UKRAINE: Olvia and Kherson ports concessions Contract Management Support

Ukraine’s critical infrastructure has long faced immense challenges, which have only worsened since Russia’s invasion of Ukraine. Before February 2022, Ukraine pursued an ambitious reform agenda focused on PSP in infrastructure. PPIAF provided early support to help establish Ukraine’s PPP Agency and develop a pipeline of potential projects.

Two years after the Olvia and Kherson port concessions were awarded, PPIAF assisted the Ministry of Infrastructure and the PPP Agency in designing a monitoring system to oversee the concessions during the first critical years of operation. These ports have been operating under concession agreements with private partners aimed at modernizing operations through PPPs. While Russia’s invasion of Ukraine has halted port activities, Ukraine has worked diligently with concessionaires and development partners to sustain these partnerships for the future.

The concession agreements laid out a framework for monitoring financial, operational, and property matters to facilitate implementation and identify issues early on. Regular meetings were held between the concessionaires, grantors, and stakeholders to review performance, address challenges, and ensure smooth operations. PPIAF’s support enabled effective oversight during this startup phase, allowing productive long-term partnerships at these strategic ports. These efforts also supported IFC’s work addressing technical,
legal, communication, and regulatory issues.

The turmoil of Russia’s invasion of Ukraine has demonstrated the value of this approach. With the Russian military targeting strategic infrastructure such as ports, the focus shifted to sustaining the concession relationships in times of crisis. PPIAF provided timely guidance on invoking Force Majeure clauses, recalculating concession payments, and extending contract timelines. This was crucial for the government to uphold concessionaire rights and obligations amidst the unrest.

Ongoing engagement with concessionaires has been critical, signaling Ukraine’s commitment to restoring operations when feasible. Though physical assets require rehabilitation and commercial terms may need renegotiating, the concession relationships remain intact. The private partners and government entities continue collaborating and monitoring developments, ready to resume operations when Russia’s invasion of Ukraine ends.

Ukraine has demonstrated remarkable dedication to its reform agenda. Its efforts to preserve partnerships with private port operators, with support from PPIAF and the World Bank, will be essential for recovery and building back better infrastructure. Sustaining engagement with concessionaires also sends a powerful signal—that Ukraine remains open for business, and private investment will continue driving modernization and growth when peace returns.

Approved date2020-12-04
RegionEurope & Central Asia