Public-private partnership in Ukraine is, similarly to Poland, a system of relations between public and private entities, within which the resources of each of them are combined, along with appropriate risks and responsibilities, to undertake and conduct cooperation, usually intended for a longer period of time. This cooperation involves: 1) the creation of new facilities or the modernization of existing facilities that require attracting investment, and 2) the subsequent use of these facilities, in accordance with previously agreed rules.
Public-private partnership (hereinafter: "PPP") is identified as one of the key mechanisms for implementing the policy of modernizing the Ukrainian economy and solving important socio-economic problems. The implementation of public goals is the most important element of cooperation under PPP from the perspective of public entities. The high effectiveness of this form of interaction between the state or local government and business is proven by solutions known from some other countries where this type of mechanisms have become popular in practice. The prospect of post-war reconstruction in Ukraine seems to further increase the potential of using this structure.
The implementation of large-scale modernization projects in various sectors of the economy (light and heavy industry, construction, including infrastructure projects, public services and even agriculture) requires the involvement of significant financial resources, an important source of which may be private investors. At the same time, it is beneficial for business because it reduces the risk of private investments and increases the credibility of investment projects for credit institutions and investment funds.
Public-private partnership takes various forms depending on the degree of involvement of the private and public sectors and the level of risk taken by the parties. First of all, these are contracts awarded to private entrepreneurs for the performance of construction works or the provision of public services, for the supply of products for state needs, etc.
Under Ukrainian law on public-private partnership, the following forms of public-private partnership can be distinguished:
– agreements as administrative contracts between a local government unit and a private partner for the implementation of socially necessary types of activities;
– rent or lease, which arises in connection with the state making real estate, but also enterprises or production equipment, available to the private sector. In such a case, the private partner pays rent for the use of the asset constituting public property (depending on the specific situation, the contract may provide for the purchase of state or municipal property after the end of the rental/lease period);
– concessions that provide for the granting by the state to the private partner of the right to perform functions specified in the contract for a certain period of time and provide it with appropriate powers to ensure the efficient implementation of the purpose of the concession (the concession always provides for the return of the facility to the public partner, and ownership of the manufactured products - if such in a specific case are created - remains with the private partner; in the case of a concession, the public entity - in addition to achieving the goal of implementing public tasks - usually obtains cash benefits from the concessionaire);
– product distribution agreements, which are similar to concession agreements, but unlike them, they provide for the division (distribution) between the concessionaire and the public partner not of financial resources, but of manufactured products;
– joint activity agreements, under which the public partner may take permanent, active participation in the activities of the joint venture being created, and the degree of this participation is usually related to the amount of its capital involvement. This group includes public-private companies.
According to official data from the state administration and local government executive bodies, as of January 1, 2022, 193 PPP contracts were concluded in Ukraine.
The body tasked with shaping and implementing state policy in the field of public-private partnership is the Ministry of Economic Development and Trade of Ukraine. It performs functions similar to those performed by the current Ministry of Funds and Regional Policy under Polish regulations on public-private partnership.
authors:
Svitlana Nemertsalova – lawyer in Ukraine, Michał Wojtyczek – lawyer
This entry contains general information about the legal issue discussed. It does not constitute legal advice or a solution to a specific case or legal problem. Due to the unique nature of each factual situation and the variability of the legal status, we recommend seeking legal advice from our law firm.