On 30 July 2025, the President of Ukraine signed the Law of Ukraine “On Public-Private Partnership” No. 4510-IX, adopted by the Verkhovna Rada of Ukraine on 19 June 2025 (the “Law”).
The Law will come into force on 31 October 2025 and will replace the Law of Ukraine “On State-Public Partnership” No. 2404-VI dated 01 July 2010.
According to the Law, the term “state partner” will be changed to “public partner”, and state-public partnership (“SPP”) will become public-private partnership (“PPP”).
1. WHAT IS A PPP, AND HOW DOES IT WORK?
A PPP is a collaboration between the state and the private sector. In such a partnership, the state/public partner provides a certain asset for use by the private partner, who, in turn, invests in its development/restoration, etc., and receives it for use for a specific period.
Thus, without spending its own resources, the state has the opportunity to develop its infrastructure, and the private partner, having received the asset for use, can commercialise it and, during the term of use, not only recoup its investment but also make a profit.
In other words, SPP/PPP is a two-way street and provides for the possibility of risk sharing between partners.
Moreover, unlike other forms of investment, SPP/PPP is an option for accessing public sector services.
2. LINGUISTIC UPDATE OR REAL CHANGE?
The Verkhovna Rada received the draft law on 01 July 2022. In October of the same year, the draft law was adopted as a basis, and it was finally adopted almost three years later. So why did it take so long?
Work on the draft law began in 2021, aiming to create a platform for attracting investment from the private sector.
In 2022, after the start of the full-scale invasion, the adoption of the Law became not just a potential investment tool but an absolute necessity.
According to World Bank estimates as of 31 December 2024 (RDNA4 report), restoration and reconstruction over the next decade will require USD 524 billion.
Obviously, such funds will be a heavy burden on the state budget.
SPP/PPP is a real way out of the situation – the investor: (1) invests in development; (2) takes on part of the risk; (3) is motivated to commercialise the asset as effectively as possible to make a profit; and (4) uses the asset and, after a specific period of time, returns it modernised to the state.
The state only needs effective tools for businesses to use.
According to IFC data (2023), the implementation of reforms aimed at improving the investment climate is expected to help attract an additional USD 282 billion, stimulating Ukraine’s development.
According to the legislators, the work on the draft law aimed to identify genuine growth points in the field of SPP/PPP and develop practical, effective solutions.
The work aimed to modernise the order and procedure. In connection with European integration, the work was accompanied, among other things, by the search for compromises on issues of compliance with European legislation and relevant negotiations with Brussels.
As the authors of the Law note, a significant number of issues were successfully defended, and we ended up with a Law that corresponds to the realities of Ukraine and has the potential to be effective.
3. WHAT ARE THE GROWTH POINTS?
A few statistics: according to the Ministry of Economy, out of 200 SPP agreements concluded, only 22 are actually being implemented. At the same time, 114 are not being implemented, 53 agreements have been terminated or have expired, and 11 have been suspended due to the armed aggression of the russian federation. In other words, the survival rate of concluded SPP agreements is about 10%. No one knows for sure how many were lost along the way to the conclusion.
For comparison, in Turkey alone, 250 projects are being carried out over the past 30 years, and another 20 are still under construction.
The main point of growth was and remains confidence in the state partner, or rather, the lack thereof. Moreover, the challenges with the state partner arise not only during the cooperation itself, but already on the way to it.
Thus, the following challenges come to the fore:
(1) legislative – a long and complex procedure – under the old law the preparation of documents could take up to three years, which is inefficient for both the investor – during this time, market conditions and the investment attractiveness of the project may change significantly, as well as for the state partner itself – potentially lost opportunities at the very beginning of the work, inefficiently spent resources of the state apparatus on the project;
(2) human resources – the bureaucratic reality of the apparatus and the lack of expertise – SPP/PPP projects are rare in Ukraine, and, accordingly, the lack of experience and unwillingness to delve into the matters often lead to projects being stalled at the outset, and private investors face significant resistance at this stage.
(3) practical – unformed selection committees lead to the need to form them up to six months, and some selection committees cannot even be formed because no representative is provided; the unwillingness of state and local government bodies to give guarantees slows down the attraction of funding for project implementation;
(4) reputational – yes, reputational, SPP/PPPs are not a well-known concept in Ukraine, and private partners do not really understand the investment potential. Those who do understand have already had the opportunity to encounter the issues mentioned above, and their reluctance to repeat the experiment is entirely logical.
An additional, but perhaps the most relevant factor today, remains the armed aggression of the russian federation, which adds potential risks of unprofitability of investments in infrastructure during martial law.
4. WHAT CAN WE EXPECT?
First and foremost, we expect the most significant issues to be solved and the PPP actually to work:
(1) procedure
The law provides for two possible procedural routes – standard and simplified.
The simplified procedure may be used for:
● projects with a threshold value of up to EUR 5,538,000;
● infrastructure and economic recovery projects, including concessions, during the period of martial law and for seven years after its termination or cancellation.
The standard procedure will apply to all other projects.
The preparation of a PPP project under the standard procedure will take place in two stages: the first is the preparation of a concept note, and the second is the preparation of a feasibility study.
At the same time, the simplified procedure will include only one stage – preparation of a concept note.
The decision on the implementation of the PPP will be made within 45 days from the date of submission of the concept note, while under the standard procedure – within 90 days from the date of submission of the feasibility study.
In other words, the time required to prepare the documentation for the PPP will be significantly reduced.
(2) selection committees, expertise
It is envisaged that to ensure the possibility of organising and conducting a selection process, the public partner will have the opportunity to establish a permanent selection committee by its decision.
According to the lawmakers, such commissions will exist at the Ministry of Economy, the Ministry of Infrastructure, and the Ministry of Defence. Other public partners will also be able to form permanent selection committee.
Additionally, if necessary, a public partner may establish a selection committee for a separate PPP project. However, if the committee’s composition for a separate PPP project is not approved, its function will be performed by the permanent selection committee of the public partner.
As we can see, the introduction of permanent selection committee will contribute to:
● the effective work of selection committee and reduce the time spent on their meetings for each individual project; and
● the development of expertise among members of permanent selection committee, which will have a positive impact on both the quality and speed of organising and conducting tenders for projects.
(3) eliminating bureaucracy and corruption
An additional step to reduce corruption risks and optimise the tender process will be the introduction of an electronic trading system (ETS), which will enable tenders to be conducted.
According to the authors of the Law, the ETS will exist separately from Prozorro, but will be under the control of their administrative team.
(4) guarantees
The law provides guarantees of rights for both private partners and creditors.
The PPP agreement will be subject to a guarantee of legislative stability – during the term of the PPP agreement, it will be governed by the legislation of Ukraine in force on the date of conclusion of the agreement, in terms of 1) the Law, 2) regulatory and legal acts adopted for its implementation, and 3) tax legislation in terms of regulating (determining) the object of taxation, the tax base, tax rates and tax incentives.
The guarantee of legislative stability shall not apply to 1) legislation that mitigates the liability of the private partner; 2) legislation that reduces the object of the taxation, tax base, tax rates or establishes new tax incentives (extends existing incentives), abolishes taxes; and 3) changes to legislation that do not worsen the position of the private partner.
There are also possibilities for compensation for losses in connection with certain legislative changes, actions/inaction of state and local government bodies, as well as in the event of termination of a PPP agreement.
In other words, the position of the private partner within the framework of cooperation under a PPP agreement can only improve as a result of changes in the relevant legislation, and in the event of losses under certain circumstances, there is a possibility of compensation.
(5) reputation
The adoption of the Law is an important step towards increasing investment attractiveness, including through practical approaches and better regulation.
At the same time, given the small number of successful projects, the first PPP projects will certainly be riskier for investors.
5. WHAT ELSE IS INTERESTING?
● Project initiation
Previously, SPP proposals could be prepared by both state and private partners, but according to the Law, PPP projects can only be initiated by the public partner.
The private partner still has the opportunity to submit proposals and ideas to the public partner, but they do not initiate the official procedure.
On the one hand, transferring the initiative to the public partner and aligning it with European legislation enables the state to focus on priority areas of PPPs, which is a rational approach in the context of the country’s recovery. On the other hand, given the lack of knowledge about PPPs and the human factor, the existence of incentives for public partners to be effective is critically important.
● New public partners
The Law expands the circle of potential public partners to include state-owned enterprises (in cases specified by Law) and public sector business companies.
This means that from now on, property belonging to such public partners may become the subject of PPPs, which accordingly expands the scope of cooperation and opportunities for both public and private partners.
● New areas
Previously, SPP could be applied to a specific list of areas and other areas of activity involving the provision of socially significant services, but under the new Law, PPPs can be implemented in all areas except those for which the law establishes restrictions or prohibitions on the implementation of PPPs and/or the transfer of a specific object to a private partner.
In other words, opportunities are now beyond socially significant services, and potential investors will be able to choose from a broader range of areas.
● New forms of state support and its sources
The new Law defines grants as a form of state support, as well as a demand guarantee (difference compensation).
This makes it possible to support projects that are not potentially profitable and to eliminate the risk of demand instability.
Moreover, from now on, there is the possibility of co-financing by state-owned enterprises, municipal enterprises and public sector business companies, which expands financing opportunities and reduces dependence on state and local budgets.
6. WHAT COULD POTENTIALLY BE PROFITABLE?
Everything that is in demand from the public partner and for which it is unable to attract the necessary resources in sufficient volume.
Based on current realities, it is obvious that the most pressing priorities for PPPs will likely be defence, infrastructure, and energy.
Based on both the experience in Ukraine and the experience of other countries, it is possible to predict some possible models of cooperation within the PPP.
In the defence sector:
● construction of military facilities and their subsequent maintenance
The private partner designs, builds and launches the facility, then ensures its operation for a specified period and receives payments.
For example, under the Skynet 5 private finance initiative agreement (PFI) in the UK, Airbus Defence and Space up launch and maintain satellites, and the public partner makes payments to the companies. This cooperation will continue until the Skynet 5 system is replaced.
● construction of infrastructure facilities for the military with subsequent maintenance
A private partner builds housing and buildings for various purposes for military use and provides their subsequent maintenance, receiving a stable income over a long period of time.
For example, the Allenby/Connaught project in the United Kingdom in 2006, which is designed to last 35 years and aims to improve the lives of 18,700 soldiers, involves the renovation of 562 buildings, the demolition of 496 buildings, and ancillary services such as catering, cleaning, property management, etc.
In infrastructure:
● design, construction, modernisation and operation of infrastructure facilities
The private partner is granted the use of the infrastructure facility, invests in it and receives payments from its users, paying a certain percentage of the income to the public partner. At the same time, upon completion of the project, the infrastructure facility is returned to the public partner.
There is already an example of such a project in Ukraine – a 35-year concession for the port of Olvia, which provides for investments in the development of the port of approximately UAH 3.4 billion and at least UAH 80 million in investments in the infrastructure of Mykolaiv.
● construction of housing, social infrastructure and their maintenance
The private partner builds housing in accordance with the agreements and financing agreed upon by the parties, provides housing management and maintenance services, and the public partner guarantees its long-term lease and payment of fees throughout the project term. Upon completion of the project, such housing is transferred to the public partner.
Ireland’s Social Housing Bundle 1 project, which is based on this principle, has enabled the construction of 534 new homes and provides a profit for the private partner over the 27 years of the project.
The Irish School Bundle projects, a series of PPP projects for the construction and maintenance of schools, provide for 25 years of cooperation and profit.
In energy and critical infrastructure
● construction and operation of energy sources
A private partner builds, owns and operates an energy source for a certain period of time and then transfers it to the state.
For example, the Albanian PPP project Devoll Hydropower, which is one of the largest hydropower investments in the Balkans and involves the construction of three hydropower plants with a capacity of 278 MW, is being implemented under a concession agreement.
● design, construction and maintenance of critical infrastructure
This example is being followed by the Seaham Garden Village project, which is designed for 40 years. Under this concession, the concessionaire has designed, is building and will maintain the heating network, as well as providing related services (metering, billing, customer service).
These are just a few examples of PPP cooperation. Real opportunities will arise after the public partner initiates projects.
AUTHORS:
(1) Oleksandr Melnyk, Partner at GOLAW, Head of Corporate and M&A practice, Attorney at law;
(2) Yevhenii Ahashkov, Senior Associate at Corporate and M&A practice at GOLAW;
(3) Yaroslav Maltsev, Paralegal at Corporate and M&A practice at GOLAW.