EBRD transport director Riccardo Puliti pointed out that passing special laws is not enough. Since all such projects are long term, some political continuity is crucial, as well as a stable policy of government purchases, an issue that Ukraine has problems with at the moment, and a special agency that would concentrate solely on DPP projects. A program of state guarantees must also be independent of the central budget, Puliti said.
Apparently the Ukrainian government is giving little thought to any of this, even though highways in Ukraine are a crucial necessity. According to Hurzhos, there are plans to build and repair a number of highways practically in all directions by 2010. While most of them are toll-free, Ukravtodor is planning to make the M26, a stretch of highway from the Russian border to Dnipropetrovsk through Kharkiv, a toll road, since there is an alternate road nearby. But for the moment these are just plans.
Not all of the highways will be built at the concessionaires’ expense. Some will be financed by the budget. Hurzhos noted that Ukravtodor received 300 million euros’ worth of credit to complete repairs on the Rivne-Kyiv section of the Kyiv-Chop highway. This sum includes 150 million euros provided by the EBRD and another 150 million by the European Investment Bank. In addition, cooperation with the World Bank is gaining momentum (the choice and financing of highway construction projects in 2007, to the tune of 150 million euros). An international tender for the construction, renovation, and repair of arterial highways worth 300 million euros will be announced in 2006, with government collateral.
In addition to these projected costs, and given legislative stability, EBRD Country Director for Ukraine Dr. Kamen Zahariev says that credits could be increased to 800 million euros a year. The bank is also prepared to finance 20 percent of all required road construction investments.
European investments will be also useful for the EU. Bondar said that within five years his ministry will update to category-one all highways coinciding with Europe’s four international transport corridors whose routes cross Ukraine.
The first steps in this direction were made during the conference. Bondar and Hungary’s Minister of Finance Janos Veres signed an intergovernmental agreement on highway junction points on the Ukrainian- Hungarian border as part of International Transport Corridor No. 5. Bondar announced that Ukraine and Hungary had been heading toward this for 16 years.
The agreement paves the way for building a Kyiv-Vinnytsia-Khmelnytsky-Hungarian border highway, which will cost more than four billion euros. According to the Hungarian minister, the project will be launched right after the agreement is signed. All technical documentation will be prepared this year, and a tender will be held for a private investor to help the state build the highway. Construction will start in 2007 and will last at least seven years. But since a law on DPPs has not been passed yet, only investors will be taking on all the risks.
