "On Public Private Partnership" was approved in 2010, and the Ministry of

Economic Development and Trade (MoEDT) was appointed by the President as an authorized

executive body on issues of PPP in Ukraine. MoEDT is responsible for summarization of the results

of PPPs; coordination of PPP development in Ukraine; development of institutional, legislative and

consultative support in this sector; oversight on implementation of PPPs; and dissemination of

experience gained.

P3DP conducted training interventions (Zagreb, Croatia and St. Petersburg, Russia) supporting the

Ministry of Economic Development and Trade, PPP Interagency Working Group under the Ministry

of Economy of Ukraine, State Agency for Investments and National Projects, and other line

Ministries.

The basic goal of the study tours was to introduce participants to successful PPP units and PPPs in

order to help them to more knowledgably formulate their opinion on the roles and functions of the

PPP unit in Ukraine.

Participants were exposed to models, functions, roles and practices of the PPP unit operation in

Croatia that have resulted in successful PPP implementation, with the expectation that they will be

able to decide what principles and practices observed and discussed are applicable to the PPP unit to

be established in Ukraine.

Primary Objective

42


Based on knowledge received in these study tours, the workshop participants will be able to discuss

different scenarios of the establishment of a PPP Unit in Ukraine, by applying the principles and

practices observed and discussed in study tours.

Key Findings

Alan Pieper provided introductory remarks for the workshop, explaining its goal and objectives. Then

Tatiana Korotka, as a Manager of GOU Development Support, made a presentation (Annex A)

summarizing observations during the study tour, explaining the expected follow-up activities, and

highlighting several issues related to PPP Unit functions and responsibilities.

The speakers and attendees shared their opinions regarding institutional framework of PPP in Ukraine,

focusing on organizational location, structure, and functional responsibilities of the contemplated PPP

Unit, and its interactions with line ministries and municipal governments. In particular:

Igor Yagovdik, Deputy Minister of Ministry of Economic Development and Trade of ARC,

described the current experience of Crimea in infrastructure development including institutional

issues (the introduction of PPP functions to the work of the Ministry, the Agency for Regional

Development), and also presented a strategy for the development of the Crimea though 2025. A

basis of the implementation of the Strategy will include use of the mechanism of PPPs. Based on

the knowledge obtained in the study tour, Mr. Yagovdik took part in the discussion of the role of

the MoEDT as a PPP unit.

Oleg Svetlichnyi, Head of the Kiev City Administration Department which is responsible for

development of investment projects actively took part in the debate. Mr. Svetlichniy expressed his

opinion about the strengths and weaknesses in the organization of PPP units in Croatia and St.

Petersburg. In addition, he informed the participants that the Kiev City Administration has

approved a long-term strategy of Kiev development. At the same time, Mr. Svetlichny expressed

his difficulty in determining how functions of PPP should be implemented at the municipal level.

MoEDT was represented by Oleg Gnatsov, Director of the Department on Investment and

Innovation Policy and Public-Private Partnership, and his deputy Pavlo Pakholko. Representatives

of the Ministry presented their vision regarding PPP functions, which are mainly limited to the

features that appear in the PPP Law and functions of PPP policy and strategy development in this

area. In addition, Mr. Gnatsov presented the structure of his department within MoEDT and

described the envisioned objectives for each organizational unit.

The discussion on PPP Unit parameters also touched upon the needed improvements to legislation

on PPPs in Ukraine so that the interests of public and private partners may be more respected and

protected.

Additionally, the discussions included representatives of the National Projects Agency,

Ukravtodor, and the Commercial Law Center (see Annex B for selected photos from the

workshop).

Value Creation

These follow-up discussions demonstrated that representatives of the government agencies have an

understanding of the necessity for development of PPPs in Ukraine, but lack clear unified

understanding of the functions and roles of a PPP Unit. Therefore, there is no shared concrete vision

of the PPP Unit structure, its resourcing, operational policies, level of influence on the preparation and

promotion of PPP projects.

43


In this regard, the role of P3DP is very important in providing Government of Ukraine support

concerning the explanation of PPP functions, formulation and implementation of the organizational

structure of the PPP Unit, development and implementation of operational policies, capacity building

for personnel for the Government of Ukraine and municipal entities, etc.

AnnexA

44


45


46


47


48


Annex B

49


Alan Pieper and Olga Petrenko provide introductory remarks.

Participants attentively listen to various presentations.

50


Tatiana Korotka delivers the stage-setting presentation to start the workshop discussion

Alan Pieper and Georgiy Gnatsov discuss PPP Unit functions during the workshop break

51


f. Poland Study Tour Report

As P3DP efforts become more and more focused on interactions with the specifically selected PPP

pilot project municipalities, more TA activities are directed at the municipal level. In that regard,

P3DP recently sponsored a small study tour to Poland for stakeholders in Lviv with which P3DP is

investigating the efficacy of a PPP initiative support Lviv’s inner-city parking management plans. The

report text following summarizes that tour.

STUDY TOUR OF LVIV CITY

ADMINISTRATION

REPRESENTATIVES AND P3DP TO

POLAND

Warsaw, November 14th-15th - 2011

52


Prepared by: Valeriy Dobrovolskiy, PPP Transactions Manager Participants from Lviv City Administration: Sergiy Kiral, Chief of Investment and Foreign Relations Department Dmytro Petsiy, Deputy Chief of Legal Department Andryi Bilous, Deputy Chief of Transportation Department Participants from P3DP: Valeriy Dobrovolskiy, PPP Transaction Manager, P3DP

Introduction

On October 13th, 2011, P3DP signed a Memorandum of Understanding and a 2-Year Action Plan with Lviv Mayor Mr. Andryi Sadovyi, which acted on behalf of Lviv City Council, to mutually develop and implement the PPP Pilot Project “Lviv City Parking Management”. Being a medium size historical pro-western city with UNESCO-protected downtown, Lviv though its City leaders has been very actively looking for a while at peer parking management solutions, undertaken in CEE countries. It became known that a number of Polish Municipalities (Gdansk, Poznan, Krakow, Wroclaw, and Warsaw) are reforming parking management and introducing outstanding facilities to park vehicles to reduce the number of cars parked on-street, which leads to greater use of public transportation and a decrease in road movement traffic jams on city streets. As Lviv is currently in the course of active development of the new city structure of road movement, which envisages greater use of public transportation and future decreasing of on-street parking spots in downtown by potential introduction of off-street parking facilities, controlled in full or partly by the city. The PPP Pilot Project is foreseen to provide solutions for Lviv that will bring its parking system on a new level, like in Eastern European cities. Warsaw has been chosen to become the destination of the First Study Tour for Ukrainian Municipalities, with which Lviv cooperates in terms of development and further implementation of PPP Pilot Projects, since this city has done extensive planning and pre-transaction work in its parking project. Also the goal of the trip included participation in the 1-day Conference “PPPs in Urban Management”, following the meetings with Warsaw representatives, which was to give an extended overview of the PPP environment in Poland, how PPPs are structured, and what is the current state of involvement of public and private entities in fostering PPP solutions in urban management.

November 14th, 1st day

The delegation, which included Valeriy Dobrovolskyi and designated representatives of Lviv City Administration, met first with Warsaw City Administration Investor Relations Head Mr. Pawel Pawlowski and his team member Ms. Karolina Frytek, who are particularly involved in working on the Warsaw Parking Project. The picture at the cover page was taken after the meeting in the host office. Currently, Warsaw is involved in a number of PPP transactions:

(a) management of city public transportation stops (tender completes on 01/2012), (b) management of 2 public hospitals, (c) management of 6 public buildings (two latter at pre-transaction stage).

However, the parking project is considered the most important to the city urban planning and the largest in terms of size of investments. Warsaw decided to hire advisers for the project on the basis of a tender, which was awarded to the Consortium, consisting of Ernst&Young (Lead adviser), DLA Piper (Legal adviser) and EC Harris (Technical adviser). The total advisory fee reached 2mln Zloty, roughly USD 625.000, being below current market prices for such advisory in project of this size.

53


Warsaw City Administration has formed a working group, which includes representatives of involved Departments (Investor Relations, Transportation, Finance, Legal, etc.), which collaborate with advisors. Key decisions are taken by mutual consent of the parties, but advisors work on pre-feasibility and feasibility reports alone. Initially, Warsaw determined it wanted less cars parked on-street, so off-street or underground (preferably) parking facilities were to be constructed using a PPP mechanism. The pre-feasibility study, conducted by advisors, identified 13 sites, which were pre-qualified for potential construction of underground parking facilities, 6 of which were shortlisted and became the starting point for preparation of the current feasibility study. The feasibility study, conducted in full by advisors, includes, but is not limited to:

1. PPP design (advisers and WG are leaning to the Design-Build-Finance-Operate deal)

2. Major contractual conditions

3. Pros and cons of all 6 sites (including major geological pre-conditions and associated risks,

envisaged/proposed number of floors/levels and number of parking spots in each parking,

etc.)

4. Land issues

5. Tariff regulations and adjustments (e.g. model, which allows a 90% load of parking facilities

with lower tariff, rather than a 60% with a higher, etc.)

6. General overview of underground parking design requirements (e.g. ground floor has to

contain washing, parking spot has to be not less than 4.25 meters long etc.)

7. Major requirements for construction approach (quality of materials, thickness of walls, etc.)

As the feasibility report is in the course of preparation, advisers are conducting soft market testing, which includes consultations with potential bidders (worldwide engineering and construction operators present in Poland), financing institutions (Polish and foreign banks that could be reached via advisors’ network), European funds (soft money), etc. During active consultations more than 10 parties expressed interest to learn more about the project, and the advisers expect 5-6 bids. Warsaw city is willing to announce the call for proposals on February 1st. The call will seek proposals by bidders in a semi-formal way, so that city administration and advisers can identify the short-listed candidates to be allowed to participate in the second stage of the tender. Also they want to collect all critical and other thoughts from bidders, so that tendering requirements and Concession agreement may be designed to contain realistic requirements and timelines. The second stage of the tender, which will formally collect bids, includes the intent of executing the PPP Agreement with the private partner not later than December 1st. Thus, the full procurement procedure is envisaged to take 10 months and will include active consultations with bidders to make the process more transparent and the tendering requirements more realistic. The Delegation met second with Legal Adviser DLA Piper, where Mr. Michal Peljan, senior associate, described the project development from the side of the advisory group. Advisors will propose possible PPP options to the city before going to the procurement stage, but informally are leaning to support that concession as the most appropriate option for the project,

54


according to current business practice and Polish legislation. Generally, more than two thirds of PPP-type transactions in Poland are conducted in the form of concessions. A general problem that advisors faced in the course of development of the project was low understanding of PPP principles and environment by the City Administration, which required time-consuming efforts to deal with city representatives. Advisors foresee they would need extensive training for many of the staff to raise awareness and build capacity in the City, so that PPP projects’ benefits will become clearer to public employees.

November 15th, 2nd day

On the second day, the Delegation participated in the Conference “PPPs in Urban Management”, organized by the Institute of Public-Private Partnership, local NGO, which is facilitating the development of the Polish PPP environment. The Ministry of Economy of Poland informed the Delegation about the website www.bazappp.gov.pl, which includes information about all PPP opportunities, available in the state and Polish municipalities. The website is available in Polish, English, German and Chinese languages. As in Ukraine, it is the MoE which is responsible for oversight of the PPPs in Poland. Another Ministry, heavily involved in the PPP process in Poland, is the Ministry of Regional Development, which has developed its own website www.ppp.gov.pl to collect and systematize information about PPPs and PPP opportunities in the country. It is unclear how the two Ministries coordinate their activities, but was observed that the Ministry of Economy is just observing the conduct of PPP activities in Poland; whereas the Ministry of Regional Development is particularly working on PPP transactions from the state side. Generally, Poland has had 18 PPP-type transactions during the 3 years 2009-2011, 12 of which were concessions, and 6 PPPs (most “popular” sectors included: parking management, healthcare, sports & recreation, energy). The Ministry of Regional Development foresees that in the future transportation (especially parking management) and ESCO-related PPPs will be leaders among PPP-type transaction in the near term. Only around 20-30% of PPPs announced lead to actual signing of a contract and financial closing (in 2010: 25 PPPs and 28 Concessions were announced, but only a minor part of these have been successfully implemented or are still considered viable). There is a TA Program, managed by Polish Agency for Development of Entrepreneurship, www.parp.gov.pl, which is dedicated to development of the PPP environment in the country. It has presented its plans to implement 5 PPP pilot projects and capacity building (study tours to EU states and trainings for at least 500 civil servants from around 100 agencies) as key areas of interest to reach its goals. The budget for the program is 10 mln Zloty. The “JESSICA” principle of PPP financing was presented, which envisages use of EIB grant funding, with a 4.5 year repayment exemption from and a total duration of 20 years for the credit line. This financing is envisaged for private partners, municipalities and actual PPP vehicles at a 4.5% rate. A number of PPP projects were presented by municipalities, where the city provides the land plot and private partner constructs and operates the facilities (administrative building, aquapark, etc.) under a regular DBFO structure, which may also envisage some social obligation from the private partner (rehabilitate park nearby etc.). It was noted that many projects appear to be “hybrid” projects, which included financing being provided by European funds (grants). Most of these projects however appear to have no financial model, no deal structure envisaged, no revenue breakdown and no specific sources of other finance.

http://www.bazappp.gov.pl/

http://www.ppp.gov.pl/

http://www.parp.gov.pl/

55


TRAVEL INFORMATION

o International Travel Information

Due to short time before study tour start up, limited number of seats and high prices provided by

air carrier for the flight Lviv-Warsaw, it was decided to conduct the trip via Prague, which appeared

less convenient for delegation, but cheaper for the budget.

The Delegation’s flight information

DATE OF FLIGHT

Flight number

AIRLINE COMPANY

Flight (from-to)

DEPARTURE Passengers

November 13th, 2011

OK 927 Czech Airlines

Lviv-Prague

15.10 Kiral Sergiy, Biloys Andryi, Peciy Dmytro, Dobrovolskyi Valeriy

November 13th, 2011


Prague-Warsaw


November 16th, 2011


Warsaw-Prague


November 16th, 2011


Prague-Kyiv

11.25 Dobrovolskyi Valeriy

November 16th, 2011


Prague-Lviv

11.35 Kiral Sergiy, Bilous Andryi, Pecij Dmytro

o Ground transportation in Warsaw

Participants were met at Warsaw airport and transferred to the Novotel hotel. At the last day of the

study tour same shuttle delivered participants to Warsaw airport for departure.

Accommodation: Participants were accommodated at Novotel hotel in Warsaw.

NOVOTEL Warszawa Centrum

Marszalkowska Street 94/98

Warsaw, 10000, Poland

Phone: +48 22 621 0271

Fax: + 48 22 625 0476

Allowance Information: All participants got allowances for meals and incidental expenses according

to USG per diem rates. For arrival and departure days participants will get 75% of M& IE ($97 x 75%

= $72.75).

56


Date Amount

November 13th, 2011 (arrival) $72.75

November 14th, 2011 $97

November 15th, 2011 $97

November 16th, 2011 (departure) $72.75

Total $339.50

Confirmation of Med Certs : All participants were covered by HAC medical insurance.

First Name Last Name Home Country Host Country Insurance ID

Dobrovolskiyi Valeriy Ukraine Poland 500943950

Kiral Sergiy Ukraine Poland 500943949

Petsiy Dmytro Ukraine Poland 500943948

Bilous Andriy Ukraine Poland 500943943

o Poland Study tour budget:

Cost, USD Unit No. Total1

International travel Lviv-Prague-Warsaw-Prague-Lviv $468.75 4 RT tickets $1,875

International travel Lviv-Prague-Warsaw-Prague-Kiev $500.13 1 ticket $500.13

Airport transfer $233.60 1 van round-trip $233.60

Lodging $186.86 3 nights for 5 people $2,802.90

M&IE $339.50 4 days for 4 people $1,358

Total trip $6,769.63

1 Originally, 5 participants were approved for this study tour. However, on the last calendar day before

departure one of the participants informed P3DP on his unavailability to go on the study tour. Since it was last minute notification, we were unable to substitute the participant and get respective approvals from AED/HQ and USAID.

57


g. PPP Pilot Projects Tracker (2011-12-26

# Municipality

Secto

r Comments / Status

ACTIVE PPP Pilot Projects

1 Lviv

Parkin

g M

an

ag

em

en

t

1st PPP Pilot Project

Among top-6 presented to USAID in Y1

Executive office of the City Administration is positive towards the project. Elected body

is the next challenge in terms of project perception.

Major legislative obstacles identified and to be addressed more at Concept stage

Concept paper to be prepared in Q12012 and presented for city leaders and

stakeholders for consideration. One PPP option to be chosen then.

City is hosting EURO-2012 which may lead to preferences from GOU to Lviv

EBRD wants to finance the private partner in the project, P3DP has the dialogue with

EBRD on this issue

City representatives have participated in Study Tour to Poland, Report has been

distributed. Poland currently has a number of transactions of that type, which are worth

looking at

58


2 Simferopol

Cit

y P

ark

The project is the priority for Municipality and MOEDT of ARC, P3DP obtained consent of

all parties

A private partner (ARC based construction holding, which manages Yevpatoriya park)

started maintain the park on its own and is interested to participate in the tender

Land issue might be the main hinder. This issue to be addressed at the Concept stage

Project has international good practices, however Ukrainian version may involve more

bureaucracy than other sectors and more approvals from authorities, directly not

reporting to Municipality

3 Vinnytsia S

olid

waste

man

ag

em

en

t Mayor got record support (80%) at 2010 elections and formed 2/3 of City Council.

Local/municipal political risks are absent. Have good relations with Oblast State

Administration. Many good references from stakeholders regarding the Mayor. P3DP

obtained clear political will towards this and several other PPP ideas

City is within the 2nd set of Clean City cities. Currently, the mechanism to combine

efforts is being considered. CC called the tender to identify advisers to prepare the

feasibility study for the City

City has 150 hectares of land ready for the project, 40km away from city. Would like

the landfill to be used as a regional to serve 370,000 of Vinnytsia and another 250,000

inhabitants of 4 rayons in Vinnytsia oblast.

Zhytomyr and Khmelnytsky oblast, located next to Vinnytsia do not have a legal landfill,

so securing solid waste can be done

59


4 Greater

Yevpatoriya. Western

ARC

So

lid

waste

man

ag

em

en

t

ARC is planning 5 regional landfills to serve 5 regions of ARC

Greater Yevpatoriya landfill to serve 6 rayons, where Yevpatoriya city shall be the

anchor in terms of solid waste providing

P3DP visited Yevpatoriya and establish working contacts

Area to generate enough solid waste for the project to be of good market interest.

Confirmation by ARC’s central executive bodies has been obtained on the highest level

– Council of Ministers of ARC and MOEDT of ARC.

Project principle is interesting. Project is replicable throughout ARC and Ukraine if

regional landfill approach is coordinated by state authorities of regional level in

Ukrainian regions.

5 Ivano-Frankivsk

So

lid

waste

man

ag

em

en

t City is open for cooperation, Mayor’s office is motivated

They have land for a new landfill. City can consider different project options: collection,

transportation, sorting, treatment, landfilling – all of the above or relevant economically

sound combinations. This issue to be discussed after the Concept Paper is prepared.

Distance to landfill and other characteristics is acceptable

60


6 Zaporizhya

Healt

hcare

Mayor and staff very supportive. Mayor in business for 15+ Years, Head of Healtchcare

dept. is local council representative for 10Y+

Never had a USAID project in City before and very willing to have one

Mayor signed a trilateral LOI – City/PPPDSC/Chamber-of-Commerce

1 interested private party is already in place, city is OK with open tender and is OK with

various PPP forms for consideration

Significant preparatory work has been done, WG has been formed under the Mayor. 1st

meeting revealed many problems and unanswered questions. The project appeared to

be more complicated than local authorities initially thought.

They are ready to approach President’s Administration, CMU, Ministry of Healthcare –

whoever can assist in project development and movement

Sector is however a difficult one for PPPs according to best practices

P3DP conducted 2 visits so far, i.a. visited hospital premises, planned for the project. It

has been identified that legal expertise has to be done first to potentially proceed with

economic and technical review. It is planned to conduct it in Jan-Feb 2012 and proceed

accordingly.

61


PPP Pilot Project ideas in active P3DP consideration

7 Poltava ES

CO

in

dis

tric

t h

eati

ng

City is among top-6 presented to USAID in Y1

MHRP did partly energy audit of city

Strong local stakeholder – ITCON (they do projects in Kiev, Sevastopol, Dnepropetrovsk

etc.), which works with TA projects and IFIs actively – is advising city and oblast

officials on heating and energy projects

Project related to ESCO in municipal buildings, which is a considered a good sector in

PPPs according to best practices

ESCO approach with Municipal finance from EBRD is now being tested in

Dnipropetrovsk. The next obvious step is PPPs in this sector. Main obstacle is lack of

good ESCOs on the market for the time being.

Mayor’s office and local consultants are motivated in the project.

City is currently deciding which buildings to propose for the Pilot Project. P3DP is likely

to get more thorough project definition in 1Q2012

Municipality is getting full oblast Administration support in ESCO initiatives

62


8 Poltava

So

lid

waste

man

ag

em

en

t

Oblast has secured land plot for the new landfill and is in the course of getting

documentation, despite that Municipality operates the landfill which is still OK till 2018.

City leaders treat solid waste management as one of two most important sectors for

PPP projects

P3DP does not see strong local team, but local consultant ITCon can assist in operative

coordination issues

Obvious political risks on the local level are not seen at this stage

Private entities have never been involved in the sector in general ever, city is clean,

Communal enterprise, responsible for collection of SW does a good job

Had a private initiative in 2008 with German partners related to burning of biogas on

existing landfill and getting carbon credits according to Kyoto Protocol. Germans were

unable to raise capital due to economic recession and in 2011 they were waiting for

extension of the Protocol. Are in active consultations at the moment.

The project might include sorting and landfilling, since just some primitive sorting

currently exists directly at the landfill.

The project is the next in line should any of the top-3 SWM projects be dropped

PPP Pilot Project ideas in passive P3DP consideration

9 Pavlograd

So

lid

waste

man

ag

em

en

t

Very open and professional Mayor, is in business since 1990s

City had Remondis (large environmental German company) on-board, involved in

collection of SW

Population has decent average income, so tariff issue should be OK for city

Smaller size of the city can be the problem for the project. Around 100,000 inhabitants

Project can include collection, sorting, landfilling, or combinations of the

abovementioned

63


10 Ivano-

Frankivsk

Wate

r s

up

ply

Mayor and Deputy Mayor are willing to meet on Tue 18.10.2011

German consulting company DREBERIS is currently working on the feasibility study for

a water and waste water PPP, to be completed around end 2011

P3DP may want to consider assisting with PPP structuring, PPP contract drafting and

procurement stages

The main topic – political will in place, size/quality of the facilities, quality of

DREBERIS’s feasibility study

DREBERIS is doing its work for the city under GIZ (German Development Agency) grant

It appears that City wants an operation contract and has no specific plan or list of

actions (or ultimate results to be achieved) as well as sources of financing these

initiatives

64


11 Pavlograd

Wate

r s

up

ply

Mayor was numerously recommended, is 20Y in the business, is generally a pleasant

and professional person

Canadian Municipal Development Project works in the city

City is highly relying on DTEK’s PavlogradCoal, which pays high salary to miners (10-12

thousand UAH/month average), so if PPP will involve user charges it is good

Wants water supply to be constructed, because currently city consumes bad quality

water from a large Soviet-era constructed water supply facility, which will be

transferred from state ownership to communal a.s.a.p.

People need new water supply badly, as they do not accept the current water quality

and buy it in bottles to drink/cook

It was Mayor’s promise on elections, so he is definitely motivated.

Population is around 100 thousand people, so tariffs are set by local authorities

People are willing to pay higher price for quality water

Requires some construction but no major

Mayors is OK with whatever PPP-type (supply only, whole Vodokanal, concession, PPP

etc.)

12 Ternopil

So

lid

waste

man

ag

em

en

t

P3DP, Ternopil Mayor/officials, Agency for National projects (Clean City) and market

players feel positive to develop the project

Lack of investors/TA projects, so Mayor highly interested

City badly requires a new landfill and generates enough waste for a middle-scale

project

EBRD is to finance city’s communal sphere, so has contacts with city officials

City OK to private participation in communal infrastructure

City cannot allocate land. Numerous meetings on Oblast State Administration level,

headed by the Governor brought not result. P3DP should consider to observe the

situation with land in beginning 2012 to consider feasibility of further mutual efforts

65


13 Voznesensk

So

lid

waste

man

ag

em

en

t Among top-6 presented to USAID

Strong mayor, started construction

We have doubts the projects is designed well-enough

If market sounding says OK, project is good for a pilot one

Small size might be the hinder

14 Rivne

Waste

wate

r

treatm

en

t

CS+NB went to talk to them in 2Q2011

Director of Vodokanal proposed the whole enterprise for a PPP, CS thinks it is just waste

water part for a PPP

P3DP had a conversation in December 2011 regarding potential waste water treatment

enterprise, but Director of Vodokanal still has no interest, only the whole Utility. Next

round of conversations is planned for January 2012 to undertake a final YES/NO

decision

15 Zhytomyr

So

lid

waste

treatm

en

t

Among top-6 presented to USAID

At the initial stage of consultations/development – we have to talk to more local

stakeholders and Governor/Deputies

P3Dp visited city to establish initial contacts

City failed to provide information on P3DP request (SWM Questionnaire), even based on

numerous reminders by VD to Deputy Mayor in charge. Low political will and motivation

16 Evpatoriya

Recreati

on

.

Bik

e d

istr

ict.


Project socially interesting, important question however is whether economically viable

and bankable?

They have a certain concept in place, which has no financial figures however

Project seems to have substantial social effect, but an important question is whether it

is economically viable. Local authorities seem to not have a plan regarding

remuneration or potential subsidizing the project.

66


17 Cherkassy

Waste

wate

r

treatm

en

t

City wants its own water collection and processing facilities, currently uses one, which

belongs to largest local private industrial enterprise (CherkasyAzot, controlled by DFG)

Project undeveloped

Significant follow-up is required to further asses the PPP project potential

May be replicable in industrial cities, but unlikely to be the easiest and broadly

acceptable solution

Political will remains unanswered

18 Trostyanets S

olid

waste

man

ag

em

en

t


Small size and remote location might jeopardize potential market interest

Regional landfilling in smaller areas might be the project description, however it is

unlikely to be cost-effective

ukraine public private parternship development...

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