Government Advances Public-Private Partnership Reform: New Rules for Project Preparation and the Selection of Private Partners

1. Government Sets Out Detailed Procedures for the Preparation and Appraisal of Public–Private Partnership Projects

Resolution No. 1051 "Certain Matters Concerning the Preparation of Public–Private Partnership Projects and the Improvement of Public Investment Management" approves the procedures for assessing concept notes and assessing the effectiveness of implementing PPP projects.

The Resolution sets out detailed requirements for the preparation, review and approval of documentation required for the implementation of the PPP project and integrates PPP project preparation into the public investment management framework.

Key provisions

• Mandatory appointment of advisers for major projects. For projects with an estimated value exceeding EUR 10 million, the engagement of an adviser is mandatory for both the preparation  of the concept note and the development of the feasibility study.

• More detailed project preparation requirements. The feasibility study must include, among other things, an analysis of rights over land plots and existing encumbrances, a land preparation plan, a sensitivity analysis addressing changes in key project parameters, an assessment of the project management team's capacity and a plan for subsequent project implementation. For projects below the threshold, the corresponding detailed assessments must be included in the concept note.

• Defined appraisal and approval periods. The appraisal of the effectiveness of implementing a project through a PPP and the preparation of the corresponding opinion must be completed within 30 calendar days of submission of the feasibility study. Opinions concerning state-owned assets are subject to review by the Ministry of Economy and Environment of Ukraine within 45 calendar days. As part of the relevant interministerial review, the Ministry of Finance of Ukraine ("Ministry of Finance") has 30 calendar days, and the Ministry of Recovery, Infrastructure and Transport of Ukraine ("Ministry of Development") has 20 calendar days, from receipt of the documents to respond.

• Consequences of failure to meet approval deadlines. In the circumstances specified in the Resolution, failure by the Ministry of Finance to respond within the prescribed period constitutes deemed approval of the opinion without comments. Failure by the Ministry of Development to respond is deemed to indicate that it has no proposals or comments.

• Specific rules for project preparation during martial law. Where an asset is destroyed or substantially damaged as a result of the Russian Federation's armed aggression, the public partner (concession grantor) may, depending on the circumstances, suspend the appraisal and refer the documentation for further revision, or decide that further preparation or implementation of the project as a PPP is no longer appropriate. Where the relevant opinion has already been submitted for review or approval, the Resolution provides for its withdrawal within five working days.

What Does This Mean for Businesses?

The new procedures are intended to streamline PPP project preparation, reduce the risk of delays in obtaining approvals and provide a more predictable transition to the tender stage.

The more detailed feasibility study requirements should improve the quality of project preparation and enable potential investors to assess projects' investment attractiveness and associated risks more objectively. During martial law, the ability to revise the conclusions and documentation required for the implementation of a PPP project where assets have been damaged is particularly significant, allowing changes in circumstances to be taken into account before a private partner is engaged.

2. New Rules for the Competitive Selection of Private Partners

Resolution No. 1204 "Certain Matters Concerning the Selection of a Private Partner" approves the Procedure for the Selection of a Private Partner, which sets out detailed rules for preparing and conducting tenders under the Law of Ukraine "On Public–Private Partnerships". The Procedure also applies to tenders for the selection of concessionaires in the circumstances it specifies, including by reference to the prescribed threshold for concession support.

For potential investors, particular significance attaches to the provisions governing engagement with the public partner during the preparatory stage, access to tender documentation, discussions on project terms and the time limits for preparing tenders.

Key provisions

• Preliminary market consultations. During tender preparation, the public partner, tender commission, advisers and independent experts may hold meetings and public consultations and issue requests for information to assess potential investor interest and refine project terms. Draft tender documentation, or individual sections thereof, may be made available for discussion. Such consultations must not confer an advantage on individual participants.

• Opportunity to discuss the draft agreement. Unless otherwise provided in the tender documentation, candidates that have passed the qualification stage must be given an opportunity to comment on the draft documents for the tender submission stage, including the draft agreement. This allows issues concerning commercial terms, risk allocation, financing and the performance of contractual obligations to be raised before final tenders are submitted. The tender evaluation criteria and methodology are excluded from such discussions.

• Minimum periods for preparing applications and tenders. In open tenders, the period for submitting applications and tenders must be at least 35 calendar days. In restricted tenders, the application period must be at least 35 calendar days, or 45 calendar days where a site visit or inspection of specified documents is mandatory. The period for submitting tenders must be at least 45 calendar days from receipt of the invitation to tender.

• Specific qualification rules for projects below the threshold. Where provided for in the open tender notice, the tender commission may evaluate tenders before verifying whether the participant submitting the best tender meets the qualification requirements. If that participant fails to meet the prescribed requirements, the commission proceeds to verify the next-ranked participant.

• Use of previous qualification results. Subject to specified conditions, participants may be exempt from resubmitting certain documents where they passed the qualification stage in a tender conducted by the same public partner no more than two years previously, the relevant information remains unchanged and the qualification criteria are identical. This may reduce the administrative burden on investors participating in multiple tenders.

• Distinction between clarifications and amendments to tender documentation. Where a clarification issued by the tender commission effectively changes participant requirements, selection criteria, material terms of the agreement or other conditions of participation, those changes must be incorporated through formal amendments to the tender documentation. Individual clarifications conferring an information advantage on particular persons are prohibited.

• Detailed rules for competitive dialogue. Negotiations on project characteristics must be conducted separately with each admitted candidate and recorded in minutes. The dialogue must not result in changes to the subject matter of the agreement, the minimum requirements for the asset, or the tender evaluation criteria and methodology. Participants must be allowed at least 45 calendar days from receipt of the invitation to submit their final tenders.

What Does This Mean for Businesses?

Resolution No. 1204 establishes a more detailed procedural framework for private investors participating in PPP tenders. One of its most practically significant mechanisms is the ability to conduct preliminary market consultations. These allow potential investors to express their views on a project's technical, financial and commercial parameters before the tender is launched.

Equally significant is the opportunity to discuss the draft agreement after the qualification stage. This is particularly relevant to complex infrastructure projects, where risk allocation, compensation mechanisms, financing arrangements and the parties' liability may be decisive factors in an investment decision.

Potential participants must also take account of the procedural requirements governing tender preparation, qualification and engagement with the tender commission. The prescribed time limits and formal rules for exchanging information should improve the predictability of the tender process, although their practical effectiveness will depend on how the procedures are applied.

3. Next Steps in Implementing the PPP Reform

The adoption of Resolutions No. 1051 and No. 1204 forms part of a broader process of establishing the regulatory framework required for the practical application of the new Law of Ukraine "On Public–Private Partnerships". Further implementation of the reform will involve developing and adopting additional implementing regulations governing specific aspects of PPPs and concessions, including:

• Infrastructure and economic recovery: a procedure for compiling a list of PPP and concession projects aimed at restoring Ukraine's infrastructure and economy, together with specific rules for preparing such projects.

• Concession payments: a methodology for calculating concession payments, the procedure and grounds for granting payment relief from such payments where the implementation of concession projects is adversely affected during martial law, and special rules governing concession payments at seaports following the full resumption of commercial shipping.

• Housing projects: methodologies for determining the minimum area of residential development to be transferred into the ownership of the public partner and/or individual beneficiaries, the minimum "discount" and the market value of the right to develop a land plot. Special procedures are also envisaged for selecting the private party (concessionaire) and conducting electronic auctions and open tenders for housing concession projects below the threshold.

• Roads: a cap on tolls payable for a single journey on roads constructed under PPP or concession arrangements, together with rules governing toll exemptions in specified circumstances and compensation payable to the private partner. Amendments to the procedure for allocating State Road Fund resources are also envisaged.

• Grant funding for PPP projects: a procedure for securing, using and monitoring grants for the implementation of PPP and concession projects.

The further development of the PPP regulatory framework creates new opportunities to attract private capital to infrastructure projects in Ukraine. Making effective use of these mechanisms requires an understanding of both the legislative requirements and the practical aspects of project preparation, structuring and implementation.

The IMPACTA LAW team has direct experience advising on PPP and concession projects and is ready to help businesses assess the opportunities presented by the new regulatory framework and identify the most suitable approaches to implementing investment projects.