Is Ukraine Ready for PPP?

Tatiana Korotka, Director of PPP Professional ServicesUSAID Public Privet Partnership Program

Program Summary

P3DP is a five year USAID program that started in October 2012 to promote PPPs a model to improve communal services and infrastructure, in accordance with international best practices.

Objectives:

•Building institutional capacity of the national PPP Unit

•Enhancement to legal and regulatory framework

•Building capacity of local organizations

•Identification and developing pilot PPP transactions

Country context*

Population 45,593,300

GDP $176,3 billion

GDP growth 0.3%

Inflation 0.5%

GED 75,6% ВВП

Public Debt 36,8%

Public investment required for sustained economic growth

$100 billion over next 10 years (PFR, 2011)

*Source: http://www.worldbank.org/en/country#:

Regional results – Overall scores*

Rank Country Score Level

1 Croatia 63.5Developed2 Lithuania 62.9

3 Slovenia 61.84 Latvia 54.4

Emerging

5 Hungary 53.86 Poland 527 FYR Macedonia 51.18 Russia 519 Albania 50.5

10 Turkey 49.611 Slovakia 47.6

12 Romania 47.413 Bulgaria 45.514 Serbia 4315 Armenia 39.916 Estonia 37.717 Moldova 35.818 Kazakhstan 35.619 Montenegro 31.720 Bosnia and Herzegovina 29.6

Nascent

21 Ukraine 2822 Georgia 27.823 Kyrgyz Republic 25.624 Mongolia 24.625 Belarus 10.3

Countries can also be compared based on groups rather than exact scores

Several countries fall in the “nascent” category.

They fall in this grouping for different reasons

Inadequate legal and regulatory frameworks

Lack of political will or strong focus on privatization

Insufficient capacity

*Source: Economist Intelligence Unit

Notes: Several answers are possible

Please, indicate the reasons, in your opinion, for which the partnership was not established (several answers are possible):

Baseline Survey

Legal & Regulatory PPP Environment

Legislative Issues Results

PPP Policy and Strategy PPP Development Concept for 2013-2018PPP Strategy and Implementation Plan (2014)

PPP Laws Framework PPP, Concessions (district heating, water supply and sanitation, motorway, sea ports)

Tariff Regulations RAB-methodology for water and heat tariffs, SWM regulations being developed

Licensing, PPP procurement and PPP Procedures

PPP development, tender, and appraisal methodology adopted by GOU

Budgetary Restrictions Draft amendments to laws related to ESCO contracts and governing Budget Code

International Arbitration, Land Issue

Draft amendments to PPP Framework Laws

Fair Termination payments Draft law adopted by Verkhovna Rada

PPP Unit•Facilitate the use of PPPs in Ukraine•Establish systems and processes to monitor the use of PPPs in Ukraine•Develop staff capacity necessary for its PPP work

Line Ministries

Local Governance Authorities

Institutional Environment

PPP Pilot Projects Practice

Current Sectors Solid Waste Management, District Heating, Healthcare, Parks & Recreation, Renewables & Energy Efficiency, Education, Transportation

2 to 4 projects expected to go to Public Tendering in 2013

Pilot City Capacity

Development •General PPP Training

•Specialized Training•Sectoral Seminars

•Study-tour•Stakeholder

Communication Support

Zaporizhia Healthcare

Objective Increase quality and improve access to medical services

Details•Hospital remains Municipal-owned•Private partner to introduce new

fee-based medical services •Free medical services remain •Private partner to renovate sections of hospital •Feasibility Study complete and awaiting

approval by Municipality Authorities•PPP agreement ≈ 25 years •Investment size ≈ $2,000,000 Tender is expected in November 2013

Simferopol Urban Park Renewal

Objective Improve park

landscape and quality of facilities

without additional cost to city

Details •Park remains Municipal owned•Green zone improves•Feasibility Study is expected

by the end of August•PPP agreement ≈ 25-30 years•Conventional breakdown into «green» and «commercial» zones•Total Investments ≈ $12,000,000

Tender expected in December 2013

Kyiv Summer Sports and Recreation Facility

Objective Establish a sports

and recreation zone on Dolobetsky

Island along the Dnipro river in Kyiv

Details•Green zone remains untouched •P3DP provided input to FS, tender

criteria, stakeholder communications•PPP agreement ≈ 15 years•Total investments ≈ $2,470,000

Tender results expected in October 2013

Malyn Energy Efficiency

Details•DCO (design-construction-operation) PPP agreement•Maintenance of the heating facility •Decrease cost of heating•PPP agreement ≈ 10-15 years•Total investments ≈ $500,000

Tender is expected in December 2013

Objective Modernize and adapt district heating facilities to renewable and more efficient energy sources

Kyiv Kindergarten

Details•Municipality retains ownership of the kindergarten(s)•Two facilities are being considered•Private partner is responsible for capital renovation and operations•Cadre of underprivileged children will be granted attendance free of charge•PPP agreement ≈ 15+ years •Total investments ≈ $1,620,000 / $2,400,000

Objective Increase Kindergarten capacity by reconstruction and renovation of existing buildings

Tender is expected in 2014

PPP Projects in Development

Reduce traffic congestion and pollution

Details •Off-street parking facility•Possible co-financing by City•Construction and operation •PPP agreement ≈ 15+ years

Introduce energy-efficient and effective lighting system

Details •Modernize street lamps and infrastructure •Improve system management•Improve safety and quality of life in city•PPP contract ≈ 15 years

Dnepropetrovsk Street Lighting

Lviv Parking Garage

Improve landfill operations

Details •Increase landfill capacity and improve environmental condition•Gas-to-energy operations•PPP contract ≈ 15+ years

Ivano - Frankivsk SWM

Conclusions: We witness the dawn of PPPs in Ukraine

Key success factors:Stronger Political Support on the local levelEffective Financial Infrastructure Success StoriesImproved investment climate Capacity building

In Summary

Thank you!

tkorotka@fhi360.org

ppp-ukraine.org