1

UKRAINE PUBLIC PRIVATE PARTNERSHIP DEVELOPMENT PROGRAM (P3DP)

QUARTERLY REPORT– Y3Q1

OCTOBER 1, 2012 – DECEMBER 31, 2012 USAID Cooperative Agreement # AID-121-A-00-10-00708

January 30, 2013 This document was prepared by FHI Development 360 LLC through the Public-Private Partnership Development Program in Ukraine.

Contents Executive Summary 3 1.Program Activities and Results 4

Objective 1: Policy and Legal Environment 6 Objective 2: PPP Unit and GOU Institutional Support 7 Objective 3: Capacity and Awareness Development 10 Objective 4: Pilot PPP Transactions 11

2. Key Upcoming Events and Activities 15 3. Program Administration 15 4. Annexes 16

P3DP Performance Monitoring Report Y3Q1 (October-December 2012) 17 Concept of Public Private Partnership Development in Ukraine for 2012-2017 33 Strategy on Public Private Partnership Development in Ukraine for 2012-2017 and Strategy Implementation Plan 48

3

Executive Summary

P3DP deliberately intensified efforts to engage private sector firms in PPP development by organizing business

seminars and market sounding events, thus advancing a key goal stated in FHI360’s Cooperative Agreement,

“to attract private sector finance and operational expertise”. P3DP’s main event during this quarter was a

business seminar on municipal PPPs organized in cooperation with two leading business organizations in

Ukraine, the American Chamber of Commerce (ACC) and the US-Ukraine Business Council (USUBC). By utilizing

ACC and USUBC’s extensive membership bases, P3DP was able to specifically target invitations to high-potential

firms for PPP development. This event attracted a full capacity crowd of 70 participants consisting of private

investors, operators and financiers. The seminar was successful in fulfilling its goals: 1) to identify private

investors interested in PPP projects; 2) to present existing PPP pilot opportunities; and, 3) to obtain private

sector viewpoints on PPP potential in Ukraine. Key private sector contacts included: 1) VEOLIA, a regional

leader in solid waste collection and disposal, which expressed high interest for involvement in P3DP’s PPP pilots

in the solid waste sector; 2) Smart Holding, a large equity investor, which sought cooperation with P3DP on a

water treatment PPP in Crimea; and, 3) SWARCO Traffic Solutions, an EU urban development company, which

provided its ideas to P3DP on energy efficiency street lighting.

Several PPP pilots are rapidly advancing towards tendering. The Vinnitsa City Executive Committee approved

the “Vinnitsa Program for Solid Waste Management”, thus authorizing the city to progress towards tendering

utilizing a PPP mechanism. Following a healthcare market sounding event in Zaporizhia where P3DP presented

financial model scenarios, the local City Council work group formally approved the “Zaporizhia PPP Healthcare

Concept Paper” and the related financial model assumptions. The work group then requested P3DP’s support

for the next stage and P3DP responded by issuing a TOR to engage consultants to develop the full Feasibility

Study that is required by MOEDT prior to PPP approval and tendering. P3DP provided assistance to its entire

pilot PPPs in the areas of concept paper development, financial modeling, legal analysis, technical research and

environmental review.

P3DP continues to support advances in institutional capacity at the Ministry of Economic Development and

Trade (MOEDT), P3DP’s primary beneficiary and recipient. Progress continued despite the Parliamentary

elections in October and the appointment of the new Cabinet of Ministers and subsequent appoint of the new

Minister of MOEDT on December 24, 2012, Mr. Igor Prasolov. The “Strategy on PPP Development in Ukraine

for 2012-2017”1 and accompanying “PPP Strategy Implementation Plan”1, prepared by P3DP’s STTA consultant,

renowned Ukrainian economists, Dr. Geyets and Dr. Yefimenko, were presented to MOEDT for approval and

subsequent submission to the Council of Ministers to be included in their national plan. To improve MOEDT’s

visibility and effectiveness with municipalities, P3DP agreed to MOEDT’s request for development of

a “Practical Guide”1 to be used as an instructional guideline for the preparation of the required PPP “Feasibility

Study”. In addition, P3DP assisted the MOEDT’s PPP Unit to develop an informational leaflet explaining the PPP

Unit’s competence, functions, capacities and contacts. These leaflets will be utilized to introduce municipalities

and potential private-sector partners to PPP opportunities and the support available through the PPP Unit. To

strengthen the operational effectiveness of the MOEDT PPP Unit, P3DP developed a systematic training

program on the preparation of feasibility studies at the municipal level .

1 Included in Annex

4

1. Program Activities and Results

The goal of the Public Private Partnership Development Program (P3DP) in Ukraine is to accelerate the use of

public private partnerships in order to improve the quality of infrastructure and public services. The Program is

achieving this goal by facilitating legal and institutional reforms; establishing public institutions, processes and

capacity to support PPP development; enabling local officials to conduct PPP transactions and stakeholders to

recognize their benefits; and implementing multiple pilot PPP transactions in various sectors.

IMPLEMENTATION CHRONOLOGY

Notable programmatic activities during Y3Q1 included:

Dates Activity

October 2 P3DP signed a Memorandum of Cooperation with the “Institute for Budgetary and Socio-Economic Research” (IBSER) defining areas of joint work to assist the Government of Ukraine.

October 3 Tatiana Korotka participated in the PPP Expert Center meeting organized by the American Chamber of Commerce. The meeting was devoted to attracting private investments for PPPs, particularly those under concession agreements.

October 4-5 Alan Pieper, Tatiana Korotka, and Olexandra Chala attended the International Black Sea Economic Forum. P3DP was invited as contributors and strategic partners of the forum.

October 5 P3DP managers conducted two meetings with representatives of Kiev-based private kindergartens to advise the Kiev City Administration on the feasibility of the Pilot PPP projects in the area of kindergarten care.

October 10 Alan Pieper and Tatiana Korotka met with European Investment Bank staff: Lilia Chernyavska, Head of EIB in Ukraine; Marion Hoenicke, Head of Division of Lending Operations in Eastern Neighbor States on financing potential for PPPs.

October 11 Alan Pieper and Tatiana Korotka met with the head of ADETEF, French technical assistance organization to define areas of cooperation in delivering assistance to the PPP sector.

October 15 Alan Pieper and Tatiana Korotka attended the workshop “Energy Efficiency in Ukraine: Policy, Experience, Reforms”, organized by EUEA with the support of the British Embassy, organized to showcase new developments in the energy sector.

October 16-17 P3DP attended the 4th International Renewable Energy and Energy Efficiency Forum to identify new market innovations and private sector partners for potential energy efficiency PPPs.

October 18 Tatiana Korotka and Natalia Boyko met with the advisors of the Head of Kyiv City State Administration to advance activities on a PPP kindergarten pilot project.

October 18 Tatiana Korotka met with representatives of VEOLIA company in Ukraine, a regional leader in solid waste management, to discuss potential Pilot PPP projects. VEOLIA expressed interest in the pilot work that P3DP is doing in the SWM sector.

October 18 Tatiana Korotka and Ruslan Kundryk met with Mr. Geyets, Mrs. Yefimenko, and Mr. Cherevykov to finalize PPP Strategy document and arrange PPP strategy seminar for interested stakeholders.

October 22 Tatiana Korotka and Ruslan Kundryk met with IBSER to discuss the practical cooperation in the area of budget legislation improvement in order that municipalities are able to enter into long-term PPP contract.

October 23 P3DP selected the local consultant to complete the short term technical assignment on collection and verification of quantitative information for a PPP financial model on disposal of solid waste in Vinnitsa so the City Council could approve progressing to the next stage of preparing tender documents.

October 25 Tatiana Korotka participated in the meeting of the Economics Reform Committee of Kyiv City-State Administration and gave a presentation on the scope of joint activities between P3DP and Kyiv Authorities.

October 25 P3DP submitted the drafts of “Strategy on PPP Development in Ukraine for 2012-2017” and “PPP Development Strategy Implementation Plan” to MOEDT for final review and subsequent submission to Council of Ministers to be included into the national plan.

October 30 P3DP submitted the draft business model on Western Crimea PPP Pilot Project to ARC Council of Ministers in order to evaluate PPP solutions in waste collection and disposal

October 31 P3DP submitted the Memorandum on Legal Viability of PPPs regarding municipal kindergarten management to Kyiv City Administration to advance the concept of identifying a private partner to manage new kindergartens in Kyiv.

November 1 Tatiana Korotka met with Mr. Ovchinnikov, the head of development projects from “Smart Holding” corporation. The parties discussed potential PPP projects within “Balaklava Green” town project.

November 2 The National Commission on Communal Services Regulation approved the draft decree on new tariff regulation methodology in water, wastewater and district heating sectors. The methodology introduces a new long-term (3-5 years) RAB approach to tariff calculation, recommended by P3DP: http://jkg-portal.com.ua/ua/publication/one/tarifam-zhkg-nadali-stimul-30205

November 6 P3DP organized the round table for GOU officials to discuss the final draft of “Strategy on PPP Development in Ukraine for 2012-2017” and “PPP Development Strategy Implementation Plan”.

November 6 Olena Maslyukivska and Mick Mullay met with AUC to discuss the development of case studies and the publication of a collection of best practices dedicated to implementing PPP projects in Ukraine.

November 6 Valeriy Dobrovolskiy attended the “Congress on Communal Services Sector Reforms”, organized by Ministry of Regional Development.

November 8 Alan Pieper, Tatiana Korotka and Mick Mullay attended the regular USAID OEG partner meeting, which focused on the impact of Ukrainian parliamentary elections on project implementation.

November 12 Tatiana Korotka and Valeriy Dobrovolskiy conducted a business trip to Zaporizhia to participate in meetings on Zaporizhia Healthcare Pilot PPP by providing presentations on the financial model and feasibility study to representatives of the City Council Executive Committee. P3DP experts also met with Deputy Mayor, to obtain commitments of cooperation between P3DP and the municipality on feasibility study preparation and tendering.

5

November 15 P3DP met with the new head of National Project Agency "Clean City" to discuss cooperation on pilot cities and the laws of Ukraine #5400 and #5402, that were enacted recently in the area of solid waste management.

November 16 Mark Cockburn of Cambridge Economic Policy Associates Ltd. delivered a presentation regarding his analysis of the feasibility of a Project Development Facility (PDF) in Ukraine. CEPA’s report summarizes the views of the donor community and examines PDF in other countries to compare their applicability in Ukraine.

November 20 P3DP has met with representatives of Green Energy Opportunity (energy-efficiency consultancy) to discuss the concept of PPP biomass district heating pilot project in Zhytomyr region.

November 21 P3DP organized the Business Seminar on Municipal PPP in Ukraine, aimed at identifying private investors interested in PPPs involving the delivery of communal services and municipal infrastructure. The Seminar focused on the presentation of 6 ongoing P3DP pilot PPP projects covering inner-city parking management, municipal solid waste management, park management and medical service delivery.

November 22 Valeriy Dobrovolskiy and Nellie Makariy participated in the Municipal Investment Forum, organized by GIZ in district heating, water supply and waste water treatment, maintenance of buildings and transportation.

November 22 At MOEDT request, P3DP provided comments and proposals to the draft law “On amendments to some laws in solid waste treatment area”.

November 27 P3DP received an official letter from MOEDT (No. 3931-04/45011-13) with its comments on PPP Practical Guide, prepared by P3DP consultants.

November 29 Olena Maslyukivska participated in the meeting "Odessa Region 2013: Investments and Development," organized by the Odessa Regional Committee for Economic Reforms.

November 30 Tatiana Korotka and Ruslan Kundryk traveled to Simferopol to participate in the meeting of the Simferopol City Council PPP Working Group to discuss the status of Gagarin Park Management pilot PPP land issue.

November 26 P3DP provided comments to the draft resolution of Kyiv City Council on investment tender procedure. P3DP suggested including PPP as a type of investment project.

December 4-6 With P3DP support, Pavlo Pakholko, Deputy Head of Investment and Innovations Department of the MOEDT, attended the UNECE’s Seventh Session in Geneva to gain knowledge on PPP development in Europe and identify practical applications for the PPP Unit in Ukraine.

December 5 P3DP met with the newly appointed director of MOEDT’s Department for Investments and Innovations, Mr. Viktor Kovalenko, and the head of the PPP Unit, Ms. Oksana Kordina, to discuss 2013 workplan activities.

December 7 P3DP submitted Concept Paper for the PPP Pilot Project Municipal Solid Waste Management in Ivano-Frankivsk to the Ivano-Frankivsk City Council and the Mayor.

December 7 PPP Practical Guide was officially submitted to the MOEDT. PPP Practical Guidelines training for MOEDT’s PPP Unit staff is expected to be delivered 25-31 January, 2013.

December 11 Chris Shugart and Tatiana Korotka met with representatives of VEOLIA (a prominent solid waste management company operating in Ukraine). The parties discussed private sector interest in P3DP’s pilot projects and explored the potential for private partner involvement utilizing a PPP structure.

December 11 P3DP met with the members of National Committee on Communal Services, as will work together to develop a SWM tariff methodology for Ukraine.

December 12 Nellie Makary and Ruslan Kundryk attended the “Energy Efficiency in Buildings” workshop, organized by GIZ in Chernigiv, and met with Ima Khrenova-Shymkina, Coordinator of the Energy Efficiency in Buildings Project.

December 12 Nellie Makary met with Ivan Dmytruchenko, the head of Energy Efficiency and Municipal Enterprises Unit of the Ivano-Frankivsk municipality, to refine project ideas for a biogas power plant.

December 13 Ruslan Kundryk met with Yuriy Yusipovych, Deputy Head of the Housing Policy Department of the Ministry of Regional Development of Ukraine, on drafting of the law on energy service contracts.

December 13 Ruslan Kundryk and Natalia Boyko met with representatives from IBSER to finalize amendments to Budget Code of Ukraine and agree on submission of the document to Ukrainian national level authorities.

December 13 The Vinnitsa City Executive Committee approved a draft of the “Vinnitsa Program for Solid Waste Management for 2013-2020” (City Council Regulation #3052 from December 6, 2012) that allows the city to move forward towards tendering utilizing a PPP mechanism. The City Executive Committee specifically approved a PPP structure for their landfill construction and management and recognized P3DP as the cities primary technical consultant.

December 17 P3DP PSG met with representatives of SWARCO Traffic Solutions, the EU operator in urban development solutions. The meeting was dedicated to exploring potential interest of the Operator in Dnipropetrovsk Street Lighting PPP Project and discuss development of energy efficiency projects in Ukraine.

December 17 P3DP met with Ukrainian Operator “Energy Consulting” in energy efficiency and utilities’ management projects to discuss energy efficiency, alternative fuel district heating and other related projects.

December 18 Ruslan Kundryk and Natalia Boyko attended a meeting with representatives of Kyiv Department of Education and Kyiv City State Administration to present acceptable legal forms of a kindergarten PPP structure.

December 19 P3DP organized a follow up workshop on Solid Waste Management Study Tour to Hungary and Austria. Participants discussed the functions of state authorities and responsibilities of local self-governments in SWM.

December 19 Tatiana Korotka and Nellie Makary met with the head of MOEDT PPP Unit, Oksana Kordina, to discuss P3DP’s support in developing MOEDT PPP Unit’s webpage.

December 19 Tatiana Korotka and Nellie Makary met with GIZ’s Coordinator of Energy Efficiency in Buildings Project Ima Khrenova-Shimkina, to discuss potential cooperation in energy efficiency projects.

December 20 P3DP visited Zaporizhia to participate in the meeting of Zaporizhia City Administration Working Group on development of Healthcare PPP Pilot Project financial model.

6

A summary of P3DP assistance and activities during the reporting period follows:

Objective 1: Policy and Legal Environment

P3DP is assisting the Government of Ukraine (GOU) to create a legal environment conducive to PPP initiatives in

multiple sectors. During this reporting period, P3DP developed a concept paper on “PPP Development Strategy

in Ukraine for 2012-2017”. After scrutiny of peer review at a public round table presentation on November 6th,

the final draft of this document was submitted to MOEDT for approval on November 27th. In addition, P3DP

developed a “Strategy Implementation Plan” for the 2012-2017 planning horizon.

P3DP continues monitoring GOU websites, tracking legislative developments, preparing monthly legal

assessment reports and compiling experiences gained during implementation of P3DP pilot transactions. These

activities contribute to P3DP’s ability to refine priorities in the area of PPP legal reforms and identify stakeholder

concerns with existing PPP legislation.

P3DP cooperates with various GOU agencies instrumental to promulgating legal and regulatory reforms.

Following is a summary of activities and status of these partner institutions that P3DP works with in the pursuit

of PPP legal reforms:

1.1 Pursuit of PPP Legal Framework Improvements

P3DP is monitoring and providing professional opinions for legislative developments regarding:

1. draft law #10228 “On Amendments to the law of Ukraine regarding PPP” prepared by Parliament

Committee on Industrial and Regulatory Policy and Entrepreneurship, and,

2. draft law #9739 “On Amendments to the Laws On Leasing Out or Giving in Concession of Communal

Facilities of District Water and Heat Supply and Sanitation”, prepared by the Ministry of Regional

Development.

Both draft laws were submitted to Verkhovna Rada and are critical for improving the PPP legislative

environment in Ukraine. Due to the parliamentary elections in November 2012 there were no formal actions

performed in regard to these draft laws during the reporting period.

Unfortunately, the Verkhovna Rada’s PPP Working Group did not meet during this reporting period because all

activities were postponed due to parliamentary elections. The new Verkhovna Rada was elected in November

2012 and the new PPP committee members were approved in January 2013. P3DP will continue its

participation in the newly appointed PPP Working Group and provide legal opinions and analysis to assist with

necessary reforms. In addition, recognizing that SWM tariffs regulation authority was reassigned to the

National Commission on Communal Services Regulations, P3DP agreed with the National Commission to

provide technical assistance in developing new methodology in SWM regulations, including tariff calculations.

A number of legislative acts affecting PPPs development were adopted during this reporting period by the

Parliament: 1) law #5458, law #5400 and law #5402 addressing new procedures in Solid Waste Management

(SWM) and empowering the National Commission on Communal Services Regulation to act as the regulator for

SWM tariffs; and, 2) decrees #356 and #357 on water supply, disposal and heating tariff calculations.

MOEDT requested that P3DP review and comment on draft law regarding SWM to facilitate PPP

implementation, which P3DP completed and submitted to MOEDT in November 2012.

7

A new Minister of MOEDT was appointed on December 24, but the key staff involved in the PPP Unit remained

constant, and therefore P3DP was able to continue joint legislative drafting activities with MOEDT.

P3DP supported Kyiv City-State Administration and responded to their request that P3DP draft regulations on

investment tendering procedures (submitted on December 17th) to facilitate PPP development in the city.

P3DP also provided proposals to facilitate investments in the Health Care Sector (submitted November 1st) for

concessions in health care in pilot regions of Kyiv, Dnepropetrovsk, Donetsk and Vinnitsa.

P3DP is working with IBSER on developing draft law “On amendments to Budget Code” in order to implement a

concept known as “contingent obligation”, one of the key issues identified in P3DP’s “Critical Legal Issues”

report published last year. On October 2, 2012, P3DP and IBSER signed an MOU outlining joint legislation

drafting activities. The parties agreed to jointly work on drafting legislation to improve existing regulations

related to:

- long-term budget liabilities by public partners within the framework of Public-Private Partnerships in

order to allow commitments beyond the current one-year budget term;

- compensation to private partners in the event of early termination of a PPP contract, thus allowing the

private partner to recover damages; and

- mechanisms for issuing guarantees by government entities.

1.2 Obstacles to PPP Implementation

Critical legal obstacles identified this reporting period as a result of pilot implementation are:

a) PPP in City park management (namely, concession projects) are prohibited in the territories, meant for

social, cultural and recreational activities, forcing P3DP to apply other types of PPP contract

(cooperation contract, etc.)

b) The wording and terminology of PPP Law does not provide sufficient clarity regarding the ownership of

the objects created under the PPP contract, limiting the implementing BOT contracts.

c) The Municipalities and central government bodies are limited in providing direct commercial activities.

d) The Law “On Concessions” is not suited for BOT form of concessions.

e) Energy performance contracts (as a PPP form) cannot be widely implemented due to the limitation of

one year public procurement.

f) The legislation on SWM tendering needs to be adapted to PPP concept.

Objective 2: PPP Unit and GOU Institutional Support

P3DP is assisting the GOU to create designated regulatory and administrative bodies having the responsibility to

facilitate the use of PPPs; establish systems and processes to monitor their use; build necessary staff capacity;

and create and implement a National PPP Strategy.

2.1 PPP Appraisal Methodology

During the previous year, the “PPP Appraisal Methodology” and the “Feasibility Study” format were developed

and adopted by the MOEDT (Order #255) as the PPP Unit’s operational documents. During the current

reporting period, P3DP agreed to MOEDT’s request to develop a “Practical Guide” to be used as an instructional

8

tool for preparing PPP Feasibility Studies. This document, adopted by MOEDT as an element of the PPP Unit’s

operational policies, serves the needs of applicants preparing PPP proposals as well as regulators assessing the

feasibility of those proposals. “Practical Guide” training will be delivered January 23-31 in Vinnitsa, Simferopol,

Zaporizhia and Kyiv. The targeted audiences are representatives of municipal city councils, regional offices of

MOEDT, NPA and other relevant agencies contributing to preparation or approval of PPP projects.

2.2 GOU Staff Development

A primary task of P3DP is enhancing the capacity of MOEDT to establish a national level PPP Unit that will facilitate the creation of PPPs by bridging the gap between the government and private sector interests. To achieve this, P3DP is delivering a systematic training program that instils the knowledge and skills necessary for the effective operation of the PPP Unit.

To successfully create a financial picture of an envisaged PPP project opportunity, an array of actions must be put into motion - input variables identified, economic data analysed and forecasts created to assess financial viability. Absent comprehensive financial planning, review, and analysis, PPP projects are at risk of failure. A primary area of interest is the preparation of comprehensive feasibility studies, including development of a

financial model that allows financial risk assessment of PPP projects.

During this reporting period, P3DP conducted a round-table to review and discuss PPP experiences from the Solid Waste Management study tour to Hungary and Austria. Outputs of this meeting produced: 1) a summary of lessons learned; 2) methods for their application in Ukraine; and, 3) recommendations on amendments to the PPP enabling environment in Ukraine. The round-table was successful in bringing together key decision-makers from USAID, Ministry of Economic Development and Trade, Ministry of Regional Policy, Construction and Housing, and the National Commission for

Municipal Services Regulation. The participants concluded:

a) It is important to continue strengthening the MOEDT PPP Unit’s role to transform it into an efficient

national coordinating and advisory body able to support local self-governments in terms of

methodology and PPP advice;

b) It is necessary to reform the legal framework in Ukraine in order to speed up and facilitate PPP

preparation, and to introduce transparent, efficient and coherent PPP procedures; and

c) It is necessary to improve methodological basis for PPP projects preparation and implementation,

embracing such issues as risk forecasting and analysis, financial modelling, estimation of economically

reasonable (cost efficient) tariffs on services provided under PPP contracts, securing of private partner

benefit from PPP given that PPP project progress demonstrates achievement of planned social benefits,

and introduction of mechanisms enabling the public partner to undertake long-term obligations on

funding of PPP projects.

Having identified existing legal obstacles for PPP development in Ukraine and deficiencies of Ukrainian legislation, it was agreed among the participants that an Aide Memoire should be drafted containing the most urgent and important steps to pursue, particularly:

a) to start joint drafting of amendments to legal acts to improve PPP risk assessment and management

control, while introducing cost-efficient tariff setting mechanisms;

9

b) to continue developing and strengthening PPP-related capacity of stakeholder institutions, including

skill development of PPP-related staffs;

c) to draft legal provisions with the support of P3DP-provided international and local experts, in the

following areas:

i. identifying those public entities that can engage in PPP contracts as legal partners;

ii. developing a legal mechanism that will enable public partners to undertake long-term

obligations for financing PPP projects;

iii. improving risk assessment and management procedures to enable government bodies to more

effectively support PPP projects;

iv. introducing licensing requirements for business entities operating in the solid waste industry;

v. developing a rational methodology for setting tariffs in solid waste processing and disposal;

vi. establishing procedures to facilitate efficient PPP implementation in the SWM sector, such as:

- authorizing local self-governments to select (on a competitive basis) one operator combining the two operational functions of solid waste collection and disposal;

- authorizing local self-governments to select (on a competitive basis) companies to build and operate SWM facilities for waste processing, recycling and disposal; and

- developing enabling legislation that will support the implementation of regional PPP projects (e.g. multiple cities, districts and oblasts).

It was universally accepted that legislation improvement should be based on international best practices in the areas of cost-effective tariff models, transparent licensing rules and PPP budgeting processes. It was also agreed that a high-level SWM Tariff Methodology round-table should be organized to kick off the development of new tariff policy. It is expected that P3DP will play a central role in this round-table by providing international experts to present approaches used by the international community.

2.3 PPP Strategy and Implementation Plan

During the last reporting period, P3DP submitted the final agreed version of the Draft PPP Development Concept (Strategy) 2012-2017 and Strategy Implementation Plan (SIP) to MOEDT with further plan to submit it to the Cabinet of Ministers of Ukraine to be introduced into the National Plan. In November 2012, P3DP delivered a round-table dedicated to discussion of the PPP Strategy and SIP, including wide-ranging consultations with the MOEDT. P3DP expects that the PPP Strategy will be adopted by summer 2013 thus establishing formal governmental policy on PPP and enabling implementation of SIP as foreseen by the Cooperative Agreement.

2.4 PPP Unit leaflet

P3DP assisted the MOEDT’s PPP Unit to develop an informational leaflet explaining the PPP Unit’s competencies, functions, capacities and contacts. These leaflets will be distributed to municipalities and potential private-sector partners in order to introduce them to PPP opportunities and the support available through the PPP Unit on PPP project initiation, preparation and the application process. It was also recognized that the PPP Unit’s existing webpage requires substantial improvements to make it more user friendly and provide statistical data and relevant information about PPPs in Ukraine. P3DP agreed to assist MOEDT with the task of webpage development.

10

Participants of the PPP training in Kyiv.

2.4. Supporting the Ministry of Economic development and Trade of ARC

P3DP together with the MOEDT ARC conducted Work Group meetings dedicated to resolving issues related to land and asset transfers that emerged during initial stages of the Simferopol Park pilot PPP project. P3DP has been providing extensive consultation to Simferopol city council. MOEDT ARC also proposed a regional solid waste landfill concept for Western Crimea and requested that P3DP assist with identifying implementation steps for this potential PPP project.

Objective 3: Capacity and Awareness Development

P3DP conducts capacity development and awareness events to provide representatives of selected pilot municipalities with knowledge and skills needed to identify, launch and manage successful PPP projects. P3DP also invited representatives of private firms and NGOs to participate in these awareness events. P3DP deliberately intensified efforts to familiarize private sector entities with PPP developments and project opportunities in Ukraine by conducting business seminars on municipal PPPs in Ukraine and market sounding events.

3.1 General PPP training in Kyiv

P3DP conducted training for the Kyiv City Administration on how a PPP structure could be utilized for kindergarten management in Kyiv. The training was conducted by Ms. Natalia Dotsenko-Bilous, a local legal expert renowned for her experience in contract law. The one-day session was attended by 32 participants, including representatives of the Chief Department for Communal Services; Chief Department for Energy Use and Energy Saving; Chief Department for Construction and Architecture; Department for Industrial, Scientific and Innovation Policy; Chief Department for Economics and Investments; Law Department; Kyiv City State Administration; Center for Investments and Development and Kyiv City rayon administrations.

The participants received information on PPP concepts and development potential, such as: i) international examples of PPP projects; ii) legal constraints and opportunities in Ukraine; and iii) various PPP contract forms, such as concessions, leases, consortium and joint ventures.

3.2 Business Seminar on Municipal Public-Private Partnerships in Ukraine

P3DP organized a Business Seminar on Municipal Public-Private Partnerships in Ukraine to advance a key program objective “to attract private sector finance and operational expertise in public infrastructure development and provision of related public services”. The goals of the event were: 1) to identify private investors interested in PPP projects in communal services and infrastructure; 2) to present existing PPP pilot opportunities supported by P3DP; and, 3) to garner feedback from potential private partners on their views of PPP potential. In order to broaden P3DP’s private sector professional network and exposure to businesses interested in PPP transactions, P3DP organized the event with the two leading business organizations in Ukraine, the American Chamber of Commerce (ACC) and the US-Ukraine Business Council (USUBC), in order to use their extensive

Speakers for the first session: Ruslan Kundryk, Alan Pieper,

Chris Shugart, Pavlo Pakholko, Tetiana Korotka.

11

membership bases to reach P3DP’s targeted audience: investors, operators and financiers interested in public-private partnership (PPP) projects. The 70 participants included: 17 investors and operators, 4 financiers, 17 transaction advisors, 6 representatives of public sector and 7 donors; of the participants, 42 were male (60%) and 28 female (40%).

The business seminar became an important milestone for P3DP in terms of engaging the private sector in PPP development activities. P3DP identified and targeted those companies with the potential to become important participants in PPP projects in Ukraine. The next step in engaging the private sector will be market sounding events organized by P3DP for each pilot project, where the proposed PPP project structure and financial model results will be presented.

3.3 Market Sounding Event in Zaporizhia

P3DP facilitated a market sounding event in Zaporizhia, where the Healthcare PPP project financial model was presented and tested against assumptions of both public and private sector participants. The event, attended by 12 participants, provided valuable feedback on the feasibility of the financial model and helped to identify market players for this P3DP flagship project. Based on the outcome of this meeting, P3DP subsequently developed a TOR to engage consultants to develop the full Feasibility Study that is required by MOEDT for PPP approval.

3.4 Collection of PPP case studies

P3DP, through its implementing partner AUC, has started collecting case studies to illustrate PPP practices in Ukraine. The first phase of case study documentation is expected to be ready for public dissemination by mid-year 2013.

Objective 4: Pilot PPP Transactions

P3DP’s four objectives collectively pursue the mission of developing the PPP environment in Ukraine both at the state and municipal levels, with the specific goal of objective 4 being to implement municipal level pilot PPPs and use these experiences as feedback to improve the Ukrainian legal and regulatory climate. It is anticipated that successful pilot PPPs will serve as models for other municipalities throughout Ukraine. Therefore, the pilot PPPs were selected based on their broad-based applicability in the important industry sectors of solid waste management, healthcare, transportation and street parking, management of municipal objects (city park), energy efficiency, water supply and waste water treatment. In this reporting period, P3DP’s main focus was assisting with concept papers, technical research, legal analysis and financial modelling to advance the projects to the stage of compiling a complete feasibility study, as required by PPP regulations promulgated by MOEDT.

During this reporting period, P3DP’s Objective 4 resources were mainly directed at the following PPP Pilot Projects (described in detail below):

a) Zaporizhia Healthcare b) Simferopol Urban Park Renewal c) Vinnitsa Solid Waste Management d) Ivano-Frankivsk Solid Waste Management e) Western Crimea Solid Waste Management f) Lviv City Parking Management

Each of the above pilot projects is characterized by strong municipal leadership, a verified business model of the project (drafted by P3DP and agreed to by the municipality), interest from private operators, and ability to deal with risks during the project preparation and implementation (budgetary, methodology, tariff regulations, land, property and other issues arising while the project is taken through the procurement stage).

12

4.1 Zaporizhia Healthcare PPP

P3DP has been actively working with Zaporizhia Municipality to develop a PPP in healthcare at one of the oldest and most well-managed municipal hospitals. Zaporizhia City Council demonstrated sufficient capacity and leadership to quickly take the project through all stages of project lifeline. Tender documents are expected to be finalized and released to the public by mid-year 2013. Although the city initially anticipated a concession contract covering the entire hospital facility, P3DP’s legal review identified structuring the PPP project as a cooperative agreement as a better approach to accomplish the hospital administration’s goals and comply with relevant Ukrainian legislations.

After drafting the initial business model, P3DP worked with the city to identify clinical and non-clinical services to be provided by the private partner without interfering or limiting the size of the existing medical services. The new services-for-a-fee will be the main source of return-on-investment to attract private sector investment for renovation of hospital premises and acquisition of new equipment.

Paid private sector medical services became the basis for drafting the financial model of the project. The financial model was prepared and presented to the Municipality Working Group in the Zaporizhia City Administration. As an outcome of the meeting, the parties agreed to prepare the feasibility study; to conduct meetings with decision-making groups in the City Council; to present the project to local stakeholders; and, to support the City Council with their PPP tender decision by providing legal consultants funded by USAID through P3DP.

4.2 Simferopol City Park and Recreational Area

P3DP assisted Simferopol City Council Working Group with the preparation of a PPP Concept Paper for Simferopol city park (Gagarin Park) management. After the formal approval of the concept paper by the working group, P3DP is now assisting the city with activities that must be completed to lead the project to procurement stage. P3DP is advising Simferopol Municipality, the Ministry of Economy and Trade of ARC and the Ministry of Regional Development and Communal Services on drafting decisions, resolutions and undertaking certain procedural steps, aimed at movement through project lifeline.

P3DP is working closely with the city to resolve two critical obstacles regarding land and property decision authority over the municipal park. These issues reflect the general difficulties of communal ownership in Ukrainian municipalities, where numerous state and municipal enterprises can have conflicting ownership rights over the same piece of property, thus freezing decisions and preventing progress on project development and implementation.

Simferopol Municipality arrived at the conclusion that the whole Gagarin Park territory, consisting of 35 hectares, must reside under municipal authority before the municipality can release tender documents to attract a private partner to develop part of the park (approximately 3 hectares) for commercial activities in return for improving the remaining public area under a PPP arrangement. P3DP is working with the municipality to obtain the necessary approvals that will consolidate all decision authority over the land, trees and other assets within the park boundaries in the hands of Simferopol City Council.

4.3 Vinnitsa Solid Waste Management

P3DP organized a study tour for representatives of Vinnitsa City Council to visit several solid waste management PPPs in Hungary and Austria to learn about the operations of regional landfills and solid waste incineration enterprises. These visits revealed successful PPP experiences that the Vinnitsa City Council used to design a PPP SWM approach for Vinnitsa municipality and surrounding rayons.

13

P3DP has hired a professional local consultant to prepare a technical concept study for Vinnitsa City Council. The study provided current information on waste generation and collection and proposed a design for waste disposal operations, including construction of a new landfill that conforms to international best practices.

On the basis of the technical study, P3DP has updated the project financial model, which indicates a staged approach in construction of the landfill and inclusion of surrounding rayons as the most financially advantageous implementation strategy. P3DP is now working with the city to proceed with preparation of a formal feasibility study that can be submitted to MOEDT for review and approval. Assuming the recent pace of project progress continues, it is anticipated the tender documents will be prepared and released for bidding during 2013.

P3DP International PPP expert Chris Shugart assisted P3DP with preparation of “Project Notes”, that was shared with international landfills and solid waste sector companies in order to gauge their interest and ideas regarding how the project could conform with market expectations. After this process is completed, P3DP plans to approach financial institutions, including development banks, to determine financing opportunities and identify their requirements for loan approval.

4.4 Lviv Parking Management

Although this project is temporarily on hold awaiting legislative reforms, which are needed to give the city authority over parking fee collection in Lviv, P3DP continues to support the city and has explored several financial scenarios, which show the various tariff levels needed to profitably construct and operate an off-street parking facility in the designated land plot in Lviv center. A tariff of 15-25 UAH per hour during business hours and 10 UAH per hour for non-business hours have been identified as the minimum charges needed to cover a 15-20 year contract to construct and operate an underground garage.

If this level of tariffs is not acceptable to the citizens of Lviv, then city subsidies or payment guarantees will be needed to make the project financially feasible. All the above information has been made available to the City for review, so that the parties can determine a mutually acceptable decision.

4.5 Ivano-Frankivsk Solid Waste Management

P3DP has prepared a SWM Concept Paper, which has been provided to the municipality for review. The Concept Paper provided a detailed overview of current solid waste management systems and outlined areas where a PPP component could enhance waste collection and disposal performance. Landfill management and biogas harvesting utilizing private sector expertise are considered to be viable options that would be more attractive to market sector operators and simultaneously maximize benefits to the community.

P3DP’s recommendations were presented to the mayor of Ivano-Frankivsk at a December 2012 meeting, at which time P3DP was given a green light from the mayor’s office to proceed with project preparation. The mayor is interested in pursuing a PPP, because of the common understanding that involvement of a professional private partner will improve solid waste management performance.

14

4.6 Western Crimea Solid Waste Management

A regional landfill PPP was on the radar of ARC officials and P3DP, as P3DP has conducted an on-site visit to identify ways to structure utilization and safe disposal of waste on a regional basis in western ARC. P3DP has drafted the Concept Paper and the financial model of the project, providing the background of how the new regional landfill might serve two large cities and three rayons of ARC, servicing a total of 300,000 citizens throughout the year and as many as 500,000 people during tourist season. In addition, two ARC representatives travelled as part of the study tour group to Hungary and Austria to visit several regional landfills, and this experience has been a valuable contribution to ARC vision regarding how the project will be structured and tendered.

P3DP participated in a working group meeting, organized by the Council of Ministers of ARC, dedicated to identifying future steps required to advance the PPP pilot project. Certain priorities shifted in ARC’s global vision of how local solid waste management will develop over the coming years. In response, ARC has signed a MOU with an international engineering company to develop and construct solid waste treatment enterprises in ARC. Currently, P3DP is verifying the proposed options and plans to conduct a series of meetings with stakeholders related to assessing the feasibility of the proposed project ideas and ways of structuring them as PPPs.

4.7 Kiev Kindergarten

P3DP was approached by the representatives Kyiv City State Administration (KCSA) with a request to explore a PPP mechanism to assist the city to close an existing supply gap in providing pre-school education services in the City and improve the quality of those services. Kyiv Department of Education has identified a short list of properties that it would be willing to allocate for potential PPP pilots. All of the facilities are fully depreciated and would require significant upfront investment by a private partner.

P3DP contacted several major private-sector market participants to assess the level of interest in potential kindergarten PPPs, identify major risks associated with launching this project, and explore the current market opportunities. Private market participants expressed high levels of interest; however, certain regulatory shortcomings present significant risks. Specifically, provisions of the budget code do not allow Kiev City to enter into management contracts with private partners; maximum lease agreement terms are insufficient for executing PPP contracts; and other existing market mechanisms, such as long-term cooperative agreements, are still questionable. P3DP will continue its effort to identify possible ways of executing long-term PPP contracts for this project within the given legislative environment.

15

2. Key Upcoming Events and Activities

Significant program events and activities planned in the months ahead are noted below.

Target Dates Planned Activity

January 23-30 PPP Guidelines Training “Preparation of PPP Feasibility Study and application of PPP Appraisal Methodology” January 23-30, 2013 Vinnitsa, Simferopol, Zaporizhia, Kyiv

February 14 Round-Table “Tariff Regulation Methodology in the sector of Solid Waste Management: international practices and regulation in Ukraine”

TBD All-Ukrainian Council of City Mayors

3. Program Administration

Administration

Mark Cockburn of Cambridge Economic Policy Associates Ltd. delivered a presentation to P3DP and USAID on the feasibility of a Project Development Facility (PDF) in Ukraine. Based on Mr. Cockburn’s work, P3DP and USAID concluded that a PDF is not feasible for Ukraine at this point in time. FHI360 should pursue a modification to the Cooperative Agreement to exclude the creation of a PDF as a program goal.

Based on directions from the new USAID administrator, P3DP followed the direction provided by P3DP’s AOTR to include Global Climate Change Indicators in P3DP’s Work Plan.

Based on a letter from the Regional Contract Officer at USAID Ukraine Mission, FHI360 was instructed to begin submitting P3DP reports to the Development Experience Clearinghouse.

Personnel

Alan Pieper, P3DP COP, submitted his resignation to FHI360 in mid-December with an effective date of departure on February 28.

Nellie Makariy has been hired as the Program Manager to lead efforts focused on increasing the institutional capacity of MOEDT and the PPP Unit.

Elena Holubenko was hired as P3DP’s Secretary/Receptionist in November to fill the open position that was created when Anastasia Walsh was promoted to Finance Assistant under the supervision of P3DP’s Financial Manager, Natalia Logvinova.

16

5. Annexes

A. Y3Q1 Quarterly Monitoring Report

B. Concept of Public Private Partnership Development in Ukraine for 2012-2017

C. Strategy on Public Private Partnership Development in Ukraine for 2012-2017 and Strategy Implementation Plan

D. PPP Practical Guide (available upon request in Ukrainian)

17

Annex A

P3DP Performance Monitoring Report Y3Q1 (October-December 2012)

Public Private Partnership Development Program 44 Khreschatyk Str, 3

rd Floor,

Kyiv, Ukraine +380442794481

FHI Development 360 1825 Connecticut Avenue, NW

Washington, DC 20009 United States

P3DP Performance Monitoring Report

Y3Q1 (October-December 2012)

This research was made possible with the generous support of the American people through the United States Agency for International Development (USAID) The Author’s views expressed in this publication do not necessarily reflect the views of the USAID or the United States Government

1

P3DP Performance Monitoring Report

Y3Q1 (October-December 2012)

The Kyiv Economics Institute prepared this report to assist the PPP project development

team in evaluation of its performance, identification of the possible delays and risks in the

implementation of the Program objectives.

The analysis shows that in the first quarter of Year 3 of the project, the planned activities

are mostly performed within the respective timelines, although a few of them are delayed

for reasons independent of P3DP (namely, parliamentary elections held in October 2012).

The rest of this report is structured as follows. For each of the four objectives of the

Program, activities foreseen by this objective for the entire Year 3 (Y3) and their

implementation are described and then the relevant performance indicators, their targets

and actual values are presented. For the ease of perception, activities that were fully and

timely implemented are marked with green, activities that are either delayed or

implemented partially marked with yellow, and activities that are not implemented are

marked with red. The report ends with some concluding remarks.

List of abbreviations

ARC – Autonomous Republic of Crimea

GOU – Government of Ukraine

IBSER – Institute for Budgetary and Socio-Economic Research

MoEDT – Ministry of Economic Development and Trade

MRDCH – Ministry of Regional Development, Construction and Housing

NCCSR – National Commission of Communal Services Regulation

NPA – National Project Agency

PPP – Public-Private Partnership

P3DP – Public-Private Partnership Development Project

RT – Round Table

SIP – Strategy Implementation Plan

SPA – State Property Agency

SWM – Solid Waste Management

TA – Technical Assistance

WG – Working Group

List of tables

Table 1. Events P3DP team took part in during Y3Q1………………………………page 4

Table 2. Performance indicators for Objective 1………….…………………………page 5

Table 3. Performance indicators for Objective 2…………….………………………page 8

Table 4. Analytical documents related to PPP transaction design, implementation and monitoring

drafted together with the PPP Unit(s) ………………………………page 8

Table 5. Performance indicators for Objective 3…………………………………….page 10

Table 6. Projects under P3DP consideration………………………………………....page 12

Explanatory note: Activities highlighted in green were conducted according to the Y3

Work Plan, highlighted in yellow were postponed/delayed and highlighted in red were not

conducted.

2

Objective 1. Legal Framework Enhancement.

To achieve this Objective, P3DP works closely with Ukrainian officials, representatives of

the private sector and international investors to make legal environment in Ukraine more

favorable for PPP development.

In Y3Q1, the following activities were planned and performed within this Objective:

Activity 1.1.1 – a year-round monitoring of legal environment. Within this activity, P3DP

team continued to issue Weekly Highlights on new developments in PPP legislation

(including developments in the area of utilities tariffs regulation – Activity 1.1.4) and

Monthly Legislation Assessment.

Activity 1.1.2 – the amendments to PPP laws that Verkhovna Rada returned to its

Committee on Industry and Entrepreneurship at the end of Year 2, were planned for review

and approval by the Committee during Y3Q1. However, due to the parliamentary elections

and consequent resolving of organizational issues by the new Parliament (election of the

speaker and heads of committees, distribution of deputies by committees etc.), Verkhovna

Rada practically did not work on legislation during October-December 2012. Hence,

review of the law draft was rescheduled for Y3Q2.

Activity 1.1.5.1 – a report on recommendations for legislation governing long-term budget

commitments in PPP area was planned to be developed in Y3Q1. Although the report has

not been finalized yet, P3DP has made a considerable progress in its development.

Namely, during Y3Q1, P3DP team:

- on 2012-10-02: organized cooperation with IBSER and signed a MoU (by mail);

- on 2012-12-06: drafted proposals to the Draft Law “On amendments to the Budget

Code” and presented them to IBSER for further discussion;

- on 2012-12-14: held a meeting with IBSER discussing Draft Amendments to the

Budget Code on implementation of the mechanism of long-term obligations.

During the meeting, P3DP and IBSER reached an agreement to jointly work on the

law draft and to organize in Y3Q2 a round table on long-term budget obligations.

Upon the round table discussion, the recommendations on the law drafts regarding

long-term budget obligations are to be developed.

Under Activity 1.1.6 P3DP is drafting comments and amendments to the licensing

regulations to provide them to MoEDT by the end of Y3Q2. In Y3Q1, P3DP discussed

with MoEDT the inclusion of P3DP proposals and amendments to the licensing regulations

into MoEDT agenda.

In Y3Q1, P3DP completed (on 2012-10-25) and submitted to MoEDT (on 2012-11-27) the

Draft Strategy on PPP Development in Ukraine for 2012-2017 and Strategy

Implementation Plan. At the end of Year 2, P3DP completed (on 2012-08-28) and

submitted (on 2012-09-06) a short version of the Strategy - Draft Concept Paper on PPP

Development in Ukraine for 2012-2017. Hence, after MoEDT approval, the Strategy

implementation will begin.

3

Under Activity 1.2.1 P3DP assisted MoEDT in organization of public discussions of Draft

GOU PPP Development Concept and Strategy, including Strategy Implementation Plan.

Namely, P3DP organized the following events:

1) 2012-11-06 – a roundtable discussion of the Draft GOU PPP Development

Concept, Strategy, and SIP (Activity 1.3.1);

2) 2012-11-21 - presentation of MoEDT PPP development ideas and pilot PPP

projects to investors at the Business Seminar on Municipal PPPs (Activity 1.3.2). At

the Seminar, developments of PPP framework were discussed, MoEDT addressed

commitments concerning PPP developments, transaction advisers expressed their

interest in participation in PPP Projects.

3) 2012-12-19 – a round table on on international SWM PPP experience (Hungary and

Austria study-tour follow-up). At the round table, representatives of GOU

(MRDCH, MoEDT, NPA, NCCSR) and P3DP discussed international experience of

PPP Unit functioning and SWM PPP implementation. P3DP and NCCSR agreed to

organize a new round table to share foreign experience in the area of SWM tariff

regulation affecting PPP Projects.

Within the year-round Activity 1.3.3 (participation in conferences, round tables, workshops

on national and regional levels, providing trainings, consultations and other types of

assistance to facilitate PPP legislation development in relevant areas), P3DP team took part

in the number events (see Table 1).

4

Table 1. P3DP participation in events during Y3Q1 (Activity 1.3.3)

Date Event Participating

organizations Topic Results

2012-11-15 Meeting with Clean

City National Project Clean City

Discussion of the last legal

developments and P3DP support

of Clean City activities

P3DP addressed inconsistencies in

adopted laws in SWM area

2012-11-30

Simferopol

Municipality PPP

Working Group

meeting

Simferopol

Municipality, Land

Agency, Land

Inspection Agency

Discussion of legal issues of land

allocation and designation under

PPP Projects

A compromise reached regarding land

allocation procedure and asset transfer

under PPP

2012-12-11

Meeting at the

National Commission

on Communal Services

Regulation

NCCSR

Discussion of National

Commission role and plans

regarding SWM regulation

Agreement on cooperation and provision

of TA on SWM tariff regulations

development, and on organization of a

round table

2012-12-12

GIZ Seminar on

Energy Efficiency pilot

projects

MRDCH,

municipalities,

international donors

Legal and technical obstacles to

implementation of the Energy

Efficiency Project

Donors learned about technical

complexity of energy efficiency

measures and legal peculiarities of

projects in municipal buildings

2012-12-17

Meeting with possible

investors of City

Lightening Projects

SWARCO, Energy

Consulting

Discussion of institutional PPPs

and technical peculiarities of city

lightening projects

Applicability of institutional PPPs to city

lightening projects established

2012-12-18

Meeting with Kyiv

Department of

Education

Kyiv City Department

of Education

PPP Project in kindergarten area:

legal peculiarities and viability

Several methods of project

implementation agreed upon

5

Additionally, P3DP team drafted several amendments/proposals to legal documents of

central and local government and submitted them to relevant government bodies:

1) on 2012-11-01, proposals to the Draft Law “On amendments to the Law “On reforming

Health Care Sector in Ukraine to facilitate investments to the Health Care Sector”

completed;

2) on 2012-11-22, proposals to the Draft Law “On amendments to some Laws regarding

SWM” completed and submitted to the MoEDT;

3) on 2012-12-17, amendments to the Kyiv City “Draft Regulations on Investment Tenders

Procedures” drafted and submitted to the City Council.

Performance indicators for Objective 1 are presented in the Table 2.

Table 2. Performance indicators for Objective 1

# Definition Y3Q1

actual Y3 target

% of target

implement

ation

POI

1.1

Draft Concept Paper, Strategy and Strategy

Implementation Plan on PPP Development

developed and submitted to GOU for approval

YES YES +

POI

1.2

# of actions implemented under PPP Strategy

Implementation Plan 0 TBD -

POI

1.3

# of policy reforms/regulations/ administrative

procedures drafted and presented for public/

stakeholder consultations to enhance sector

governance and/or facilitate private sector

participation and competitive markets as a result

of USG assistance (F 4.4.1-13)

1* 4 25

POI

1.4

# of P3DP legal reforms (based in part on the

GIDE review) that are submitted in final

recommendation form to the relevant GOU

(state) entity

1** 6 17

* Draft Strategy on PPP Development in Ukraine for 2012-2017 and Strategy Implementation Plan

** Draft Decree on Strategy on PPP Development in Ukraine for 2012-2017 and Strategy

Implementation Plan

Although some activities are slightly behind the schedule, generally implementation of

Objective 1 proceeds according to the Year 3 plan, and planned performance indicators are

likely to be achieved.

6

Objective 2. PPP Unit(s) Establishment.

Within this Objective, P3DP assists the development of a national PPP Unit within the

MoEDT, which could coordinate PPPs on the national level and promote PPP-friendly

policies.

In Y3Q1, the following activities were planned and performed within Objective 2:

Activity 2.1 foresees a year-round participation of P3DP team members in Working Groups

organized under different GOU bodies, namely, the Interagency Working Group, the WG

under the parliamentary Committee for Industrial Policy and Entrepreneurship, SWM

working group under MRDCH, and working groups under other government committees.

During Y3Q1 P3DP did not participate in the meetings of the working groups:

- PPP WG within parliamentary Committee for Industrial and Regulatory Policy and

Entrepreneurship did not meet due to elections and post-election activities related

to formation of Verkhovna Rada administrative units. By the end of December

2012, the mentioned Committee was reorganized into Investment Committee,

hence the WG will be re-established and P3DP plans to apply for membership in

January 2013;

- SWM WG within the MRDCH did not met during Y3Q1 due to elections;

- Committee on Sector Reforms within MRDCH met once (on 2012-12-06) but the

agenda did not include any PPP issues, therefore, P3DP did not participate in the

meeting.

At the round table on SIP (Activity 2.2.1.1, also mentioned under Activity 1.3.1), extensive

consultations on SIP were provided to MoEDT during the presentation and discussion of

the draft GOU PPP Development Concept and Strategy (including SIP).

Activity 2.2.2 foresees the pursuit of the awareness campaign on PPP Unit functions and

responsibilities, procedures and guidance tools. Within this activity, P3DP planned to

conduct five workshops/round tables (in November 2012, January, March, May and July

2013) on the usage of PPP Appraisal Methodology. However, November seminar was not

conducted.

The outline leaflet on a PPP Unit, its role and responsibilities (Activity 2.2.2.2) was

developed in Y3Q1 and is currently being agreed with the MoEDT.

Activity 2.2.3.1. On 2012-12-19, P3DP held a study tour follow-up workshop (also

mentioned under Activity 1.3.1), in which 12 (5M/7F) representatives of central

government (MoEDT, MRDCH and NCCSR) took part.

Activity 2.2.3.3. P3DP signed a MoU with IBSER (also mentioned under Activity 1.1.5.1).

Activity 2.2.4.1. For Year 3 it is planned to conduct three training workshops on

international PPP experience for MoEDT representatives. The first workshop was planned

for December 2012. The workshop was held ahead of planned scheduled (on 2012-11-21),

7

at the Business Seminar on Municipal Public-Private Partnerships in Ukraine (Activity

3.3.1). At the workshop, MoEDT officials presented their vision of PPP development

perspectives and forecasts for Ukraine based on the draft GOU PPP Development Concept,

Strategy and SIP.

Activity 2.2.4.2 stipulated for a practical workshop on how to effectively use the “Practical

Guide for PPP Appraisal Methodology” for representatives of the PPP Unit (MoEDT) and

local officials. However, due to extension of the deadline for incorporation of MoEDT

comments and suggestions to the “Practical Guide…” and further harmonization of these

changes with MoEDT, the workshop was rescheduled for the end of January 2013.

Activity 2.4.1.1 specifies the P3DP participation in the WG activities at the Crimean

MoEDT during the year. During Y3Q1, this WG has met once – on 2012-11-30 it

discussed land allocation for the Simferopol Park project (this meeting is also mentioned

under Activity 1.3.3). At the meeting, Crimean MoEDT and P3DP agreed on land

allocation procedure, asset transfer mechanism, and discussed some issues of Western

Crimea SWM project. These results are reflected in the corresponding Minutes of the

meeting.

Activity 2.4.2.1.The training on PPP “Practical Guide…” for ARC officials planned for

December 2012 was rescheduled for January 2013 due to already mentioned extension of

the deadline for “Practical Guide…” approval by MoEDT.

Activity 2.4.2.2. As the ARC officials did not request to support their participation in the

international PPP conferences, the support stipulated in the Work Plan was not provided.

Activity 2.5.1 includes year-round consultations with MRDCH representatives on

operational issues related to PPPs. Within this activity, P3DP and MRDCH specialists

discussed changes to the legislation on licensing, waste management, tariffs on solid waste

management operations (on 2012-12-19, at the study-tour follow-up workshop mentioned

under Activity 2.2.3.1). On 2012-12-26, P3DP discussed the draft changes to the legislation

on licensing and waste management with MRDCH representatives at the round table

hosted by the National Project Agency.

Table 3 presents the performance indicators for the Objective 2 for Y3Q1.

To sum up, almost all activities planned for Objective 2 were conducted. Annual targets are

likely to be met for majority of indicators. Moreover, annual target for the indicator POI

2.3 has been already met. The underperformance on indicator POI 2.1 is explained by the

fact that familiarization tours are scheduled for the Q3 of Year 3.

8

Table 3. Performance indicators for Objective 2.

# Definition Y3Q1

actual Y3 target

% target

implemen

tation

POI

2.1

# of top level participants in familiarization study

tours re: PPP Unit(s) implementation and

operations

0 30 0

POI

2.2

# of drafted legislative acts/regulations specifying

PPP Unit(s) activities 1* 5 20

POI

2.3

# of analytical documents related to PPP

transaction design, implementation and monitoring

drafted together with the PPP Unit(s)

5** 5 100

POI

2.4

# of desired Operational Polices drafted for the

PPP Unit(s) 1

† 3 33

POI

2.5

# project ideas submitted by public bodies (line

ministries/municipalities) to the designated

responsible GOU PPP entity (MoEDT/NPA)

2‡ 8 25

DC

2.1

# of stakeholders (lawmakers, public officials)

attending consultations, conferences annually re:

regulatory operations/implementation of the

designated responsible PPP GOU entity and PPP

Strategy Implementation Plan or modification

12

(5M/12F,

12P/0R)

N/A -

*PPP Strategy Implementation Plan

** see table 4 for details †PPP Practical Guide ‡ (1)Sea Port, submitted by Port Ochakiv LLC in October 2012; (2) airlines, submitted by

the SPA on behalf of the “Motor Sich” plant in November 2012.

Documents related to POI 2.3 are presented in Table 4 below:

Table 4. Analytical documents related to PPP transaction design, implementation and

monitoring drafted together with the PPP Unit(s)

Date Name of the document

2012-11-01 Proposals to the Draft Law “On amendments to the Law “On reforming of

the Health Care Sector in Ukraine to facilitate investments to the Health

Care Sector”

2012-11-22 Proposals to the Draft Law on amendments to some Laws regarding SWM

(submitted to the MoEDT)

2012-11-30 PPP Practical Guide to Appraisal Methodology

2012-12-06 Proposals to the Draft Law On amendments to the Budget Code (presented

to IBSER for further discussion)

2012-12-19 Aide Memoire defining further steps of cooperation with GOU

9

Objective 3. Awareness and Capacity-Development.

P3DP conducts capacity development and awareness events to provide representatives of

selected pilot municipalities with knowledge and skills needed to identify, launch and

manage successful PPP projects, while also inviting representatives of private and NGO

organizations to join.

Within this Objective, P3DP organized several events on PPP awareness and capacity

development: PPP training in Kyiv, market sounding event in Zaporizhzhya and Business

seminar on PPP. Below these events are described in more detail.

Activity 3.1.3. The general PPP training for Kyiv City Administration representatives to

support the development of its pilot projects related to kindergartens in Kyiv was organized

on 2012-10-03. One-day training session was attended by 32 participants (13F/19M)

including representatives of the Chief Department for Communal Services, Chief

Department for Energy Use and Energy Saving, Chief Department for Construction and

Architecture, Department for Industrial, Scientific and Innovation Policy, Chief

Department for Economics and Investments, Law Department, Kyiv City State

Administration, Center for Investments and Development and Kyiv City rayon

administrations.

The participants were familiarized with the most important areas of PPP development, such

as

- international experience of implementation of PPP projects;

- challenges and opportunities for Ukraine;

- peculiarities of various PPP forms, such as concession, lease, consortium, joint

venture etc.

Within Activity 3.2, P3DP planned to assist municipalities that pursue pilot PPP projects to

conduct awareness campaign.

Activity 3.2.1. Due to the timing of pilot project preparation, P3DP did not conduct the

survey/focus group planned for December 2012 (quarterly public attitude surveys and

focus groups with elements of “willingness/ability to pay” are being considered in order to

help shape communication strategy for a pilot city and contribute to a respective feasibility

study).

Activity 3.2.3. On 2012-12-21, P3DP organized a Market Sounding Event in Zaporizhzhya.

At this event, P3DP presented financial model for the hospital PPP project and tested it

against assumptions and expectations of both public sector and potential private investors.

The event provided a valuable feedback on the feasibility of the financial model and helped

to identify market players for this P3DP flagship project. It was attended by 12

participants.

Activities 3.2.5 and 3.2.6. Quarterly media monitoring was conducted by P3DP

implementing partners, and their web-sites are regularly updated.

Activity 3.3.1. Business Seminar on Municipal Public-Private Partnerships in Ukraine was

held on 2012-11-21. The purpose of the event was to identify private investors and

10

financiers interested in projects involving delivery of communal services and developing

municipal infrastructure in Ukraine through the public-private partnership mechanism. In

addition, this seminar was aimed at presenting existing and developing opportunities

supported by the P3DP and other donors, engaging potential partners and identifying the

best ways to develop effective partnerships in Ukraine.

To expand the network of invited private companies, P3DP engaged in a partnership with

the two major business associations in Ukraine: US-Ukraine Business Council (USUBC)

and American Chamber of Commerce in Ukraine (ACC) in order to use their extensive

membership base to reach P3DP target audience: investors, operators and financiers

interested in PPP projects. Out of 70 seminar participants (M42/F28), 17 were investors

and operators, 4 – financiers, 17 – transaction advisors, 6 – representatives of public sector;

7 – donors.

The Business Seminar became an important milestone for P3DP in terms of involving

private sector into P3DP activities on PPP development. It helped to identify and target

companies that can become important players in the PPP area in Ukraine. The next step in

engaging private sector will be market sounding events organized by P3DP on each pilot

project, were the proposed PPP project structure and financial model results will be

presented.

Activity 3.4.1. P3DP planned to issue a collection of the best PPP practices in Ukraine by

the end of January 2013. P3DP started collecting case studies illustrating PPP practices in

Ukraine. During Y3Q1 its implementing partner (AUC) was working with its members

requesting information about private sector participation in delivering services traditionally

provided by the public sector. The work is expected to be completed in time.

Performance indicators for Objective 3 are presented in the Table 5.

Table 5. Performance indicators for Objective 3

# Definition Y3Q1 actual Y3 target

% target

implement

ation

POI

3.1

# of individual events held to promote

PPP understanding 3 15 20

POI

3.2

# of persons attending major events held

to promote PPP understanding

102

M61/F41

U38/R41/N23

350 29

POI

3.3

# of targeted government trainees

completing PPP training sessions during

the reporting period

6

M6/F0 250 2

POI

3.4

# of targeted non-government trainees

completing PPP training sessions during

the reporting period

64

M36/F28

R41/N23

150 43

POI

3.5

# of individuals who received USG-

assisted training, including management

skills and fiscal management, to

strengthen local government and/or

102

M61/F41

350

M245/F105 29

11

decentralization (F - 2.2.3-1)

POI

3.6

# of sub-national government entities

receiving USG assistance to improve

their performance (F 2.2.3-5)

3 30 10

POI

3.7

# of people receiving training in global

climate change (clean energy) as a result

of USG assistance (4.8.2-6a)

0 200 0

DC

3.1

Index of development in capacity of the

public sector representatives to prepare

and implement PPP projects. Survey

based data

- - -

DC

3.2

Index of raised awareness about PPPs

among key stakeholders. Survey based

data

- - -

The indicators for Objective 3 demonstrate that almost all activities are implemented as

planned. However, indicators POI 3.6 and POI 3.7 raise some concerns whether their

annual targets are achievable.

12

Objective 4. Pilot Project Transactions.

Within this Objective, P3DP helps local officials to implement PPP projects – from idea

selection and evaluation to tendering and contraction.

In the Year 3, P3DP team will concentrate on six projects, for which the most progress has

been achieved in Year 2, as well as new PPP Pilot Project opportunities.

Top-6 active PPP Pilot Projects include:

1) Zaporizhzhya Healthcare

2) Simferopol Urban Park Renewal

3) Vinnytsia Solid Waste Management

4) Ivano-Frankivsk Solid Waste Management

5) Lviv City Parking Management

6) Crimea Solid Waste Management

In the first quarter of Year 3, three new projects were added to P3DP portfolio:

1) Kyiv kindergartens

2) Dnipropetrovsk ESCO in street lighting

3) Zhytomyr biofuel heat production

The ideas for the first two projects were delivered to P3DP at the end of Year 2, while the

last project appeared in Year 3.

Lviv SWM project pursued together with IFC is currently awaiting resolution of the land

allocation issue.

Table 6 outlines the stages at which different pilot projects of the current portfolio of P3DP

projects are. It also contains information on the indicators for Obejctive 4.

Other activities not covered in Table 6 are presented below:

Activity 4.2.1. Initially it was planned to finalize Concept Papers for 3-5 new projects by

the end of 2012. This target was probably too ambitious, since a Concept Paper is the third

stage of a project and it is drafted after the USAID approval. In Y3Q1, Concept Papers for

two “older” projects were finalized, which constitutes 2/3 of the annual target.

Activity 4.2.2. According to the Work plan for Year 3, Environmental Reviews for four

projects (Lviv Parking, Simferopol Park, Vinnytsia SWM and Zaporizhzhya Healthcare)

had to be completed by the end of November 2012. Two reviews – for Vinnytsia SWM and

Zaporizhzhya Healthcare – were completed in Y3Q1, which nevertheless constitutes a half

of the annual plan.

In Y3Q1, three new projects passed the stage of the USAID approval, which is 100% of the

annual target.

13

For Zaporizhzhya Healthcare project:

- a financial model was prepared and presented to the project stakeholders and city

administration at the working group in Zaporizhzhya;

- a business model description was finalized and provided to the project stakeholders for

information purposes;

- an awareness event for hospital staff was held in Zaporizhzhya (mentioned under Activity

3.2.3).

For Simferopol Park project:

- P3DP team participated in two working group meetings (with the Council of Ministers of

ARC and with the Simferopol City administration) concerning land issues and property

transition. Meetings resulted in resolutions with approval of further activities (mentioned

under Activity 2.4.1.1);

- P3DP assisted in obtaining expert analysis of the State Committee for Land Resources

related to land issues in the Simferopol Park;

- P3DP assisted in drafting of the ARC Council of Ministers Resolution related to transfer

of assets from different stakeholders to Simferopol Municipality for the project.

For Vinnytsia solid waste management project:

- a technical concept paper was drafted, specifying additional details for the PPP Pilot

Project;

- an updated financial model with more extended input data was finalized.

For Ivano-Frankivsk SWM project

- a concept paper was finalized, provided to the City and discussed during the meeting

with the Mayor; further steps on the project have been agreed during the meeting.

For Lviv parking project:

- an updated financial model with four scenarios was prepared for Lviv Parking PPP pilot

project and sent to the city officials for review. The model specifies possible tariff and PPP

contract duration if the City decides to only choose project of one large with 400-places

off-street parking facility;

- P3DP held discussions/consultations with three interested foreign private city parking

operators to learn about transaction issues and desired scope of the project.

For ARC solid waste management project:

- a business model was drafted and made available to the ARC officials for review.

For Kyiv kindergarten project:

- a brief business model was finalized and made available to the working group;

- possible budgetary and legal structure of the project was subject to the detailed

verification by P3DP and relevant recommendations were provided to the City.

For Dnipropetrovsk ESCO project:

- consultations with possible private partners started in order to verify the business model

of the project.

14

Table 6. Projects under P3DP consideration

POI Project stage Lviv City

Parking

Simfero-

pol Park

Vinnytsia

SWM

Zaporizh

zhya

Healthcar

ARC

SWM

Ivano-

Frank.

SWM

Kyiv

kindergar

tens

Dniprope

trovsk

ESCO

Zhyto-

myr

biofuel

Y3Q1

act.

Y3

plan

%

plan

impl.

Sta

ge

1 4.1 PIB prepared Y2Q1 Y2Q1 Y2Q2 Y2Q1 Y2Q1 Y2Q2 Y2Q4 Y3Q1 Y3Q1 2 3 67

4.2 PPP initiative

approved by

USAID

Y1 Y1 Y2Q1 Y2Q1 Y1 Y2Q1 Y3Q1 Y3Q1 Y3Q1 3 3 100

Sta

ge

2

4.3 Concept paper

prepared Y2Q3 Y2Q3

Y3Q1

technical

CP

Y2Q4 Y2Q3 Y3Q1 Expected

in Y3Q2 2 3 67

4.4 Environmental

review prepared Y2Q3 Y3Q1 Y3Q1 2 4 50

4.5 Feasibility report

(FR) initiated Y2Q4 Y2Q4 Y2Q4 0 3 0

4.6 FR completed

in

progress

in

progress

in

progress 0 3 0

Sta

ge

3

4.7 Effectiveness

report submitted 0 2 0

4.8 Tender package is

being drafted 0 2 0

4.9 Tender issued 0 2 0

4.10 PPP contract

executed 0 1 0

Sta

ge

4

4.11 Project under P3DP

monitoring 0 0 0

DC

4.1 # of jobs created - N/A -

DC

4.2

Investment, $

equivalent - N/A -

15

Concluding remarks

Despite delays in a few activities that occurred because of the parliamentary elections and

post-electoral issues (distribution of deputies by parliamentary committees, election of

speaker and voting for new government etc), P3DP team conducted almost all activities that

were planned for the Y3Q1. P3DP team is actively working on the pilot projects, annual

targets for majority of the indicators are likely to be met.

18

Annex B

Concept of Public Private Partnership Development in Ukraine for 2012-2017

Public Private Partnership Development Program 44 Khreschatyk Str, 3

rd Floor,

Kyiv, Ukraine +380442794481

FHI Development 360 1825 Connecticut Avenue, NW

Washington, DC 20009 United States

Concept for Public Private Partnership Development in Ukraine

for 2012-2017

This research was made possible with the generous support of the American people through the United States Agency for International Development (USAID) The Author’s views expressed in this publication do not necessarily reflect the views of the USAID or the United States Government

Contents

І. DESCRIPTION OF THE PROBLEMS TO BE ADDRESSED

BY THE CONCEPT

ІІ. GOAL OF THE CONCEPT AND IMPLEMENTATION

TIMEFRAMES

ІІІ. PROBLEM SOLUTION WAYS AND METHODS

IV. EXPECTED RESULTS

V. RESOURCE SUPPORT FOR THE CONCEPT

I. DESCRIPTION OF THE PROBLEMS TO BE ADDRESSED BY THE

CONCEPT

The progress of the modern economy creates the need to establish a permissible degree

of state intervention in the functioning of markets to ensure their competitiveness. In the 21st

century, the entrepreneurial sector is acquiring the status of an equal partner of the

government in resolving strategic tasks of the country's socio-economic development.

The anti-crisis action plans and plans of post-crisis economic revival implemented in

many countries envisage efforts to expand cooperation between the state represented by

public executive authorities, the business sector, and civil society, which is only possible on

the basis of forming partnership relations known as state-private partnerships and/or public

and private partnerships (PPP)1 intended to become an effective mechanism of infrastructure

development and public services. The significant spread of the PPP in the world is connected

not only with the desire of the government to attract financial resources of the private sector

to address socially important tasks of social and economic development, but also with the

need to use complex organizing, management, and production technologies.

The importance of PPP as a mechanism stimulating the social and economic development of a

country is attested by numerous conceptual, programmatic, regulatory, and methodological

documents at both the national and international levels, specifically: G202 summit declarations

aimed at developing anti-crisis response actions; special laws and other legislative acts

regarding PPP3,4,5,6,7,8

(Bosnia and Herzegovina, Brazil, Greece, Egypt, Zambia, Kyrgyzstan,

Latvia, Mexico, Germany, Poland, the Republic of Korea, the Russian Federation, Romania,

Slovenia, the USA, the Philippines, Croatia, an so on); PPP development concepts and

programs9,10,11

(Australia, India, Ireland, Kazakhstan, African countries,

1 The term "state and private partnership" is used in this document in accordance with Law of Ukraine No. 2404-17 “On State-

Private Partnerships,” dated July 1, 2010. In the subsequent legislative activities it would be appropriate to use the term "public-

private partnership" which to a fuller extent reflects the range of relations within this social phenomenon, taking into account the

involvement of local self-government bodies and the public 2 World Economic Forum Annual Meeting 2011. - [Electronic resource]. – Available at:

http://www3.weforum.org/docs/AM11/WEF_AM11_ExecutiveSummary.pdf 3 PPP in Infrastructure Resource Center. - [Electronic resource]. – Available at: http://ppp.worldbank.org/public-private-

partnership/legislation-regulation/laws/ppp-and-concession-laws#examples 4 Michael E. Pikiel, Lillian Plata A Survey of PPP Legislation Across the United States. - [Electronic resource]. – Available at:

http://www.ncppp.org/resources/State%20PPP%20Legislation%20Survey_2008.pdf 5 Report on the Public Consultation on the Green Paper on Public-Private Partnerships and Community Law on Public Contracts

and Concessions, Commission of the European Communities, Brussels, 2005.

6. Law No 80/2011-ОЗ of the Moscow Oblast "On the Participation of the Moscow Oblast in Public-Private Partnerships," dated

June 8, 2011. 7 Law of Saint Petersburg “On the Participation of Saint Petersburg in Public-Private Partnerships," dated December 20, 2006.

8 Draft federal law "On Public-Private Partnerships.” - [Electronic resource].– Available at:

http://www.economy.gov.ru/minec/about/structure/depregulatinginfluence/doc20120622_015 9 Program of Public-Private Partnership Development in the Republic of Kazakhstan for 2011 – 2015 - [Electronic resource].–

Available at: http://www.minplan.kz/economyabout/8011/38376/ 10

Shendi, Riham “Towards Better Infrastructure: conditions, constraints, and opportunities in financing public-private

partnerships”, PPIAF, 2011. 11

Vickram Cuttaree, Cledan Mandri-Perrott “Public-Private Partnerships in Europe and Central Asia”, The World Bank, 2011.

3.

3

Germany, Thailand, and so on); PPP Codes12

(for local self-government bodies in the

Philippines), and PPP project implementation manuals13,14,15,16,17,18

.

The post-crisis recovery and the efforts to ensure the competitive socio-

economic development of Ukraine call for accelerated modernization of the national

economic infrastructure. In the current situation characterized by a shortage of

needed state financing to implement new progressive mechanisms of cooperation

among the government, local authorities, and businesses, private investments in the

traditionally public economic areas are an imperative of time for Ukraine. Public-

private partnerships are regarded as a way to resolve the said problems.

The adoption of the Law of Ukraine “On State-Private Partnerships”

(hereinafter referred to as the Law) and numerous bylaws is proof of the intention to

implement PPP in Ukraine on a large scale.

As of the moment of adoption of the Law in 2010, Ukraine had a legislative

basis for contractual relations between the public and the private sector in the areas

of concessions, lease, joint venture operations, and so on, but there was no uniform

approach to the PPP principles-based interaction between the public and private

sectors.

At the same time, Ukraine had some experience attracting business to the

development of national economic sectors. According to the World Bank, in the

period of 1990–2011, Ukraine implemented 40 infrastructure projects involving the

private sector, and investments in those projects totaled USD 12.1 billion, 90.0

percent of which was accounted by the telecommunications sector19

. In other

countries with personal income below average, investments in infrastructure projects

involving the private sector in 1990–2011 equaled USD 588.5 billion. Taking into

account the fact that the aforementioned category of the countries includes primarily

African countries, the least developed countries of Southeast Asia and the CIS, the

shown level of involvement of the private sector in infrastructure projects in Ukraine

should be recognized as unsatisfactory.

For comparison, it is especially worth mentioning among the countries with

personal income above average such countries as Brazil (where 27.1 percent of

investments in infrastructure projects come from the private sector), the Russian

Federation (10.0 percent), China (9.7 percent) and Turkey (6.4 percent)20

.

11

Vickram Cuttaree, Cledan Mandri-Perrott “Public-Private Partnerships in Europe and Central Asia”, The World

Bank, 2011. 12

Proposed PPP Code for Local Governments, Philippines, 2012. 13

Guidebook on Promoting Good Governance in Public-Private Partnerships. – United Nations Economic Commission

for Europe, New York and Geneva, 2008. 14

The Guide to Guidance “How to Prepare, Procure and Deliver PPP Projects”, European PPP Expertise Centre EPEC,

2011. 15

Public-Private Partnership Handbook. – Asian Development Bank, Manila, 2008. 16

Guidelines for Successful Public – Private Partnerships, European Commission, Brussels, February 2003. 17

Public Private Partnership Handbook, Ministry of Finance of Singapore, October 2004. 18

Formulation, Appraisal and Approval of Public Private Partnership Projects, The Secretariat for the Committee on

Infrastructure, Planning Commission, Government of India, New Delhi. 19

Private Participation in Infrastructure Database. - [Electronic resource]. – Available at:

http://ppi.worldbank.org/explore/ppi_exploreCountry.aspx?countryID=97 20

Private Participation in Infrastructure Database. - [Electronic resource]. – Available at:

http://ppi.worldbank.org/explore/Report.aspx?mode=1.

4.

4

Despite some experience of involving business in infrastructure projects in

Ukraine, there were some unsuccessful attempts of this kind, especially in the

housing and communal sector. The general business difficulties existing in Ukraine

and the lack of preconditions for long-term and mutually beneficial cooperation

between the government and private partners got in the way of developing civilized

forms of interactions between them.

The adoption of the Law of Ukraine “On State-Private Partnership” along with

relevant bylaws also contributed to the activation of PPP projects.

The key reasons behind the slow PPP development in Ukraine are:

1. No consistent PPP state policy and no developed PPP promotion

management system.

The efforts to implement the national PPP policy have been inconsistent,

lacking systematic steps toward forming PPP development conditions, vaguely

outlined functions of the public authorities engaged in promoting PPP, and

ineffective coordination of work of the relevant public authorities. In fulfillment of

the strategic tasks set in the Economic Reforms Program for 2010–2014, the nation-

wide and local documents concerning the socio-economic development of the

country highlight the importance of PPP, but the provided state management

mechanisms and instruments in the said area are mutually contradictory and need to

be reconciled. Specific forms of cooperation in this area are developed separately by

different state and local authorities without sufficient coordination and observance of

the requirements of the Law.

According to Decree No 634/2011 of the President of Ukraine, dated May 31,

2011, the authorized central executive body responsible for developing proposals

and carrying out measures to form and implement a uniform national PPP policy is

appointed the Ministry of Economic Development and Trade of Ukraine whose

purview includes: 1) preparation and implementation of PPP development programs;

2) support for the PPP implementation at the central and local levels; and 3)

monitoring the PPP performance of state authorities and local self-government

bodies.

The state bodies that are authorized to implement specific PPP projects and

also have a significant influence on the development of the PPP institutional

environment are the Cabinet of Ministers of Ukraine, the Ministry of Regional

Development, Construction, Housing and Communal Services of Ukraine, the

Ministry of Energy and Coal Industry of Ukraine, the Ministry of Infrastructure of

Ukraine, the Ministry of Education and Sciences, Youth and Sports of Ukraine, the

Ministry of Health of Ukraine, the State Agency on Investments and Management of

National Projects of Ukraine, the State Agency of Motor Roads of Ukraine, the State

Property Fund of Ukraine and others. The State Agency on Investments and

Management of National Projects of Ukraine has its own powers as regards PPP. Its

central tasks are working out a national policy for attracting foreign investments, as

well as preparing and implementing “national projects” that can be based on the PPP

principles. It is also worth mentioning in this connection the State Property Fund of

Ukraine, a state authority responsible for privatization and state property

management.

5.

5

The functions and powers of specific public bodies regarding state property

and asset management are based on different legislative and regulatory acts, a factor

that in some cases makes it more difficult to select a public partner when starting and

carrying out PPP projects.

2. A low level of institutional capacity for state-private partnerships in pubic

authorities and the private sector

The institutional capacity of public authorities and the private sector in Ukraine

is characterized by a low level of mutual trust, lack of public trust in public

authorities, non-governmental, and political organizations, underdeveloped ideology

of partnership in society, underestimation of the potential of PPP projects on the part

of specialists working for public and local self-government authorities, low public

awareness of the advantages and risks of PPP mechanisms, a shortage of PPP

specialists on the staffs of public authorities and local self-government bodies, and

insufficient financing of the real sector of economy.

3. The unattractive investment climate and difficult conditions of business

under PPP projects

The relations between the government and business in Ukraine are burdened

with numerous problems in such areas of public governance as licensing and permit

obtaining, land ownership, protection of investors’ property rights, and settlement of

commercial disputes. The low transparency in budget relations complicates the

attraction of domestic and foreign investments to the infrastructure of national

economy and public services on the basis of PPP principles.

4. The contradictory and inconsistent legal regulation of the state-private

partnership relations

In the situation of the existing ramified legislation on concessions in various

areas, property lease, joint venture operations and investment activities, which to a

certain extent can be classified as PPP forms, a framework law has been adopted in

Ukraine. This document, known as the Law of Ukraine “On State-Private

Partnerships,” is intended to summarize and systematize the area of state-private

partnerships.

According to this Law, a state-private partnership is the cooperation between

the government of Ukraine, the Autonomous Republic of Crimea, territorial

communities represented by appropriate central and local self-government authorities

(public partners) and legal entities, except state and communal enterprises, or

individual (private) entrepreneurs (private partners) carried out on a contractual basis

under the procedure established by this Law and other legislative acts. The Law

provides a long and rich list of PPP application areas, including in particular the area

of mineral production, which is rarely regarded as a traditional PPP application area.

The Law does not provide clear-cut criteria prioritizing such areas for PPPs, unlike

the international experience according to which PPPs cover the market segments

connected with infrastructure creation, reconstruction, and modernization, or delivery

of public services.

The Law has introduced the PPP principles and approaches, stressed the

importance of a feasibility study of PPP projects and competition-based selection of

private partners, and envisaged special state support for PPP projects.

6.

6

The broad definition of the term “state-private partnership” and the variety of

contractual relations within the PPP framework provided by the Law make it

difficult to work out a common approach to the development of organizational and

methodological support to promote PPPs in Ukraine. The issue of correlation of the

Law with the special laws concerning PPPs remains is yet to be properly settled, as

well. The Law permits the state partner to use its discretion as regards applying this

Law to a specific project. According to the Law, any projects that formally bear PPP

traits may be implemented without applying the principles, approaches, and

procedures provided by this Law, if there is a decision of the state partner to that

effect. In such cases, the Law “On Concessions” is directly applied, which does not

regulate the application of PPP principles outside its area of regulation in a

concession, lease, joint venture operations, etc. The Law has other shortcomings21

. In

particular, it does not clearly outline the circle of persons that have the right to act as

public partners in projects of a national level, does not provide for the application of

institutional partnership, does not contain a provision allowing two and more public

authorities (or municipalities) to act simultaneously as one state partner, and limits

the participation of state and communal companies in PPP projects.

In execution of the Law, an array of bylaws have been worked out to regulate

the methodological, organizing and management aspects of PPPs, but their

effectiveness remains low due to the shortcomings of the Law and some of the said

acts.

5. No effective mechanisms of state support for state-private partnerships

International experience proves that domestic legislation does not give a

decisive impulse to intensive development of PPP projects. The state support

mechanism is a common instrument of drawing private investments to PPP-based

infrastructure projects in the world. The main problems plaguing state support for

PPPs are the single year budgeting and annual changes in the financing directions

and priorities of budget programs, which means there is no guarantee that the budget-

financed programs will continue throughout the entire PPP project term; no clearly

established methodology of state budget support for PPP projects; the principles and

approaches applied in this area are different from international ones; and the limited

possibility of obtaining state guarantees for PPP projects at the local level (a paid

basis, required counter-guarantees, impossibility of using state budget money to

repay a loan).

6. Complicated and inconsistent tariff regulation and economically ungrounded

tariffs

The tariff formation mechanism plays an important role in ensuring successful

PPP projects, because it directly supports the possibility of repayment of private

investments. However, some areas of the national economy are still not based on free

market principles and the tariff does not work as an economic regulator. Communal

utility tariffs in most regions of Ukraine fail to cover the cost of the provided

services and almost every tariff lacks an investment component, which does not

21

Diagnostic Overview of the Public-Private Partnership Legislation. - Public-Private Partnership Development

Program (PPPDP), USAID, October 20, 2011.

7.

7

encourage enterprises to operate efficiently and save energy. The inability of the

private partner in an PPP project to influence the tariffs substantially complicates the

repayment of investments. The outlined problems along with the absence of an

effective mechanism of reimbursing for the difference in tariffs22

do not make it

possible for companies to plan and carry out measures to modernize equipment and

networks.

The foregoing proves that the PPP implementation process has generally been

launched in Ukraine, and basic principles of effective cooperation between the

public and private sectors created, but the specifics of economic and political cycles

resulted in the PPP regulation lacking in proper coordination in general and in the

part related to anti-crisis regulation of economic processes in particular.

In view of the lack of a developed state PPP ideology in Ukraine and a lack of

progress in the area of PPP investment projects implementation at the national and

local levels, it appears necessary to work out a public-private partnership

development concept for Ukraine for 2012-2017 (hereinafter referred to as the

Concept).

The Concept forms the PPP development methodology on the basis of the

relevant priority goals of social and economic progress of Ukraine determined by the

Economic Reforms Program for 2010-2014 "Prosperous Society, Competitive

Economy, Efficient State", National Plan of Action for 2012 regarding the

implementation of the Economic Reforms Program for 2010-2014, Annual Address

of the President of Ukraine to the Parliament of Ukraine “On the Internal and

External Situation for Ukraine in 2012,” and other program documents.

The Concept has been developed on the basis of a study of international PPP

experience of developed countries, post-socialist countries, and transition economies,

taking into account the results obtained within the framework of the Public-Private

Partnership Development Program (PPPDP) for Ukraine, Ukrainian-Dutch

Intergovernmental Project “Ukraine: Studying and Implementing European

Experience of Development and Realization of Public Private Partnership

Mechanisms in Ukraine” (G2G10/UA/8/4),” ESBS Project “Complementary

Technical Assistance to the EU-funded Budget Support to Ukraine's Energy Strategy

Implementation (EuropeAid/128260/C/SER/UA),” and the World Bank’s Project

“Public-Private Partnership Framework Development. Ukraine (2010).”

The obtained results proved the need to form a national PPP model taking into

account the institutional specifics and modern condition of investment and innovation

development of Ukraine.

22

K. Shugart. PPP and Tariff Regulation in the Water Supply, Drainage, and Heating Supply Sectors. - VIII Ukrainian

Municipal Forum, USAID. – Yalta. – 2012.

8.

8

II. GOAL OF THE CONCEPT AND IMPLEMENTATION

TIMEFRAMES

The goal of this Concept is to work out a uniform approach to the formation

of an efficient mechanism of interaction among the government, private business

entities, civil society institutions, and the expert community on the basis of PPPs to

ensure the successful implementation of projects aimed at improving the standard of

life for Ukrainian people and the environment, and developing the infrastructure of

the national economy and public services.

Concept implementation timeframe – 2012–2017

The tasks of the Concept, in view of its goal and existing PPP development

barriers in Ukraine, are:

– working out a uniform approach to the development of the PPP

institutional environment, identifying the priority areas for PPP development and

spread and the specifics of PPP development in various areas;

– improving the PPP legislative and regulatory framework;

– establishing a clear distribution of powers in the state management of PPP;

– determining directions for improving the mechanisms of state support and

guarantees;

– determining directions for improving the interaction between the government

and the private sector as regards initiating and implementing PPP projects;

– increasing the institutional capacity of state executive authorities and local

self-government bodies as regards the use of modern PPP mechanisms; and

– creating conditions fostering the involvement of non-governmental

associations in the efforts to form the necessary institutional environment and

implement PPP projects.

The Concept provides general PPP development basics and principles that

will form a ground for partnership relations between the public and private sectors in

Ukraine. The key provisions of the Concept will be detailed in the Public-Private

Partnership Development Strategy for 2012–2017 and the Strategy Implementation

Plan, the documents that will describe the measures, mechanisms, stages, resources,

and expected results in the institutional, financial, legislative, and information areas.

III. PROBLEM SOLUTION WAYS AND METHODS

The aforementioned problems should be addressed with an orientation to the

best European and world practice, considering the current crisis trends by identifying

priority areas for PPPs in Ukraine, improving the investment climate and business

environment in the context of the efforts to promote state-private partnerships,

establishing an authorized state body responsible for the promotion of state-private

partnerships in Ukraine, strengthening the functions of local self-government bodies

in the PPP area, improving the PPP project financing mechanisms, intensifying the

activities of enabling institutions in the PPP management system, eradicating

contradictions and faults in the PPP legislative and regulatory base, and improving

cooperation between the government (local self-government bodies) and civil society

institutions with regard to PPP projects.

9.

9

1. Identifying priority areas for state-private partnerships in Ukraine

The identification of priority areas in the national economy for implementing

PPP mechanisms should be carried out on the basis of the following criteria, taking

into account international experience:

- socio-economic potential of the given area;

- social significance of the project (national project), the role of this area in

ensuring economic, financial and humanitarian safety of the nation;

- availability of methodological and organizing support for PPPs;

- availability of qualified personnel and experience of attracting the private

sector to investment infrastructure projects; and

- implementation transparency and relative simplicity of pilot projects.

Taking into account the said criteria, as well as the importance of the issues

that need to be addressed and no good reason for privatizing specific public and

communal facilities that require modernization and create the need for resources

from the private sector, the priority areas for PPPs in Ukraine are:

1. production infrastructure and high-tech manufacture (transport and transport

infrastructure, energy sector, energy saving, machine building, and

communications).

2. construction and the housing and communal services sector (development of

the market of affordable housing, technical re-equipment, resource and energy

efficiency improvements in the housing and communal services sector, water supply,

domestic wastes disposal, outdoor improvements).

3. social infrastructure and human development (healthcare, education, culture,

tourism and sport, and environment protection).

In its further development stages, PPPs should be populated to:

- R&D and innovations sector;

- information sector;

- agro-industrial complex; and

- forestry.

The spread of PPP should be conducted taking into account the level of

development of free market relations in every economic sector and the accumulated

project implementation expertise.

2. Improving the investment climate and business environment in the

context of the efforts to promote state-private partnerships in Ukraine

The further development of PPPs in Ukraine depends to a great measure on the

investment climate and business conditions in the country. An improvement in the

business climate and attraction of private investments to PPP projects requires:

- efforts to improve the transparency of the permission system and lower

bureaucratic barriers;

- putting in order the inspection and technical regulation procedures

(standardization and certification);

- simpler property registration procedures;

- favorable conditions for land use within the PPP framework;

- transparency in the relations between the private partner and the public

partner in preparing and implementing PPP projects;

10.

10

- focusing efforts of the government on implementing PPP projects and

ensuring effective feedback in the relations of the government with the private

sector.

3. Establishment of an authorized state body responsible for the development

of state-private partnerships in Ukraine

The leading state policymaker developing the national economic policy and

responsible for PPP promotion in Ukraine, the Ministry of Economic Development

and Trade of Ukraine is obligated to ensure:

- the formation of strategic development directions of PPPs in Ukraine, which

requires a relevant strategy to be worked out along with legislative, regulatory, and

organizing support;

- methodological and consultative project support that envisages keeping a

record of PPP agreements at the central and local levels by regions, territories, and

types of economic activity, approving PPP feasibility studies for projects

implemented by central executive bodies; and PPP project fulfillment monitoring and

control;

- a mechanism of clear coordination of work of central executive bodies with

regard to the PPP projects implemented at the national level. The management

function of the ministry should be reinforced with an administrative mechanism of

the ministry’s interaction with the said executive bodies as regards PPP project

implementation issues, which mechanism is provided in the appropriate regulatory

act of the Cabinet of Ministers of Ukraine that will contain a provision establishing

the degree of functional subordination or mandatory requirement for central

executive bodies to agree their PPP-related decisions with the Ministry of Economic

Development and Trade of Ukraine; and

- transparency of its PPP activities, including by creating a public council

under the Ministry of Economic Development and Trade of Ukraine as an instrument

of coordination of the Ministry’s interaction with local self-government bodies and

representatives of business and the expert community

Taking into account the global experience of running state PPP promotion

centers, the list of the functions assigned to the Ministry of Economic Development

and Trade of Ukraine as the authorized body, and the need to raise the coordinating

role of the ministry in preparing and implementing PPP projects at the level of central

executive bodies, it appears reasonable to increase the staff of the relevant

department of the ministry.

The State Agency for Investments and National Projects of Ukraine should

gradually evolve within the limits of its purview into a full-fledged enabling

institution in the investment field, whose role should be the provision of

methodological and organizing support for national projects.

4. Strengthening the functions of local self-government bodies in the area of

state-private partnerships

The central task of developing PPP mechanisms at the level of local self-

government bodies is to ensure the effective implementation of projects by

developing a uniform algorithm of selecting, subjecting to the expert examination,

11.

11

agreeing, and implementing such projects, engaging specialists with the required

qualifications.

The implementation of PPP projects at the local level should involve the use of

financial resources from oblast and municipal budgets that are responsible for

constructing, operating, and maintaining large infrastructure projects.

The legislative regulation of the relations between local self-government

bodies and the authorized state body responsible for PPP development in Ukraine

will provide the right granted to the said bodies to be exercised within their

respective purviews and applicable law to make independent decisions on the

expediency and implementation of PPP projects, and to obtain consultative and

methodological assistance from the authorized state body, as well as the obligation to

agree their actions with appropriate central executive bodies if PPP projects involve

state support.

5. Intensification of the activities of enabling institutions in the state-private

partnership management system of Ukraine To improve the PPP management system, the government should establish

relations with international enabling institutions and promote more intensively the

formation of national enabling institutions whose activities should be oriented to the

priorities of innovation-based modernization of the national economy, using the

latest risk management approaches. The establishment of enabling institutions should

be carried out observing the financial sustainability, resource diversification,

investment risks minimization, administrative pressure and corruption risks

elimination requirements.

The role of enabling financial institutions (universal and targeted development

banks, export-import banks, state venture and leasing companies, innovation funds,

regional development funds and agencies, etc.) will be financial, advisory and

information support for PPP projects.

Non-financial enabling institutions (techno parks, industrial parks, business

incubators; technical implementation and industrial manufacture, as well as tourism

and recreation, special economic zones; research centers, centers of technology

transfer, sub-contraction, design development, energy saving, and others) will

advance the development of business infrastructure within the PPP framework,

improvement in the qualifications of state officials, and integration of PPP

problematics into the academic programs for specialists prepared for state authorities

and local self-government bodies, and organize PPP training sessions, seminars, and

roundtables.

6. Improving the financing mechanisms of state-private partnership projects

in Ukraine

The efforts to improve the PPP project financing mechanisms should focus on

improving the effectiveness of public budget financing, intensified involvement of

enabling institutions in PPP projects, extending the range of instruments of long-term

project financing, and so on.

12.

12

The public budget financing of PPP projects and the participation of the

government in PPP projects should be based on the principles of medium- and long-

term program and targeted planning, and program and project financing.

The state financial support for PPPs should envisage:

- outright financial support through subsidies; reimbursement for the cost of

construction, participation in tender competitions, capital repairs, and investment in

authorized capital;

- using taxation leverage to encourage investments, introducing mechanisms of

state crediting and insuring imports of investment equipment;

- reimbursing from the state budget for payments for the services provided to

consumers;

- providing state guarantees for loans, reimbursing for losses from exchange

rate fluctuations, assuming obligations to acquire products.

- using contemporary market financing instruments (securities).

7. Eradicating the contradictions and faults in the legislative and regulatory

base of public and private partnerships in Ukraine

When addressing the legislative regulation improvement issue, it is necessary

to include in this process as a specific line of activity the efforts to collate and

systematize the PPP legislation and harmonize the domestic legislation with the rules

provided by the legislation of the European Union.

In view of the available contradictions in the legislative and regulatory base

and the actual impossibility of fast implementation and harmonization of the

provisions of the Law of Ukraine “On State-Private Partnerships” with other special

laws that regulate the business relations between the public and the private sector, it

is necessary to develop PPP mechanisms on the basis of this Law, which should

serve as a framework law, which requires:

- improving the Law to ensure a clearer outlining of the powers of the

authorities that become involved in PPP projects at all stages at both central and

local levels; extending the timeframe for PPP relations; more accurate formulation of

PPP characteristics as regards delegating the functions and powers of the government

related to infrastructure development and provision of public services to the private

sector; improving the list of PPP agreement application areas; introducing the

possibility of institutional partnership, including the creation of a public-private

project joint venture (intended to implement a specific project); and granting the

right to state (communal) enterprises to act as a state partner;

- harmonizing the provisions of the Law with the provisions of the special laws

that regulate the contractual relations between the state and the private sector in the

field of concessions, joint venture operations, lease, product distribution, and so on;

- introducing instruments of methodological support for PPP projects for

specific PPP forms; such instruments should be of an advisory nature and developed

by the authorized body;

- legal regulation of issues of title to assets created under an PPP project;

- improving the mechanism of settling disputes arising out of any PPP

agreement entered with a non-resident or an enterprise with foreign investments,

13.

13

which mechanism should include the possibility of the dispute to be referred to an

international court of commercial arbitration;

- improving the budget and tax legislation (including in the part regarding

financial support for the rights and obligations of state and municipal entities acting

as parties to PPP agreements) to improve the investment climate and form an

effective mechanism of state support for PPPs; and

- further legislative efforts to introduce stimulating tariff regulation.

8. Improving cooperation between state authorities (local self-government

bodies) with civil society institutions with regard to PPP projects in Ukraine

The development of PPP relations requires more active involvement of the

public in the preparation and implementation of PPP projects at the national and local

levels. In this context, it is necessary to promote the development of the mechanisms

of state interaction with civil society institutions in the direction of inviting the public

to take part on a permanent basis in discussions on PPP projects and their expert

examination and implementation.

IV. EXPECTED RESULTS

The adoption and implementation of this Concept is expected to produce the

following results:

a worked-out uniform approach of all stakeholders to developing the PPP

legislative and regulatory framework and the institutional environment;

an improved organizing mechanism of public management of PPP development;

prepared and implemented PPP projects;

a more effective mechanism of state support for PPPs and a more efficient use of

public resources; and

an improved level of training and upgraded qualifications of specialists of state

executive and local self-government authorities, business entities, and representatives

of civil society in issues related to the application of PPP mechanisms.

The expected results of the Concept implementation are presented in the draft

Public-Private Partnership Development Strategy for 2012–2017 as quantitative

target indicators.

V. RESOURCE SUPPORT FOR THE CONCEPT

PPP development is planned to be financed until 2017 for the account of the

state and local budgets within the budget allocations for each specific year and by

funds from business entities and international organizations.

The legislative, institutional, informational, scientific, HR, and other support

for the implementation of this Concept is planned to be provided within the

framework of the day-to-day work of the Ministry of Economic Development and

Trade of Ukraine, with the involvement of representatives of the expert and research

communities.

19

Annex C

Strategy on Public Private Partnership Development in Ukraine for 2012-2017 and Strategy Implementation Plan

Public Private Partnership Development Program 44 Khreschatyk Str, 3

rd Floor,

Kyiv, Ukraine +380442794481

FHI Development 360 1825 Connecticut Avenue, NW

Washington, DC 20009 United States

Strategy on Public-Private Partnership Development in Ukraine for 2012-2017 and Strategy Implementation Plan

November 20, 2012

This research was made possible with the generous support of the American people through the United States Agency for International Development (USAID) The Author’s views expressed in this publication do not necessarily reflect the views of the USAID or the United States Government

1

Contents

Preface 3

І. Implementation Mechanism of the Public-private Partnership

Development Concept for 2012-2017 7

1.1 Institutional Part 7

1.2 Financial Part 11

1.3 Legal Part 12

1.4 Informational Part 15

ІІ. Implementation Stages and Resources 16

ІІІ. Implementation Results 22

IV. Implementation Monitoring and Evaluation 236

V. Strategy Implementation Plan 31

2

Preface

Public-private partnerships (PPP) are one of the key mechanisms of development

of the national economy’s infrastructure, improvement in the standard of life of the

nation on the basis of better quality public services and an enhanced business climate

and better investment environment, recognized as priority tasks of the socio-economic

development of Ukraine in the Program of Economic Reforms for 2010–2014 titled

“Wealthy Society, Competitive Economy, Effective Government” and the Annual

Address of the President of Ukraine to the Parliament of Ukraine titled “On the Internal

and External Situation for Ukraine in 2012.” The PPP mechanism has gained ground in

most world countries of the world where it is regarded as a key instrument of economic

progress. Public-private partnerships allow the public and private sectors to join their

financial, administrative, and technological resources to achieve common benefits by

combining the efforts to resolve socially significant tasks of the nation’s socio-

economic development with the interests of business and the community.

Mission: to create a modern mechanism of effective PPP-based interaction

between the public and the private sector in implementing innovation investment

projects aimed at infrastructure development and delivery of public services to achieve

the strategic goal of sustainable development of Ukraine.

The priority areas for fostering PPPs in Ukraine are manufacturing infrastructure

and high-tech production (transport and transport infrastructure, energy sector, machine

building, and telecommunications); construction and the housing and communal sector

(HCS) (formation of the market of affordable housing; technical upgrade and the efforts

to improve the resource and energy efficiency of the HCS; municipal waste disposal,

and municipal outdoor improvements); social infrastructure and human development

(healthcare, education, culture, tourism, and sports).

In future, PPP mechanisms should be extended to the technical research and

innovation area; information area; agriculture and village infrastructure; environment

protection; and forestry.

Implementation Results of the Strategy (Values):

improved PPP legislative and regulatory framework;

improved organizational mechanism of PPP development public management;

PPP projects prepared and launched;

improved PPP public support mechanism;

increased institutional capacity of the public and private sectors in terms of better

application of modern PPP mechanisms; and

created conditions for involving enabling institutions and non-governmental

associations in the efforts to form the necessary institutional environment and

implementing PPP projects.

International experience knows three basic PPP development phases for a

country: the preparation, implementation, and improvement. The preparation phase

3

involves studying international experience and the current legislative and regulatory

framework and determining the configuration of the PPP national policy. The

implementation stage is about forming a PPP legislative and regulatory framework,

developing a methodological basis, creating a special authorized body, expanding the

PPP area of application, and so on. The improvement stage is characterized by

intensified PPP activities and increased complexity of PPP projects, and envisages

further efforts to improve the legislative-regulatory, methodological, and organizational

support for PPP.

The PPP development process in Ukraine is now in the implementation stage

characterized by the presence of a PPP legislative and regulatory framework and

methodology and the lack of a systemic approach to public management of the

development of PPPs and pilot PPP projects.

Despite the lack of PPP ideology and a uniform PPP project implementation

mechanism, there have been some isolated attempts in Ukraine to involve business in

the efforts to develop national economic sectors. According to the World Bank, 40

infrastructure projects involving the private sector have been implemented in Ukraine in

the period of 1990–2011, and investments in those projects totaled USD 12.1 billion,

with nearly 90.0 percent of the amount in the telecommunications sector1. Of the said 40

projects, only 18 actually had PPP project traits and were implemented in the form of

concessions, greenfield projects, management and lease agreements.

The key problems holding back the development of PPP in Ukraine are:

- low investment attractiveness of the national economy and a difficult business

environment;

- contradictory and inconsistent legislative and regulatory framework for PPPs;

- no effective PPP public support mechanism;

- complicated and inconsistent tariff regulation;

- poor qualification level of public sector workers and low awareness of the private

sector as regards PPP specifics;

- the lack of a consistent PPP development national policy and governance;

- poorly developed PPP risks management system, and so on.

The indicated problems are possible to overcome if there was a comprehensive

national policy and a systemic approach to PPP development in Ukraine. The Public-

Private Partnership Development Strategy for Ukraine for 2012–2017 (hereinafter

referred to as the Strategy) should become an important component of such a policy. It

is a political and legal document, according to which the central executive body

authorized to carry out the public PPP policy in Ukraine determines its medium-term

(long-term) development prospects and directions in accordance with the provisions of

the Public-Private Partnership Development Concept for Ukraine for 2012-2017.

1 Private Participation in Infrastructure Database. - [Electronic resources]. – available at:

http://ppi.worldbank.org/explore/ppi_exploreCountry.aspx?countryID=97

4

Strategy implementation indicators

These indicators are required to be included in the mandatory reports of economic

entities operating in the public and private economic sectors, prepared to the standards

of international and national statistic and financial reporting:

- number of PPP projects per economic sector (units);

- amount in financing for PPP projects (mln UAH);

- gross investment in fixed capital for the account of PPP projects (mln UAH, % of

the total investment);

- amount in loans for PPP projects (mln UAH);

- Proceeds generated by PPP projects to budgets of all levels in taxes, duties, and

fees (mln UAH);

- value of assets created under PPP projects (mln UAH);

- number of jobs created under PPP projects (units); and

- the level of public satisfaction with the prices for and quality of public services

(conventional units).

Financial indicators of Strategy implementation

No Indicator

1 Fulfillment of the spending part of budgets of all levels to finance PPP-based

programs (as compared with the approved and adjusted year-end data), %

2 Actual share of budget outlays intended to support PPP projects, as compared

with the approved budget, %

3 Actual fulfillment of the PPP projects financing plan by private entities, %

4 Amount in debts to PPP projects incurred by private partners, thous. UAH

5 Amount in debts to PPP projects incurred by public partners, thous. UAH

6 Changes in amounts in PPP project financing by financing sources, thous.

UAH

7 Volume of operations financed from public and private sources, mln UAH

8 Cost estimate of the financial risks associated with PPP projects, according to

feasibility studies, thous. UAH

9 Estimation of available funds to assume the obligations to support financial

commitments of PPP participants, %

10 Payroll under PPP projects, mln UAH

11 Average salary under PPP projects, UAH

The legal foundation of the Strategy is the Constitution of Ukraine, Commercial

Code of Ukraine, Civil Code of Ukraine, Law of Ukraine “On Local Self-Governance,”

Law of Ukraine “On Public-Private Partnership,” and other legislation regulating

economic activities of and interrelations among state executive authorities, local self-

government bodies, business entities, and civil society institutions.

5

І. Implementation Mechanism of the Public-Private Partnership

Development Concept for 2012-2017

1.1 Institutional Part.

Problems

The quality of the PPP institutional environment in Ukraine is characterized by a

low level of personal-to-person trust and trust of the citizens in public authorities, non-

governmental and political organizations, no partnership ideology in the society,

underestimation of the potential of PPP projects on the part of specialists working for

state authorities and local self-government bodies, no specialized PPP enabling

institutions, a low level of public awareness of the advantages and risks of PPP

mechanisms, a lack of PPP specialists working with state authorities, insufficient

crediting in the real sector of economy, and so on.

The result of the said problems is the untapped potential of PPPs as a mechanism

ensuring the infrastructure development of the national economy and improvement in

provided public services. The national PPP policy is characterized by inconsistency, no

systematic steps towards creating PPP favoring conditions, unclearly described

functions of the public authorities involved in the PPP promoting efforts, ineffective

coordination of the activities of the relevant state authorities, and insufficient attention

to PPP development problems at the local level.

International experience proves that the body responsible for PPP development in

the country may be a governmental institution, public enterprise, state agency, and so

on2. The activities of such bodies may be financed both from the state budget and for

the account of contributions made by the private sector. According to the European

Investment Bank, the staff of such an authorized body responsible for PPPs in the EU

countries ranges from one person to 45 persons, and averages 8–10 persons3. The

functions of such authorized bodies vary substantially from country to country, ranging

from forming and ensuring the implementation of the PPP national policy to passing the

final approval of contracts, directly supervising and controlling the project

implementation, and providing PPP training sessions and courses4. The effectiveness of

the management of PPP processes is secured by reliable and transparent budgeting

mechanisms and fiscal control over the flow of obligations and debts at various project

implementation stages and those reflected in the results presented in financial

statements.

The authorized state body responsible for PPP development in Ukraine is the

Ministry of Economic Development and Trade of Ukraine whose terms of reference

include working out proposals and carrying out measures to form and implement a

uniform national PPP policy, preparing and implementing PPP development programs,

changing current programs; supporting the PPP implementation at the central and local

levels; performance monitoring of state executive authorities and local self-government

authorities as regards PPPs.

2 Dedicated Public-Private Partnership Units. A Survey of Institutional and Governance Structures, OECD, 2010.

3 Stein В. РРР Units and Related Institutional Frameworks. Lessons Learned. - European Investment Bank, Kyiv, 2012.

4 In the same place.

6

The public bodies that are not only authorized to undertake specific PPP projects but

also have a significant influence on the development of the PPP institutional

environment are the Cabinet of Ministers of Ukraine, the Ministry of Regional

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

of Energy and Coal Industry of Ukraine, the Ministry of Infrastructure of Ukraine, the

Ministry of Education and Sciences, Youth and Sports of Ukraine, the Ministry of

Health of Ukraine, the State Agency on Investments and Management of National

Projects of Ukraine, the State Agency of Motor Roads of Ukraine, the State Property

Fund of Ukraine, just to name some. The main task set for the State Agency on

Investments and Management of National Projects of Ukraine is working out a national

policy of attracting foreign investments, as well as preparing and implementing national

projects that can be based on PPP principles. The State Property Fund of Ukraine is the

state authority responsible for privatization and state property management.

The activities of the said authorities in the PPP field are not systemic, not

sufficiently coordinated by the authorized state body, and the functions and powers of

specific state bodies as regards public property management are based on different

legislative and regulatory acts that need to be reconciled and as such, in certain cases,

do not make it possible to identify a state partner for a PPP and an appropriate method

of coordinating the interrelations between the parties.

The efforts of local self-government bodies to engage the private sector in PPP

projects remain at an extremely low level, whereas the bulk of the potential of

infrastructure development and improvements in the quality of public services is at the

local level. The poorly developed PPP processes at the local level in Ukraine are

connected with systemic shortcomings of applicable legislation, little knowledge of PPP

mechanisms in local authorities and businesses, limited investment resources in

business support programs, a lack of qualified staff in local self-government authorities

to prepare and perform PPP projects, and so on. The level of preparedness of the private

sector for active participation in PPP-based infrastructure and public services projects in

Ukraine remains low, a fact supported by the results of a poll completed under USAID

sponsorship5. According to this poll, only 3.0 percent of the polled business

representatives have taken part in projects bearing PPP traits and only 39.0 percent of

the polled business representatives are actually interested in PPP projects, an indicator

that is significantly below the same indicator showed by local authorities (62.0 percent).

Goal and Tasks:

To improve the quality of the PPP public management system, creating an

effective organizational structure of interaction among executive authorities, business,

civil society institutions, and representatives of the expert community by way of:

- extending the powers of the authorized state body in charge of PPP development

management;

5 O. Besiedina, D. Nizalov, R. Semko “Basic Opinion Poll Regarding Public-Private Partnership Awareness” – Public-

Private Partnership Development Program, USAID. – Kyiv, 2012.

7

- effective and transparent coordination of the authorities responsible for

developing the national policy in this area and authorized to control the

preparation and implementation of PPP projects;

- forming institutional principles for the financial sector of the economy to provide

support for PPP projects; and

- creating conditions to attract private investors to PPP-based infrastructure

development and public services projects.

Steps to be taken 1) Increasing the administrative role of the Ministry of Economic Development

and Trade (MEDT) as an authorized state body in the part concerning its interaction

with line ministries and other state executive bodies that are authorized to take part in

PPP projects as partners, which implies:

- concretizing the functions and powers of the MEDT in the part related to its

administrative role in the PPP area; incorporating the administrative components of the

Strategy in the functions and powers of the management and units of the MEDT;

- singling out within the MEDT’s current special PPP unit the functions and structural

units engaged in the formation of the public PPP policy, expert examinations of PPP

projects, and provision of PPP projects with a methodological basis;

- establishing quantitative and qualitative performance criteria for the PPP unit of the

MEDT;

- providing methodological and consulting support for projects that includes keeping

records of PPP agreements at the central and local levels by regions, territories, and

types of economic activity;

- applying the MEDT’s functions related to approving a PPP feasibility study at the

preparation stage exclusively to projects implemented by central executive bodies; and

- monitoring and controlling PPP projects at the central and local levels.

2) Implementing the coordination of administrative functions at the national and

local levels to ensure the steady orientation of PPP projects to the strategic goals of

national economic development by:

- determining the functions and powers of central executive bodies in the part related to

executing and supporting PPP agreements, taking into account the strategic planning

role of the MEDT;

- at the instruction of the Cabinet of Ministers of Ukraine, assigning the functions of the

preparation and feasibility study of PPP projects involving the Cabinet of Ministers of

Ukraine as a partner to the appropriate central executive bodies; and

- creating a public council under the Ministry of Economic Development and Trade of

Ukraine for consultations regarding the MEDT’s interaction with local self-government

bodies and representatives of the business and the expert community.

3) developing institutional principles for the financial sector of the national

economy to support PPP projects, including in particular:

- identifying institutional entities of the financial sector for long-term financing of PPP

projects and changing the functional structure of their activities to minimize the

involved risks;

8

- developing a system of re-financing credit organizations by public PPP project

promotion institutions within the framework of applicable law; and

- developing measures to stimulate the engagement of joint associations of enabling

institutions operating in various activity areas on association conditions (consortiums,

provisional joint projects, associations).

4) creating favorable conditions to attract private investors to PPP-based

infrastructure development and public services projects, specifically:

- promoting the forms of state non-financial support for PPP projects;

- measures to be carried out by central and local authorities to spread information about

promising regional development investment projects involving the private sector;

- providing clear rules, procedures, an exhaustive list of required documents, and permit

issue deadlines, as well as supporting private partners in obtaining all permits required

for PPP projects;

- allotting land plots for PPP projects to the public partner in PPP projects; and - implementing pilot projects to create a foundation for increasing public trust in private

capital and outline development directions for the PPP legislative and regulatory

framework in Ukraine.

9

1.2 Financial Part

Problems

The financial capacity of PPP projects depends on the investment potential of the

private sector, fiscal scope of the state, lending capacity of financial institutions, and

effective interaction between the project parties.

A widespread factor in the world to draw private investments to PPP-based

infrastructure development and public services delivery projects is the mechanism of

public financial support. The national policy as regards financial support for PPPs

should be aimed at supporting innovative technologies of infrastructure development

and delivery of public services. In the conditions of increased pressure on budgets of all

levels, the public financing of PPP projects should be supported by private investments.

The state financial support for PPPs should consist of the following components: direct

financial support through subsidies; reimbursement for the expenses for construction,

participation in tenders, and maintenance of PPP projects; investments in the authorized

capital; application of taxation leverage to encourage investments, introduction of

mechanisms of state crediting for and insurance of investment equipment imports;

reimbursements from the state budget for payments for services provided to consumers;

state guarantees for loans, reimbursement for currency exchange rate fluctuation losses,

commodity acquisition commitments, and so on.

The main problems plaguing public PPP support in Ukraine are the single year

budgeting and annual readjustment of the financial directions and priorities of budget

programs, which means there is no guarantee that the budget-financed programs will

continue throughout the entire PPP project implementation term; no clearly established

methodology of state budget support for PPP projects; the principles and approaches

applied in this area are different from international ones; the limited possibility of

obtaining state guarantees for PPP projects at the local level (a paid basis, counter-

guarantee requirements , impossibility of using state budget money to repay loans).

In addition, when executing long-term PPP agreements, the parties may encounter

the problem of the public partner's default on its financial obligations due to the

imperfect legislation, especially in the part related to budget process regulation.

Enforcing the financial commitments of a public partner through a court is a

problematic issue as such financing is made primarily within the limits of the budget

allocations for the purposes of satisfying payment enforcing decisions of courts.

Goal and Tasks

To improve the PPP financial support mechanisms through:

- improving the effectiveness of budget spending and avoiding the fiscal risks

while financing PPP projects;

- intensifying the process of involving enabling institutions in financing PPP

projects; and

- implementing modern long-term project financing instruments for PPP.

Steps to be taken

10

1) Improving the effectiveness of budget spending and avoiding fiscal risks in

financing PPP projects by way of:

- planning budget allocations for the entire implementation term of PPP

investment projects, taking into account the dynamics of prices and privileged taxation

sources in accordance with the approved budget programs; and

- annual approval of state financial support amounts for PPP projects, taking into

account their implementation results on the basis of an introduced register of PPP

investment projects6 which will specify the public support amounts and forms.

2) Intensifying the process of involving enabling institutions in financing PPP

projects.

The engagement of enabling financial institutions in this process should be

carried out observing the requirements for financial stability, resource diversification,

and investment risk mitigation, as well as administrative influence and corruption risks.

To provide support for PPP projects and optimize budget spending for investment

purposes, it makes sense to:

- create a public bank for reconstruction and development and authorize it to

provide financial support within the limits of its authorized capital for PPP projects and

assist project participants in the financing support procedure;

- encourage public banks to provide consultancy as regards evaluation of the PPP

projects fulfillment and crediting effectiveness; and

- create specialized leasing centers based on the public-private partnership

principles to stimulate investments in the real sector on a leasing basis, providing a

simplified procedure for the privileged importation of high-tech equipment and

improvements in the legislation that regulates leasing operations.

3) The implementation of modern instruments of long-term PPP project financing

implies:

- improving the mechanism of state and local guarantees for PPP projects by

limiting the application of the paid-basis terms and counter-guarantee requirements;

setting specific limits of the local debt and debt guaranteed by the Autonomous

Republic of Crimea and local self-government bodies by adjusting the standards

introduced by the budget legislation;

- developing the market of local loans by diversifying repayment sources which

are currently dominated by proceeds from communal property alienations and non-

farming land sales; introducing a list of activities which are allowed to be financed by

foreign currency and hryvnia loans;

- forming mechanisms of assuming by a public partner (a local self-government

body) long-term budget obligations (which exceed the current budget) and their

fulfillment under PPP agreements; providing a fair reimbursement to a private partner

for the account of the public partner (a local self-government body) for any documented

losses incurred by the private partner as a result of early termination of a PPP

agreement;

6 The register of PPP investment projects in Ukraine may be a part of the State Register of Investment Projects and Project

(Investment) Proposals whose keeping procedure is approved by Resolution No 650 of the Cabinet of Ministers of Ukraine,

dated July 18, 2012.

11

- cash flow securitization within PPP projects (financing the assets of a project

company through securities issued by this company), which requires appropriate

amendments to be made to the Law of Ukraine “On Securities and Stock Market” and

singling out the functions of using financial instruments in the PPP area to improve the

regulation of and supervision over the financial sector in Ukraine.

12

1.3 Legal Part.

Problems

In an effort to further the legislative regulation that have generally standardized

the relations between the government and business in Ukraine, an attempt was made to

improve the legislative and regulatory framework regulating the state-business relations,

legally establishing the PPP institute by adopting the Law of Ukraine “On Public-

Private Partnership.” This law outlines the public-private partnership principles and

basic provisions based in international practice. However, these efforts proved to be of

little effect from the viewpoint of PPP project implementation support.

As of the moment of adoption of this law in 2010, Ukraine had a legislative

framework regulating contractual relations between the public and the private sector in

the areas of concession, lease, joint venture operations, and so on, but it had no holistic

vision of the interaction between the public and the private sector on the basis of the

PPP principles. The adopted law was intended to create framework conditions for the

establishment of the PPP institute in Ukraine.

Pursuant to Article 5, the PPP law is the basic legislative act applicable to all PPP

forms, including concession agreements, joint venture agreements, and other

agreements (in particular, lease and property management ones). At the same time, each

of the said types of agreements is subject to a separate law.

The PPP law as a framework law contains many referenced provisions. When

selecting a specific PPP form for their project, stakeholders need to study numerous

mutually contradicting legislative acts. The great number of law regulating the PPP

relations and the contradictions among them make the implementation of PPP projects

in Ukraine a difficult task. In addition, at the local self-government level, investment

projects bearing PPP traits are subject to numerous local acts that often contradict the

provisions of the PPP law.

The major contradictions and shortcomings of the legislative regulation of PPPs

in Ukraine include:

- the discretion powers of the public partner as regards application of the PPP law

provisions, which allow the public partner to arbitrarily decide whether to apply critical

provisions of the PPP law to specific projects or not;

- the lack of reconciliation between the PPP law provisions and the provisions of

the special laws regulating concessions, lease, joint venture operations, and other PPP

forms recognized by the effective PPP law; no effective mechanism of fair

reimbursement for losses incurred by the partners as a result of early termination of PPP

agreements;

- no effective mechanism regulating the public partner’s assumption of long-term

budget obligations and their fulfillment;

- no effective mechanism of reimbursing the private partner for the difference

between the approved and economically reasonable tariffs, considering that the tariff

regulator is obligated to cover this difference;

- no effective mechanism of replacing the private partner if it defaults on its

assumed obligations;

13

- the need for local self-government bodies to obtain approval for a PPP project

from the authorized state body responsible for PPP development, which contradicts the

principles of local self-governance;

- the impossibility for the parties to set prices for public services and correct them

on the basis of PPP agreements; and

- imperfect regulation of public support for PPP projects, including for the

medium and long term.

Goal and tasks

The creation of an effective system of legislative regulation of PPP relations

implies a series of tasks to be resolved. These are:

- putting in order the PPP project management legislation at the central and local

levels;

- improvement in the legislative regulation of state financial support for PPP

projects; and

- putting in order the legislative and regulatory framework regulating the creation

and functioning of enabling institutions within the PPP framework.

Steps to be taken

1) Putting in order the PPP legislation at the central and local levels by:

- improving the PPP law by defining more clearly the powers of the authorities

that become involved in PPP projects at all stages at both central and local levels;

extending the timeframe for PPP relations; more accurate formulation of PPP specifics

as regards delegating the functions and powers of the government related to

infrastructure development and public services to the private sector; improving the list

of PPP agreement application areas; introducing the possibility of institutional

partnership, including the creation of a public-private joint venture for a specific

project; and granting the right to public (communal) enterprises to act as parties to PPP

agreements;

- reconciling the provisions of the PPP law with the provisions of the special

laws that regulate the contractual relations between the public and private sectors in the

field of concessions, joint venture operations, lease, and so on by appropriately

amending the Laws of Ukraine “On Concessions,” “On Concessions for the

Construction and Operation of Motor Roads,” “On the Specifics of Leasing Out or

Granting Concessions for Communal Centralized Water and Heating Supply and

Drainage Facilities,” “On the Specifics of Leasing Out or Granting Concessions for

Public Fuel and Energy Facilities,” “On Lease of State and Communal Property,” “On

Financial Leasing,” “On Land Lease,” “On Management of Public Properties,” On

Seaports,” “On Local Self-Governance,” “On Housing and Communal Services,” “On

Heating Supply,” “On Drinking Water and Drinking Water Supply,” “On Wastes,” “On

Natural Monopolies,” “On Public Procurement,” the Civil Code of Ukraine, and others;

- making amendments to bylaws in execution of the Law of Ukraine “On Public-

Private Partnership” to improve the Methodology of Public-Private Partnership

Feasibility Study7, Methodology for Identifying and Assessing the Risks Associated

7 Approved by Order No 255 of the Ministry of Economic Development and Trade of Ukraine, dated February 27, 2012

14

with Public-Private Partnership and Determining the Management Approach to Them8;

abolishing the provision that requires the Ministry of Economic Development and

Trade of Ukraine to approve a PPP feasibility study for projects implemented by local

self-government bodies for the account of local budgets 9; improving the mechanism of

public support for PPP projects10

and the procedure for competitions to select private

partners for PPP purposes11

, and so on;

- improving the legislative and regulatory basis of the sectoral competition

procedures intended to select private partners for PPP projects;

- introducing instruments of methodological support for PPP projects under

agreements of specific types; these instruments should be of an advisory nature,

developed by the authorized body, and include model agreements, and PPP project

selection, preparation, financing, implementation, and monitoring manuals;

- legislatively regulating the issues of title to any assets created under a PPP

project; and

- improving the mechanism of settling disputes arising out of any PPP agreement

entered with a non-resident or an enterprise with foreign investments, which mechanism

should include the possibility of the dispute to be referred to an international court of

arbitration;

2) Improving the legislative regulation of state financial support for PPP projects by:

- improving the fiscal legislation (including in the part regarding financial support

for the rights and obligations of state and municipal entities acting as parties to PPP

agreements) to improve the investment climate and form an effective mechanism of

public support for PPP;

- improving bylaws (including Resolution No 279 of the Cabinet of Ministers of

Ukraine, dated March 17, 2011) to simplify the mechanism of public support for PPP

projects.

3) Putting in order the legislative and regulatory framework regulating the

creation and functioning of enabling institutions within the PPP framework, including

by:

- legislatively forming the structure and operating fundamentals of PPP enabling

financial institutions;

- revising and preparing amendments to the provisions of domestic legislation

which regulate the operation of universal and special development banks, export-import

banks, pubic leasing companies, development foundations and agencies, and so on.

8 Resolution No 232 of the Cabinet of Ministers of Ukraine “On Approving the Methodology for Identifying and Assessing

the Risks Associated with Public-Private Partnership and Determining the Management Approach to Them,” dated

February 16, 2011 9 Public-Private Partnership Feasibility Study Procedure approved by Resolution No 384 of the Cabinet of Ministers of

Ukraine, dated April 11, 2011. 10

Public-Private Partnership State Support Procedure approved by Resolution No 279 of the Cabinet of Ministers of

Ukraine, dated March 17, 2011. 11

Competition Procedure to Select Private Partners for Public-Private Partnerships Regarding Facilities of Public and

Communal Ownership and Facilities Belonging to the Autonomous Republic of Crimea approved by Resolution of the

Cabinet of Ministers of Ukraine No 384, dated April 11, 2011

15

1.4 Informational Part.

Problems

One downside of the process of national policy implementation and formation of

a PPP management system is the low level of professional qualifications of public

officials, which is explained by the absence or inconsistency of steps to ensure the

proper PPP management organization and logistics on the part of central executive

bodies and local self-government authorities.

The ineffective information exchange covering the PPP implementation practice

within the framework of applicable law between central executive and local self-

government bodies adds to the inconsistence of the legislative regulation of PPP

relations. The misbalances in the existing communication models, a lack of systemic

approach to gathering information needed for effective PPP management have a

negative impact on the quality of decisions made at all hierarchical levels of state

governance.

Inconsistency is plaguing the implementation of communication networks that

link the government and the public together by information flows. The underdeveloped

connections and mechanisms among the government, business circles, and non-

governmental organizations, as well as poor usage of technical means and information

technologies, do not allow unleashing to the full extent the potential of the private sector

as a positive partner of the government in terms of PPP implementation and make it

impossible for business representatives to establish partnership relations with the

government, and for government representatives with business and civil society.

Goal and Tasks

To form an information environment to support the interaction among

stakeholders interested in PPP projects employing modern information instruments and

communication technologies by addressing the following tasks:

- forming a modern professional and interpersonal communication culture in public

officials at all governance levels as regards studying PPP experience as a change

management component in the economic reform process;

- implementing the most effective communication connections and overcoming

information barriers throughout the entire cycle of the creation and

implementation of the PPP institute in Ukraine; and

- introducing information models as part of PPP management mechanisms, which

will allow systemic monitoring of information needed for decision-making,

excluding unnecessary duplication of information and any redundant information

that reduces the efficiency of business operations in PPP projects.

Steps to be taken

1) Forming a modern professional and interpersonal communication culture in

public servants at all governance levels as regards studying PPP experience as a change

management component in the economic reform process through the introduction of a

systematic study by public servants of the world’s best PPP practices, which includes

the following measures:

16

- familiarizing public servants with analytic materials produced by leading

research, expert, and professional organizations;

- arranging visits for them to leading PPP centers operating within public

authorities in European countries;

- providing opportunities for them to upgrade their PPP qualifications, including

within the framework of special PPP training programs for public workers and workers

of local self-government authorities;

- holding regular information and experience exchanges at conferences,

roundtables, forums, and so on.

2) Implementing the most effective communication connections and overcoming

information barriers throughout the entire cycle of creation and implementation of the

PPP institute in Ukraine through:

- putting in order formal communications between the government and the public

by introducing organizational (for example, based on organizational charts) and

functional (for example, based on structural unit regulations) arrangements both at the

vertical and horizontal levels of the governance hierarchy;

- supporting the system of informal communications between representatives of

state institutions and institutions of civil society on grounds provided by PPP promoting

non-governmental organizations and public authorities, and arrangement by local

authorities for the possibility of public feedback with regard to the preparation and

implementation of PPP projects.

3) Introducing information models as part of PPP management mechanisms,

which will allow systemic monitoring of flows of information needed for decision-

making, excluding unnecessary duplication of information and any redundant

information flows that affect the effectiveness of business operations in PPP projects

through:

- regular coverage of the completion of key stages of PPP projects in mass media,

with accents on social, economic and organizational effects;

- improving the quality of the technological process of PPP information exchange

within the framework of applicable law between the authorized state body, central

executive bodies, and local self-government bodies through more intensive application

of technical means and information technologies, as well as interpersonal

communications in the process of implementing PPP projects; and

- information support for management decisions regarding the implementation of

the PPP strategy.

ІІ. Implementation Stages and Resources

1. As of the beginning of 2012, Ukraine had formed the PPP institute as an

important instrument of strategic development and modernization of the national

economy, which allowed starting actions of a strategic nature in this direction.

The first instances of activity within PPP projects in Ukraine took place in the 90s

as part of the attempts to build mechanisms of long-term economic cooperation between

the government and business as partners, facts supported by information sources of the

17

World Bank12

. The further progress of interaction between business entities and public

authorities of all levels allowed developing PPPs in Ukraine from the early 2000s as an

institute of state governance. After the national PPP legislation was adopted to replace

various quasi-PPP forms, a uniform conceptual and terminological framework meeting

the standards of international practice was introduced.

2. After the Public-Private Partnership Development Strategy for Ukraine for

2012-2017 was adopted in 2012 following years of searches for the right approaches to

using PPP mechanisms in the system of state governance and the adoption of a

framework law (first stage of PPP establishment in Ukraine), a new groundbreaking

stage of PPP development began in the country. This second stage will make it possible

to ultimately formalize the criteria and implementation conditions of PPP projects,

outline the PPP application areas, and create PPP enabling institutions and

infrastructure by way of:

2.1 adopting administrative documents of the Cabinet of Ministers of

Ukraine (CMU AD) that include provisions introducing functional

subordination degrees or a mandatory requirement for central executive

bodies to agree PPP decisions with the MEDT, and amending the

provisions on central executive bodies, dividing state authorities by

specific activities in the PPP area;

2.2 passing administrative documents by central executive bodies in

fulfillment of the aforementioned CMU AD, containing a detailed

description of the functional distribution in the area of PPP project

management among structural units and established positions;

2.3 preparing amendments to Law of Ukraine No 280/97-ВР “On Local

Self-Governance in Ukraine,” dated May 21, 1997.

Since approving relevant administrative decisions is a prerogative of the President of

Ukraine, the CMU AD provide the possibility of formulating proposals to be submitted

to the President of Ukraine in accordance with the applicable regulations of legislative

and regulatory initiative.

By the end of 2012, the MEDT has to:

analyze the performance status of the functions of the central authorized body

in charge of PPP issues and prepare a Strategy Implementation Plan to

reinforce the relevant units of the MEDT to ensure the functional capacity of

the authorized body.

3. Coinciding with 2013, the third stage of the Public-Private Partnership

Development Strategy for Ukraine for 2012-2017 envisages steps to be taken to make

more effective and transparent the coordination of the activities of the authorities

responsible for developing the national policy in this area and authorized to control

PPP project preparation and implementation. For this purpose,

3.1 by issuing CMU AD, a list will be compiled of attractive national PPP

projects to be financed by international enabling financial institutions;

12

Private Participation in Infrastructure Database. - [Electronic resource]. – available at:

http://ppi.worldbank.org/explore/ppi_exploreCountry.aspx?countryID=97

18

3.2. amendments will be worked out to CMU resolutions issued to detail and

concretize the Law of Ukraine “On Public-Private Partnership” to improve the

procedures for a feasibility study and risk assessment, public support for projects, and

competition procedures, bringing them into compliance with international practice and

applicable law;

3.3 amendments to the Laws of Ukraine “On Public-Private Partnership” and “On

Public Procurement” will be prepared and submitted to the Parliament of Ukraine to

implement a transparent competition procedure for private partners expressing a desire

to take part in PPP projects; outline the powers of the authorities that become involved

in PPP projects at all stages at both central and local levels; extend the timeframe for

PPP relations; provide a more precise formulation of PPP specifics as regards

delegating the functions and powers of the government related to infrastructure

development and public services to the private sector; improve the list of PPP

agreement application areas; introduce the possibility of institutional partnership,

creating, as a result, a special public-private project joint venture; and grant the right to

state (communal) enterprises to act as parties to PPP agreements;

3.4 the provisions of the Law of Ukraine “On Public-Private Partnership” will be

harmonized with the respective provisions regulating the powers of local authorities to

improve the legislative and regulatory basis of competition procedures intended to

select private partners for PPP projects at the local level;

3.5 to amend the domestic legislation to improve the mechanism of settling

disputes arising out of any PPP agreement entered with a non-resident or an enterprise

with foreign investments, which mechanism should include the possibility of the dispute

being referred to an international court of arbitration;

3.6 amendments will be made to the financial legislation to improve the

effectiveness of budget spending and avoid fiscal risks in financing PPP projects, and a

section will be made in the draft Law of Ukraine “On Public Support” that describe

preparation procedures for administrative decisions concerning PPP development; and

3.7. the provisions of the framework PPP legislation will be harmonized with the

provisions of the special laws that regulate the contractual relations between the public

and private sectors in the field of concessions, joint venture operations, lease, and so on.

In addition:

- amendments will be made to the applicable legislation, and administrative

documents of the MEDT, Ministry of Finance, and other central executive bodies will

be issued to provide methodological principles of PPP project monitoring and control at

the level of central executive bodies; - preparations for approving administrative documents of local self-government

authorities will be made, observing the MEDT’s recommendations regarding PPP

project monitoring and control; - the public council under the MEDT will acquire advisory functions as regards the

MEDT’s interaction with local self-government bodies and representatives of business

and the expert community; - a network of PPP project support institutes will start to develop;

19

- due to the joint administrative documents to be submitted by the supervision

authorities in charge of the financial sector, measures will be implemented to encourage

the involvement of joint associations of enabling institutions in various activity areas on

association conditions (consortiums, provisional joint projects, associations);

- an information environment will be formed for supporting interaction among all

stakeholders interested in PPP projects on the basis of modern information instruments

and communication technologies by issuing administrative documents of the MEDT,

Ministry of Finance, and other central executive bodies, approving administrative

documents of local self-government authorities, observing the MEDT recommendations

regarding summarization of the best international experience, and holding training

events, upgrading the qualifications required for implementing PPP mechanisms,

sorting out formal communications between state authorities and civil society by

introducing organizational (for example, based on organizational charts) and functional

(for example, based on structural unit regulations) arrangements both at the vertical and

horizontal levels of the governance hierarchy and quality information support for

administrative decisions concerning the implementation of the PPP Strategy.

4. The central task of the fourth stage of the Public-Private Partnership

Development Strategy for Ukraine for 2012-2017 will be further formation of PPP

enabling financial institutions and creation of an effective system of legislative

regulation of PPP relations.

The plans for 2014 include:

4.1. issuing a relevant CMU AD providing basic principles of planning and

monitoring selected financial indicators for the MEDT, Ministry of Finance of Ukraine,

and State Statistics Committee of Ukraine to implement systemic measures ensuring

PPP financing predictability and control;

4.2 amending the legislation and bylaws that regulate the legal relations of

property use and disposal to legislatively regulate the issues of state ownership of assets

created under PPP projects;

In addition, the following is in the plans:

- promoting various forms of state non-financial support for PPP projects by

amending legislative acts and bylaws to improve the application of PPP mechanisms to

stimulate innovation activities: innovation clusters and networks, innovation enabling

institutions (business incubators, techno parks, investment banks, and so on), and

national targeted programs, and create joint innovation companies, including public

corporations;

- completing in general the formation of state institutes aimed at creating favorable

conditions attracting private investors to PPP-based infrastructure development and

public services projects.

5. The fifth stage of the Public-Private Partnership Development Strategy for

Ukraine for 2012-2017 to be held in 2015 will focus on polishing the financial leverage

of PPP management and forming a PPP institutional system in Ukraine.

For this purpose, it is necessary to:

20

5.1 by amending the Budget Code of Ukraine, improve the mechanisms of state

and local guarantees for PPP projects by limiting the application of the paid-basis terms

and counter-guarantee requirements; setting specific limits of the local debt and debt

guaranteed by the Autonomous Republic of Crimea and local self-government bodies

by adjusting the standards introduced by the budget legislation;

5.2 amend the Law of Ukraine “On Public-Private Partnership” to reconcile the

powers of the authorities that become involved in PPP projects at all stages at both

central and local levels with the provisions of the fiscal legislation;

5.3 amend the regulatory acts that govern the process of assuming by a public

partner (a local self-government body) long-term budget obligations and their

fulfillment under PPP agreements, according to which such partners could assume

payment obligations (direct or conditional) that exceed the current budget; providing a

fair reimbursement to the private partner for the account of the public partner (a local

self-government body) for any documented losses incurred by the private partner as a

result of early termination of a PPP agreement (based on the termination reasons);

5.4 issue NBU (National Bank of Ukraine) and CMU AD to authorize public

banks to provide consulting assistance in evaluating the PPP effectiveness and credit

PPP projects.

In addition, it is necessary to:

- create a Public Bank for Reconstruction and Development (PBRD) to provide

financial support for PPP projects; and

- continue amending the applicable legislation to polish the procedure for channeling

budget funds through the Public Bank for Reconstruction and Development to PPP

projects.

6. Within the framework of the final stage of the Public-Private Partnership

Development Strategy for Ukraine for 2012-2017 to be held in 2016-2017, the creation

of a holistic national system of PPP institutions will be finalized, as well as their

formalization within applicable legislation, in particular:

6.1 amendments will be made to the applicable legislation regarding the

procedures for indirect financing of investment PPP projects through the acquisition of

securities and the PBRD’s provision of loans and guarantees;

6.2 administrative documents issued by the CMU and bodies in charge of financial

sector regulation and supervision will provide for cash flow securitization under PPP

projects (financing the assets of a project company through securities issued by this

company);

In addition, the plans include:

- identifying institutional units of the financial sector for long-term financing of PPP

projects and changing the functional distribution of their activities to minimize the risks;

- creating a network of specialized leasing centers to stimulate investments in the

real sector of the economic on the conditions of leasing as a PPP form;

- creating a market of local borrowings by diversifying repayment sources and

introducing a list of activities which are allowed to be financed by foreign currency and

hryvnia loans;

21

- developing a national legislation in the PPP area to regulate business relations

between the public and private sectors in the context of supranational economic

agreements; and

- legislatively establishing the structure and operating fundamentals of PPP enabling

financial institutions;

Financial sources should be identified on an annual basis in accordance with the

indicators of the cumulative, state, and local budgets for the medium-term and long-

term, and sources of private investments should be identified on the results of expert

evaluations and statistical studies.

The volume of logistic resources is determined on the basis of the amount in

declared needs of ministries, departments, and local self-government bodies (in relevant

quantitative units of measure) and for private enterprises and non-governmental

organizations - on the results of expert evaluations and statistical studies.

The amount of workforce is determined on the basis of the number of specialists

engaged in state governance, according to the organizational, structural, and staff

changes in ministries, departments, and local self-government bodies, and for private

enterprises and non-governmental organizations - on the results of expert evaluations

and statistical studies.

22

ІІІ. Implementation Results

The implementation results of the Strategy are determined on an annual basis in

accordance with the indicators of the cumulative, state, and local budgets for the

medium-term and long-term, and for private sector performance indicators - upon the

results of expert evaluations and statistical studies.

№ Indicator Unit of

measure Forecast by Strategy stages

2012 2013 Accrued

total

2014 Accrued

total

2015 Accrued

total

2016 Accrued

total

2017 Accrued

total

1 Number of PPP

projects by economic sectors

Unit

2 Total amount in

PPP project financing

mln UAH

3 Gross investments

in fixed capital as

a result of PPP projects

mln UAH, %

of total

investment

4 Total loans

extended for PPP projects

mln UAH

5 Total fiscal

proceeds (taxes, duties, fees) to

budget of all levels

from PPP projects

mln UAH

6 Value of assets created and

transferred to the

state under PPP projects

mln UAH

7 Number of jobs

created under PPP

projects

unit

8 Level of public

satisfaction with

the price and quality of

provided public

services

conventional

unit

23

ІV. Implementation Monitoring and Evaluation

The monitoring of PPP processes requires a specially set up standing system of

observations, information gathering, analysis, and dissemination, and prediction of key

Strategy implementation processes.

1. Combining the goal, tasks, and methods, including monitoring planning and

implementation arrangements, the MEDT, central executive bodies, local self-

government bodies, and other authorized state bodies should provide in their

administrative documents, in accordance with the key goals and tasks of the Strategy:

- the general PPP processes performance and financial indicators that are

provided in the text of the Strategy, taking into account their annual values and totals

accrued from project commencement to completion, per economic sector and per PPP

project; and

- a legislative acts and bylaws preparation schedule in accordance with the

Strategy Implementation Plan.

2. By gathering, analyzing, and interpreting the data envisaged in Clause 1, the

said bodies should evaluate on an annual basis the current progress status of each

project and the Strategy in the part related to their terms of reference, and so on. For this

purpose, it is necessary to:

- identify and evaluate intermediate results and achievements;

- identify any deviations from the set targets;

- ensure publication of the results of completed Strategy measures;

- create conditions to ensure regular feedback at all levels (between the

decision-making and decision fulfilling levels); and

- make corrections to the Strategy Implementation Plan as necessary and

within their powers.

3. Within the framework of strategic management, the MEDT is required to

timely assess any changes threatening to slow down the fulfillment of the Strategy

Implementation Plan, taking into account factors of external and internal influence.

Reasonable and grounded critical ideas should be included in the Strategy

Implementation Plan as direct corrections. Acting within its powers, the MEDT should

forecast and evaluate events, including crisis ones, which affect the fulfillment of the

Strategy, threatening any deviations temporary and permanent, local and systemic,

extensive and intensive by nature. The quantitative assessment of the aforementioned

changes should be envisaged within the Strategy implementation indicators presented in

the introductory part of this document. Any additional indicators introduced to reflect

changes in the Strategy should correspond to the adopted statistical characteristics of

economic processes, including, crisis and emergency ones, at both supranational and

national levels.

4. The Strategy implementation effectiveness indicators and Strategy

implementation cost-effectiveness indicators should be predicted for the period until

2017, with annual adjustment of their values. General indicators are entered into the

sections of documents that reflect the quantitative characteristics of strategic goals

(Address of the President of Ukraine), and financial indicators are entered into the target

and forecast indicators of documents passed by the government. At the same time, the

24

aforementioned quantitative indicators are entered into relevant statistic and financial

reporting forms which economic agents operating at the public level and in the business

environment are required to complete. The fulfillment evaluation of the indicators is

done on an annual basis. If factual indictors deviate substantially from the forecast

values, the MEDT is required to submit its evaluation of such deviations to the CMU

for consideration and making tactical or strategic administrative decisions, depending

on the deviation degree. The MEDT should determine in its administrative document

the approach to managing potential changes in the Strategy on the basis of the following

components:

4.1 Realizing the changes and the need to take specific actions to carry them out

This component requires that measures should be taken to ensure the collection of

trustworthy, all-round, objective, and updated information for systemic analysis and

evaluation to prepare grounds for proposals and decisions to correct the PPP Strategy.

4.2 Realizing the differences in the management style and forms under normal

and emergency conditions.

5. As the MEDT, central executive bodies, and local self-government bodies

monitor the Strategy implementation process, they will be noticing deviations from the

set targets. Such a situation dictates two scenarios 1) continuing with the Strategy

implementation into the coming periods without any revision of the projected targets,

tasks, and measures (in this case the Strategy differs from other documents that

determine the socio-economic policy for the short-term only by the term for which it

has been developed); 2) thorough correction of the Strategy for the whole future period

at every moment of its revision (in this case, the revised Strategy will by no means be

linked to the implementation results of the previous periods, which means that a new

Strategy has actually been adopted).

6. Central executive and local self-government bodies are obligated to prepare

correction proposals for the Strategy to change its indicators and measures planned for

remote future periods as the correction moment approaches them.

7. The MEDT is obligated to evaluate the degree and tactics of such changes at

various Strategy implementation stages.

7.1 The identification of the degree and character of changes that require editing

the Strategy at the macro and micro levels, as well as the selection of specific steps, will

be carried out with respect to the below types of strategic changes:

- partial active changes (non-strategic management components) which

allow correcting the completion status of specific stages and items of the Strategy

Implementation Plan without any sharp changes;

- partial reactive changes (tuning in) which allow adjusting the Strategy

Implementation Plan to changes in the external and internal environment.

8. The MEDT and other state authorities will track a specific set of key Strategy

fulfillment parameters and, if they deviate from the set targeted parameters, influence

these parameters, bringing them back to the target values. The possibility of this

Strategy correction approach implies flexibility of the parameters provided in it, as well

as the powers in the responsible state authority and business partners to immediately

respond to changes in circumstances and independently make corrections to the

25

quantitative parameters of the Strategy. It is necessary to take into consideration the

informational asymmetry risks and identify in this connection special interest groups

that are not interested in providing exhaustive and accurate information.

9. After determining the nature of changes, the MEDT and other authorized state

bodies should select a tactics of changes in the Strategy Implementation Plan. It should

imply the identification and quantity and quality assessment of such parameters,

specifically:

• change timeframes (situation-dependant);

• pitfalls and crisis situations during the time of changes implementation;

• possible solutions;

• expected spending of all resources;

• expected mechanism of changes;

• expected results of changes;

• temporary signals and other assessment parameters;

• changes in the changes implementation sequence (possible channels of

switching from one strategy of changes to another);

• complete or partial involvement of the staff in the process of changes;

• short-term results (benefits); and

• involvement of external experts or forces.

10. Selection and preparation of influence agents in the context of changes in the

Strategy.

After the qualitative and quantitative assessment of the changes tactics, it is

necessary to select and prepare influence agents in the context of changes. If the nature

and character of changes and the changes management process cannot be completely

transparent, it is necessary to formulate a context of changes acceptable for the whole

system. After this it is necessary to select and prepare agents of changes, people who

will support changes in the organization, carry out work to implement the changes, and

implement them professionally.

When introducing changes, it is necessary to communicate the information about

envisioned prospects and changes strategies to public officials through official training

sessions and communication networks, inviting public and private sector representatives

to such events.

11. The procedure for concretizing the Strategy and determining the

psychological and organizational basis of changes should be described in administrative

documents of the MEDT, central executive bodies, and local self-government bodies.

For this purpose, it is necessary to:

11.1 determine a standard set of procedures and elements of management

decisions to make changes and reflect them in appropriate documents as factors of

change arise along with the need to correct the Strategy Implementation Plan;

11.2 compile additional calendar schedules of events involving non-governmental

organizations, if introducing permanent long-term procedures of changes. In this case,

the MEDT and other authorized state bodies should formulate for public sector workers

organizational tasks, targets, and obligations, and the expected effect of the results of

26

the change implementation efforts on public and private partners, reflecting the

aforementioned and personal vision of the prospects in official documents.

11.3 such actions need to be accompanied by the creation of a patronage system

for people without experience and new employees. Patrons may be officially or

informally appointed.

11.4 compile job descriptions for each major area of work to activate public

workers in carrying out the change procedures. Special attention should be paid to those

functions that do not fall within the limits of the existing functional duties, that is, to the

processes that are intended to implement coordination with other units or hierarchical

levels, as well as to effective principles of delegating and vesting powers.

12. Decisions to make changes to the Strategy Implementation Plan will need to

be backed by the MEDT’s public council which will take into account expert opinions

of the society and private partners in view of their possible expectations and the

volumes of information flows that may be necessary for private contractors. For this

reason, using the procedures for passing administrative decisions as necessary,

administrative documents should be used to introduce criteria assessing the needs and

expectations of private contractors on a permanent basis, with appropriate monitoring of

changes in them and expectation trends.

13. The process of making decisions to amend the Strategy Implementation Plan

should be coordinated on the basis of clearly declared priorities and observing the

principle “not everything that can be done adds value.” It makes sense to give priority to

the most important aspects that add to the value of specific PPP measures tangible for

the private partner and producing a measurable socio-economic effect. To achieve such

goals, it is necessary to create favorable conditions for PPP participants, enabling them

to be up to new tasks in the process of changes. It is also necessary to enrich and expand

the area of their production activities, adding responsibility in the areas that require new

skills and capabilities.

V. Strategy Implementation Plan

This Plan should list actions and responsible executors, fulfillment timeframes,

and expected results. The Plan should take into account the need to further agree the

project with responsible executors (ministries, departments, and so on) and

stakeholders; its content should be based on the existing distribution of powers between

ministries and departments, exiting programs and plans of action, expert opinions and

consultations with stakeholders.

The methodology of identifying resources for the Strategy Implementation Plan is

as follows:

І. Using budget financing sources.

According to the approved projected spending of the state and local budgets for

the appropriate years and the medium-term, a list of financing items and amounts to be

invested in state targeted programs should be provided.

Within the established financing limits, the PPP mechanisms application areas

should be concretized. The amounts in required financing from budgets of appropriate

levels are calculated depending on PPP application methods, including drawing budget

27

money to finance the project, increasing the chances of contracting loans for projects by

securing state guarantees, and so on.

ІІ. Using private financing sources

According to the list of investment state targeted programs which envisages the

application of PPP mechanisms, the amounts in needed financing from private sources

are calculated.

ІІІ. Unified cost estimates of investment state targeted programs (of the national

and local levels) should be compiled, envisaging the application of PPP mechanisms.

In these cost estimates, it is necessary to highlight

- the direct and indirect expenditures to finance the actions envisaged in the

project documentation, assuring the achievement of the goals set in the state and/or

local targeted programs; and

- the expenses required to cover specific items of the Strategy Implementation

Plan.

These unified cost estimates of PPP programs should list sources of national,

local, and private financing, which are determined individually for each target

fulfillment indicator. The amounts in budget and other state financing should be within

the limits set by the relevant legislative and other regulatory acts.

Thus, financing sources for the Strategy Implementation Plan will be created as a

result of:

- saving budget and other state financial resources through additional attraction of

private capital; and

- potential profits of private business as a result of an expanded space for free

flows of capital and its penetration into earlier inaccessible areas, transaction savings

due to simplified licensing and permissive documentation obtaining procedures,

favorable opinions of supervisory bodies, elevated project statuses thanks to the

participation of the government, and a created positive image of the involved company.

The flows of national and local funds should be documented in accordance with

the budget legislation, and the flows of mixed and private financial resources in

accordance with the rules similar to those that regulate the use of funds of public

corporations and special budget funds. The financial reporting to reflect cash flows

related to the fulfillment of PPP projects and the Strategy Implementation Plan

envisages specific entries to be created in the fiscal and statistical databases. The

provision of relevant information is based on the mandatory reporting procedures

established for economic entities of the private and public sectors.

28

Implementation Plan of the Public-Private Partnership Development Strategy for Ukraine for 2012-2017

No Goal Tasks and measures Responsible executor Fulfillment

time

Fulfillment indicator

I. Institutional part

To improve the quality of the PPP state management system, creating an effective organizational structure of interaction among executive authorities,

businesses, civil society institutions, and representatives of the expert community

1 Extending the powers of

the authorized state body

in charge of PPP

development

management

1.1 Concretization of the functions and

powers of the MEDT regarding its

strategic administrative role in the PPP

area

Adopted administrative

documents of the

Cabinet of Ministers of

Ukraine (CMU AD) that

include provisions

introducing functional

subordination degrees or

a mandatory requirement

for central executive

bodies to agree PPP

decisions with the

MEDT, and amending

the regulations of central

executive bodies,

dividing state authorities

by specific activities in

the PPP area (including

in accordance with the

procedure for advancing

proposals to Presidential

Decrees, if the relevant

provisions are subject to

Presidential Decrees)

Prepared amendments to

to the Law of Ukraine

1.1.1 Identification and formation of

closed lists of powers, functions, and

administrative services in the PPP area for

the MEDT, including in the context of

determining distinctions in management

functions of strategic nature

Prime Minister of Ukraine

MEDT

November

2012

1.1.2 Identification and formation of

closed lists of powers, functions, and

administrative services in the PPP area for

central executive bodies

Prime Minister of Ukraine

MEDT

central executive bodies

November

2012

1.1.3 Establishment of the strategic

planning role of the MEDT when local

self-government bodies exercise their

powers to make their own decisions

regarding the expediency and

implementation of PPP projects

Prime Minister of Ukraine

MEDT

Local self-government bodies

December 2012

1.2 Introduction of the managerial

components of the Strategy in the

functions and powers of the management

and organizational units of the MEDT

MEDT

Deputy minister with the

appropriate functions

December 2012

1.3 Singling out within the present special

PPP unit of the MEDT the functions and

MEDT

Deputy minister with the

December 2012

29

structural units engaged in forming the

state PPP policy, expert examinations of

PPP projects, and provision of a

methodological basis of PPP projects

appropriate functions No 280/97-ВР “On

Local Self-Governance

in Ukraine,” dated May

21, 1997

Passed administrative

documents of central

executive bodies in

execution of the

aforementioned CMU

AD, determining the

PPP project management

functional distribution

among structural units

and established positions

Amendments made to

Law of Ukraine No

2404-VI "On Public-

Private Partnership,”

dated July 1, 2012

1.4 Introduction of quantitative and

qualitative performance criteria fir the PPP

unit of the MEDT

MEDT

Deputy minister with the

appropriate functions

December 2012

1.5 Application of the MEDT’s functions

related to approving PPP feasibility study

at the preparation stage exclusively to

projects implemented by central executive

bodies

CMU

MEDT

December 2012

1.6 Provision of methodological and

consulting support for projects, involving

accounting for PPP agreements at the

central and local levels by regions,

territories, and types of economic activity

MEDT

Ministry of Justice

December 2012

1.6.1 Determining legal and organizational

forms and directions of public support for

PPP projects

MEDT

Ministry of Justice

December 2012

1.6.2 Implementation of the PPP forms

application criteria: execution of PPP

project agreements, creation of appropriate

PPP institutional entities, and so on

MEDT

Ministry of Justice

December 2012

1.6.3 Implementation the procedure for

obligatory evaluation of competitive

advantages of applied PPP mechanisms as

compared with other technologies of

organizing and financing investment

projects

MEDT

Ministry of Finance

December 2012

1.7 Organizing PPP project fulfillment

monitoring and control at the central and

local levels

MEDT

Ministry of Finance

Ministry of Justice

central executive bodies

local self-government bodies

March 2013

30

1.7.1 Development of methodological

principles of PPP project fulfillment

monitoring and control at the level of

central executive bodies

MEDT

Ministry of Finance

Ministry of Justice

central executive bodies

March 2013 Issued administrative

documents of the

MEDT, Ministry of

Finance, and central

executive bodies on the

consent of the Ministry

of Justice

Approved administrative

documents of local self-

government bodies, with

observed

recommendations of the

MEDT for the Strategy

refinement methodology

and PPP project

fulfillment monitoring

and control

1.7. 2 Development of methodological

principles of PPP project fulfillment

monitoring and control at the level of local

self-government bodies, observing the

principle of the strategic planning role of

the MEDT

MEDT

Ministry of Finance

Local self-government bodies

March 2013

1.7.3 Implementation of the Strategy

refinement methodology

MEDT

central executive bodies

local self-government bodies

March 2013

2 Making more effective

and transparent the

coordination of the

activities of the

authorities responsible

for developing the

national policy in this

area and authorized to

control PPP project

preparation and

implementation.

2.1 Determining the functions and powers

of central executive bodies in the part

related to executing and supporting PPP

agreements, taking into account the

strategic planning role of the MEDT

MEDT

Ministry of Finance

Ministry of Justice

central executive bodies

March 2013 Issued administrative

documents of the

MEDT, Ministry of

Finance, and central

executive bodies on the

consent of the Ministry

of Justice

2.2 At the instruction of the Cabinet of

Ministers of Ukraine, assigning the

functions of preparation and feasibility

study of PPP projects involving the

Cabinet of Ministers of Ukraine as a

partner to the appropriate central executive

bodies

MEDT

Ministry of Finance

Ministry of Justice

central executive bodies

March 2013

2.3 Assigning the advisory functions to the

Public Council under the MEDTU

MEDT March 2013 Issued administrative

document of the MEDT

31

regarding coordination of the MEDT’s

interaction with local self-government

bodies and representatives of business and

the expert community

on the composition and

activities of the Public

Council under the

MEDT

3

Formation of

institutional principles

for the financial sector of

the economy to provide

support for PPP projects

3.1 Identification of institutional units of

the financial sector for long-term

financing of PPP projects and changing

the functional distribution of their

activities to minimize the risk factors

3.1.1 Increasing the capitalization of

insurance companies and at the same time

introducing insurance supervision

principles meeting international standards,

and creating a system of guaranteeing

insurance indemnification to attract long-

term investments

State Commission for Regulation

of Financial Services Markets of

Ukraine

Ministry of Finance

MEDT

2016-2017 Development of

conceptual principles for

the planned draft Law of

Ukraine “On Insurance”

3.1.2 Introduction of a set of measures to

improve financial stability of banking and

non-banking financial institutions, in

particular joint investment institutions,

ensuring operational transparency of stock

market operators and encouraging

investments

NBU

State Commission for Regulation

of Financial Services Markets of

Ukraine

Ministry of Finance

MEDT

2016-2017 Amendments to the

Laws of Ukraine “On

Business Companies,”

“On Securities and Stock

Market,” “On Institutes

of Joint Investment (Unit

and Corporate

Investment Funds),” and

certain laws of Ukraine

as regards toughening

requirements for the

authorized capital of

professional stock

market players and

financial institutions

3.2 Development of a system of re-

financing credit organizations by public

enabling institutions within the framework

of applicable law to ensure resource

32

support for PPP projects

3.2.1 Consideration of the issue of

expediency of a venture investment state

institute to be created to secure the results

by increasing capitalization of investments

in sectoral targeted funds and further

reinvestment of earned proceeds in new

development projects

MEDT

Ministry of Finance

December 2013 Issued CMU AD

determining the

organizational status of

the public company

whose mission is to

stimulate the creation of

Ukraine’s own venture

financing industry and a

substantial increase on

the financial resources of

venture funds

3.2.2 Development of cooperation with

international enabling financial institutions

MEDT

Ministry of Finance

Ministry of Foreign Affairs

September

2013

Issued CMU AD

providing a list of

attractive national PPP

projects for international

enabling financial

institutions to finance

Passed joint

administrative

documents of financial

sector supervisory

authorities

3.3 Development of measures to stimulate

the engagement of joint associations of

enabling institutions operating in various

activity areas on association conditions

(consortiums, provisional joint projects,

associations)

MEDT

Ministry of Finance

NBU

State Commission for Regulation

of Financial Services Markets of

Ukraine

SSMSCU

September

2013

4 Creation of favorable

conditions for attracting

private investors to PPP-

based infrastructure

development and public

services projects

4.1 Promotion of the forms of state non-

financial support for PPP projects

Passed administrative

documents of central

executive bodies based

on the uniform

methodology of the

MEDT regarding

assessment and

avoidance of the risks of

negative effects on PPP

projects at the macro and

micro levels

4.1.1 Supporting the viability of programs

and projects, taking into account the risk

classification and levels and correlation

between external and internal factors

CMU

MEDT

State Agency for Investment and

National Projects

Ministry of Justice

Ministry of Finance

March 2014

4.1.2 Creation of universal consulting

organizations to provide quality PPP

services to state institutions and

CMU

MEDT

State Agency for Investment and

March 2014

33

departments National Projects

Ministry of Justice

Ministry of Finance

Passed documents of

central executive and

local self-government

bodies based on the

common methodology of

the MEDT regarding

PPP projects

implementation

standards, as well as

prepared proposals to

improve the legislative

basis

Passed documents of

central executive and

local self-government

bodies based on the

common methodology of

the MEDT regarding

specifics of marketing

actions to intensify the

attractiveness of PPP

projects for the private

sector

4.1.3. Application of PPP mechanisms to

stimulate innovation activities: innovation

clusters and networks, infrastructure

development projects (business incubators,

techno parks, investment banks, and so

on), and national targeted programs, and

create joint innovation companies,

including public corporations

CMU

MEDT

State Agency for Investment and

National Projects

Ministry of Justice

Ministry of Finance

March 2014

4.2 Measures to be carried out by central

and local authorities to spread information

about promising regional development

investment projects involving the private

sector

MEDT

central executive bodies

local self-government bodies

March 2014

4.3 Providing clear rules, procedures, an

exhaustive list of required documents, and

permit issue deadlines, as well as

supporting private partners in obtaining all

permits required for PPP projects

First Vice Prime Minister of

Ukraine

MEDT

State Service of Ukraine for

Regulatory Policy and

Entrepreneurship Development

If necessary:

Local authorities

March 2014 Approved law of

Ukraine on amendments

to be made to the Law of

Ukraine "On the List of

Permissive Documents

Required in the Business

Sphere" and other

legislative acts of

Ukraine regarding

cutting the list of

permissive documents

34

by at least 70 percent,

and an issued CMU AD

cutting by at least 40

percent the list of the

types of business

activities to which the

declarative principle is

not applicable

4.4 Implementation of pilot projects to

create a foundation for increasing public

trust in private capital and outline

development directions for the PPP

legislative and regulatory framework in

Ukraine

MEDT December 2013 Issued CMU AD

formulating the basic

status principles of pilot

PPP projects, which will

create a foundation for

increasing public trust in

private capital and

outline development

directions for the PPP

legislative and

regulatory framework in

Ukraine

II. Financial Part

Improving the PPP project financing mechanisms

5 Improvement in the

effectiveness of budget

spending and avoidance

of fiscal risks in

financing PPP projects (Comment: the effective

financing mechanisms of state

targeted programs do not take

into account the specifics of

5.1 Planning budget allocations for the

entire implementation term of PPP

investment projects, taking into account

the dynamics of prices and privileged

taxation sources in accordance with the

approved budget programs

Amendments made to

the Budget Code of

Ukraine, Law of Ukraine

No 1621-IV “On

Targeted State

Programs,” dated March

18, 2004, and to the draft

Law of Ukraine “On

State Strategic Planning”

5.1.1 Approving budget programs and

datasheets of budget programs in all areas

of budget investment from the national

MEDT

Ministry of Finance

March 2014

35

planning, using, and

controlling funds of the state

and local budgets when using

them as a PPP financing

source. Clause 5 contains

goals whose promises a

transparent mechanism of

public PPP financing and

explains the difference

between the financing of a

usual targeted budget

program and the financing

involving the PPP

mechanism)

and local budgets for the medium-term

(taking into account PPP mechanisms) Singled out section on

relevant preparatory

procedures for

management decisions in

the draft law “On Public

support”

5.1.2 Approving the methodology of

budget programs fulfillment monitoring,

effectiveness evaluation, and efficiency of

local budgets (taking into account PPP

mechanisms)

MEDT

Ministry of Finance

March 2014

5.2 Annual approval of the amounts in

state financial support for PPP projects,

taking into account the results of their

implementation based on the introduction

of a register of investment PPP projects13

in which the public support amount and

form will be specified

MEDT

Ministry of Finance

March 2014

6 Intensification of the

process of involving

enabling institutions in

financing PPP projects

6.1 Using the mechanisms for

reorganizing the existing enabling

institutions, to create a public bank for

reconstruction and development (PBRD)

and authorize it to provide financial

support within the limits of its authorized

capital for PPP projects and assist project

participants in the financing support

procedure

Amendments to the

Budget Code of Ukraine

Issued CMU AD

approving the amount in

authorized capital,

functions and procedure

for the interaction with

executive bodies and

business entities

Issued CMU AD

describing the forms of

direct and indirect

financing of investment

PPP projects in priority

areas

6.1.1 Using the mechanisms for

reorganizing the existing enabling

institutions, to create a public bank for

reconstruction and development (PBRD)

to provide financial support for PPP

projects

Prime Minister of Ukraine

MEDT

March 2015

6.1.2 to provide the procedures for

channeling budget money through the

PBRD to PPP projects

MEDT

Ministry of Finance

June 2015

13

The Register of Investment PPP Projects in Ukraine may be a part of the State Register of Investment Projects and Project (Investment) Proposals the keeping procedure for which

is approved by Resolution No 650 of the Cabinet of Ministers of Ukraine, dated July 18, 2012

36

6.1.3 to provide the procedures for indirect

financing of investment PPP projects

through the acquisition of securities and

the PBRD’s provision of loans and

guarantees

MEDT

Ministry of Finance

2016-2017

6.2 to authorize public banks to provide

advisory assistance in evaluating the PPP

performance and credit PPP projects

Prime Minister of Ukraine

MEDT

Ministry of Finance

NBU

June 2015 Issued CMU and NBU

AD

6.3 to create specialized leasing centers

based on the public-private partnership

principles to stimulate investments in the

real sector

Prime Minister of Ukraine

MEDT

Ministry of Finance

2016-2017

Issued CMU AD

7 Implementation of

modern instruments of

long-term PPP project

financing

7.1 Improvement of the mechanism of

nation-wide and local guarantees for PPP

projects by limiting the application of the

paid-basis terms, counter-guarantee

requirements; setting specific limits of the

local debt and debt guaranteed by the

Autonomous Republic of Crimea and

local self-government bodies by adjusting

the standards introduced by the budget

legislation

Prime Minister of Ukraine

MEDT

Ministry of Finance

March 2015 Amendments to the

Budget Code of Ukraine

7.2 Development of the market of local

loans by diversifying repayment sources

which are currently dominated by

proceeds from communal property

alienations and non-farming land sales;

introducing a list of activities which are

allowed to be financed by foreign

currency and hryvnia loans

Prime Minister of Ukraine

MEDT

Ministry of Finance

NBU

2015-2016 Amendments to the

Budget Code of Ukraine,

issued CMU and NBU

AD

7.3 Formation of mechanisms of

assuming by a public partner (a local self-

government body) long-term budget

obligations (which exceed the current

Prime Minister of Ukraine

MEDT

Ministry of Finance

NBU

2015-2016 Amendments to the

Budget Code of Ukraine,

issued CMU and NBU

AD

37

budget) and their fulfillment under PPP

agreements; providing a fair

reimbursement to a private partner for the

account of the public partner (a local self-

government body) for any documented

losses incurred by the private partner as a

result of early termination of a PPP

agreement

7.4 Cash flow securitization within PPP

projects (financing the assets of a project

company through securities issued by this

company)

NBU

State Agency for Investment and

National Projects

Ministry of Justice

Ministry of Finance

State Commission for Regulation of

Financial Services Markets of

Ukraine

SSMSCU

2016-2017 Amendments made to

the Law of Ukraine “On

Securities and Stock

Market” and singling out

the functions of using

financial instruments in

the PPP area to improve

the regulation of and

supervision over the

financial sector in

Ukraine

8

III. Legal part

Creating an effective system of legislative regulation of PPP relations

8 Putting in order the PPP

project management

legislation at the central

and local levels

8.1 Preparation, adoption, and further

improvement of the PPP framework

legislation to reconcile its rules with fiscal

provisions; clearer formulation of the

powers of the authorities that become

involved in PPP projects at all stages at

both central and local levels; extending

the timeframe for PPP relations; more

accurate formulation of PPP specifics as

regards delegating the functions and

powers of the state related to

infrastructure development and public

services to the private sector; improving

MEDT

Ministry of Justice

2013-2015 Amendments to the Law

of Ukraine “On Public-

Private Partnership” as

well as the Laws of

Ukraine “On

Concessions,” “ On

Concessions for the

Construction and

Operation of Motor

Roads,” “On the

Specifics of Leasing Out

or Granting Concessions

for Communal

38

the list of PPP agreement application

areas; introducing the possibility of

institutional partnership, including the

creation of a special public-private joint

venture for a specific project; and

granting the right to state (communal)

enterprises to act parties to PPP

agreements

Centralized Water and

Heating Supply and

Drainage Facilities,”

“On the Specifics of

Leasing Out or Granting

Concessions for Public

Fuel and Energy

Facilities,” “On Lease of

State and Communal

Property,” “On

Management of Public

Properties,” and others

8.2 Reconciliation of the provisions of the

framework PPP legislation with the

provisions of the special laws that

regulate the contractual relations between

the public and private sectors in the field

of concessions, joint venture operations,

lease, and so on

MEDT

Ministry of Justice

2013-2015 Amendments to the Law

of Ukraine “On Public-

Private Partnership” as

well as the Laws of

Ukraine “On

Concessions,” “ On

Concessions for the

Construction and

Operation of Motor

Roads,” “On the

Specifics of Leasing Out

or Granting Concessions

for Communal

Centralized Water and

Heating Supply and

Drainage Facilities,”

“On the Specifics of

Leasing Out or Granting

Concessions for Public

Fuel and Energy

Facilities,” “On

Financial Leasing,” “On

Land Lease,” “On

8.3 Harmonization of legislative and

bylaw provisions in connection with the

implementation of the PPP development

Strategy

MEDT

Ministry of Justice

2013-2015

39

Management of Public

Properties,” “On

Seaports,” “On Local

Self-Governance,” “On

Housing and Communal

Services,” “On Heating

Supply,” “On Drinking

Water and Drinking

Water Supply,” “On

Wastes,” “On Natural

Monopolies,” “On

Public Procurement,”

the Civil Code of

Ukraine, and others

8.4 Preparation, adoption, and further

improvement of the legislative and

regulatory basis of competition

procedures to select private partners for

PPP projects

MEDT

Ministry of Justice

2013-2014 Amendments to bylaws

in execution of the Law

of Ukraine “On Public-

Private Partnership” to

improve the

methodology of

identifying risks

associated with public-

private partnership and

their assessment, and

selecting a form of

controlling them14

in the

part related to the

identification,

assessment, distribution,

and management of risks

associated with PPP

projects; abrogation of

the provision requiring

8.5 Introduction of instruments of

methodological support for PPP projects

under agreements of specific types; these

instruments should be of advisory nature,

developed by the authorized body, and

include model agreements, and PPP

project selection, preparation, financing,

implementation, and monitoring manuals

MEDT

central executive bodies

local self-government bodies

December

2015

8.6 Legal regulation of issues related to

titles to any assets created within the PPP

framework

MEDT

Ministry of Justice

State Agency of Land Resources of

Ukraine

Local self-government bodies

December

2014

8.7 Improving the mechanism of settling MEDT 2013

14

Resolution No 232 of the Cabinet of Ministers of Ukraine “On Approving the Methodology for Identifying and Assessing the Risks Associated with Public-Private Partnership and

Determining the Management Approach to Them,” dated February 16, 2011

40

disputes arising out of any PPP agreement

entered with a non-resident or an

enterprise with foreign investments,

which mechanism should include the

possibility of the dispute to be referred to

an international court of arbitration

Ministry of Justice that the Ministry of

Economic Development

and Trade of Ukraine

approves the PPP

feasibility study for

projects implemented by

local self-government

bodies15

8.7.1 Harmonization of the domestic PPP

legislation PPP that regulates business

relations between the public and private

sectors

MEDT

Ministry of Justice

2013

8.7.2 Harmonization of the domestic

legislation in the context of supranational

economic agreements

MEDT

Ministry of Justice

2013

9 Improvement of

legislative regulation of

state financial support

for PPP projects

9.1 Improvement of the fiscal legislation

(including in the part regarding financial

support for the rights and obligations of

state and municipal entities acting as

parties to PPP agreements and

implementation of the long-term

obligations assumption mechanisms) to

improve the investment climate and form

an effective mechanism of public support

for PPP

MEDT

Ministry of Finance

June 2013 Amendments to the laws

of Ukraine on PPP, on

local self-governance,

and the Budget Code of

Ukraine

9.2 Improvement of bylaws to simplify

the mechanism of public support for PPP

projects

MEDT

Ministry of Finance

June 2014 Amendments to

Resolution No 279 of

the Cabinet of Ministers

of Ukraine, dated March

17, 2011

10 Putting in order the

legislative and regulatory

framework regulating the

creation and functioning

10.1 Legislative formation of the structure

and operating fundamentals of enabling

financial institutions (EFI) in the PPP area

Prime Minister

MEDT

NBU

State Agency for Investment and

2015-2017 Amendments to

applicable legislation to

harmonize the

conceptual and

15

Public-Private Partnership Effectiveness Analysis Procedure approved by Resolution No 384 of the Cabinet of Ministers of Ukraine, dated April 11, 2011

41

of enabling institutions

in the PPP context

National Projects

Ministry of Justice

Ministry of Finance

State Commission for Regulation of

Financial Services Markets of

Ukraine

SSMSCU (Securities and Stock

Market State Commission of

Ukraine)

terminological

framework of FDI

activities, unification of

FDI’s financial support

procedure and

instruments

10.2 Revision and preparation of

amendments to the provisions of domestic

legislation that regulate the operation of

universal and special development banks,

export-import banks, pubic leasing

companies, development foundations and

agencies, and so on

Prime Minister

MEDT

NBU

State Agency for Investment and

National Projects

Ministry of Justice

Ministry of Finance

State Commission for Regulation of

Financial Services Markets of

Ukraine

SSMSCU

2016-2017 Developed draft Law of

Ukraine “On Insurance”

and amendments to the

Law of Ukraine “On

Amending Certain

Legislative Acts of

Ukraine Regarding

Targeted Bonds” (to

improve the mechanisms

of targeted bonds issue

and circulation, vesting

sufficient powers in the

market regulator to

guarantee the protection

of the legitimate rights

of investors)

IV. Informational part

Formation of an information environment to support the interaction among stakeholders interested in PPP projects by employing applying modern information

instruments and communication technologies

11 Formation of modern

professional and

interpersonal

11.1 Familiarization of public workers

with analytic materials produced by

leading research, expert, and

MEDT

central executive bodies

local self-government bodies

December

2013 Issued administrative

documents of the

42

communication culture in

public workers at all

governance levels as

regards studying

experience of PPP as a

changes management

component in the

economic reform process

professional organizations MEDT, Ministry of

Finance, and central

executive bodies.

Approved

administrative

documents of local

self-government

bodies, observing the

MEDT’s

recommendations

regarding the

summarization of the

world’s best experience

and provision of

training events

11.2 Visits of public workers to leading

PPP centers operating within public

authorities in European countries

MEDT

central executive bodies

local self-government bodies

December

2013

11.3 Upgrade of the qualifications

required for the successful

implementation of PPP mechanisms;

MEDT

central executive bodies

local self-government bodies

December

2013

11.4 Regular information and experience

exchange at conferences, roundtables,

forums, and so on

MEDT

central executive bodies

local self-government bodies

December

2013

12 Realization of the most

effective communication

connections and

overcoming information

barriers throughout the

entire cycle of creation

and implementation of the

PPP institute in Ukraine

12.1 Putting in order formal

communications between state

authorities and the public by introducing

organizational (for example, based on

organizational charts) and functional (for

example, based on structural unit

regulations) arrangements both at the

vertical and horizontal levels of the

governance hierarchy

MEDT

central executive bodies

local self-government bodies

December

2013 Issued administrative

documents of the

MEDT, Ministry of

Finance, and central

executive bodies

Approved

administrative

documents of local

self-government

bodies, observing the

MEDT’s

recommendations

regarding organization

of communications

among stakeholders in

the real and virtual

environment within the

framework of clearly

12.2 Support for the system of informal

communications between representatives

of state institutes and institutes of civil

society at grounds provided by PPP

promoting non-governmental

organizations and state authorities, and

arrangement by local authorities for the

possibility of public feedback with

regard to the preparation and

implementation of PPP projects

MEDT

central executive bodies

local self-government bodies

December

2013

43

planned events, taking

into account proposals

of changes made by the

said stakeholders

13 Introduction of

information models as

part of PPP management

mechanisms, which will

allow systemic monitoring

of information needed for

decision-making,

excluding unnecessary

duplication of information

and any redundant

information that affect the

effectiveness of business

operations in PPP projects

13.1 Regular coverage of the fulfillment

of keys stages of PPP projects in mass

media, with accents on social, economic

and organizing effects;

MEDT

central executive bodies

local self-government bodies

December

2013 Issued administrative

documents of the

MEDT, Ministry of

Finance, and central

executive bodies

Adopted administrative

documents of local

self-government

bodies, observing the

MEDT’s

recommendations

regarding the

implementation of

standard models of

business-processes of

information services

(set of roles, their

functions,

interconnections among

the rules, functions

performance rules, and

uniform approaches to

information interaction

of standards models,

including when

applying the conceptual

and terminological

framework and using

an adequate IT services

management)

13.2 Improvement in the quality of the

technological process of PPP

information exchange within the

framework of applicable law between

the authorized state body, central

executive bodies, and local self-

government bodies through more

intensive application of technical means

and information technologies, as well as

interpersonal communications in the

process of implementing PPP projects;

MEDT

central executive bodies

local self-government bodies

December

2013

13.3 Information support for

management decisions regarding the

implementation of the PPP strategy

MEDT

central executive bodies

local self-government bodies

December

2013