Ukraine establishes Rebuilding Agency, plans pilot projects for rebuilding and develops e-system for their management

Rebuilding Agency

On 17 January 2023, the Cabinet of Ministers of Ukraine (CMU) enacted resolution No. 29 “On Some Issues of Optimisation of the System of Central Executive Authorities”. This resolution established the State Agency for Reconstruction and Infrastructure Development of Ukraine (i.e. the “Rebuilding Agency”), which replaces the State Road Agency of Ukraine and the State Agency for Infrastructure Projects. Furthermore, CMU resolution No. 193 dated 21 February 2023 approved regulation outlining the following powers and responsibilities of the Rebuilding Agency:

• management of the construction, refurbishment and rebuilding of transport and industrial, social, residential and public, energy and waste management property and infrastructure;
• development, construction, repair, arrangement, modernisation and maintenance of border crossing points for road and rail traffic;
•  facilitation of the attraction of funds, formulate the investment policy and developing digitisation and information platforms for state services in the rebuilding sphere;
• management and maintenance of the facilities falling under the control of the agency, including crisis management and civil protection; and 
• implement PPP policy (including in the form of a concession) and secure concession tenders as well as the signing and execution of concession contracts.

The Rebuilding Agency is already functioning

Legal framework for the pilot projects and funding for them

On 27 April 2023, “Procedure on Implementation of a Pilot Project on Restoration of the Settlements Affected by Armed Aggression of the Russian Federation” (i.e. the “Procedure for Pilot Rebuilding”) approved by CMU resolution 382 dated 25 April 2023 went into effect. The Ministry of Community and Territory Development, and Infrastructure of Ukraine (i.e. the “Infrastructure Ministry”) and the Rebuilding Agency are key stakeholders and managers of the Procedure for Pilot Rebuilding. This initiative focuses on six reconstruction locations: the villages of Borodyanka and Moshchun in the Kyiv region; the village of Posad-Pokrovske in the Kherson region; the city of Trostyanets in the Sumy region; the village of Tsyrkuny in the Kharkiv region; and the village of Yagidne in the Chernihiv region. 

Under the principle of "bottom-up implementation," specific projects will be selected by local state administrations based on the proposals of municipal authorities. These authorities will allocate land plots, gather information on object surveys, feasibility studies, options for restoration or new construction, available funding, and expert documentation if applicable, and submit these details to the Rebuilding Agency for approval. The latter will assess the projects based on their efficiency, coherence and priority and assumes the employer’s function for the private property. All the projects submitted to the Rebuilding Agency should be recorded in the register of damaged and destroyed property (partly described in our previous materials) and to the Digital Restoration Ecosystem for Accountable Management (i.e. the “Dream System”).

At the start of 2023, the Fund for the restoration of destroyed property and infrastructure was established following the approval of the procedure for the use of the Fund’s money by CMU resolution No. 879 on 29 July 2022. The government has currently allocated more than UAH 17 billion (approximately EUR 430 million) to the Fund. To ensure transparency in the Fund’s cash flow, the procedure stipulates that projects seeking funding must be selected during government commission meetings, the protocols of which are publicly available.

Dream System and its implementation

On 5 May 2023, the pilot version of the Dream System (which can be accessed via this link) was unveiled in Ukraine by the Infrastructure Ministry and is due to be presented to the western partners in London in June 2023. This system consists of two levels: 

• the “first level system” incorporates data from various existing national registries such as the construction registry and the Prozorro system; and
• the “umbrella system” collects data from all the registries in the first level system, providing users with comprehensive access to this information.

Once the Dream System is fully operational, it will serve as a knowledge base, offering practical guides on project preparation and templates for project packages. The aim of these resources is to serve as tools for communities to efficiently initiate and develop their projects. Moreover, the system should allow users to add and track specific details of the rebuilding projects, including details about developers, contractors, donors, results of the public hearings, and cash flow associated with the projects. 

Private investment developments for rebuilding Ukraine

In addition to the projects initiated and funded by state and local authorities, western donors and international financial institutions, Ukraine has also pursued private investment initiatives. Ukraineinvest, the governmental investment agency, in collaboration with the European Business Association and Global Business for Ukraine business associations, has developed an investment map of Ukraine. This map highlights over 100 investment projects categorised based on all regions of Ukraine and 14 industries, including transport and logistics, agriculture, construction, fuel and energy, heavy industry, waste management, extraction, industrial parks and others. 

Furthermore, on 5 May 2023, the Ministry of Economy of Ukraine entered into an agreement with BlackRock Financial Market Advisory to provide support services to the Ukraine Development Fund, with the objective of attracting private investment and fostering collaboration between private investors and the national government.

For more information on environmental regulations in Ukraine and Ukrainian efforts to align with EU standards, contact your CMS client partner or these CMS experts: Natalia Kushniruk and Anna Pogrebna.

Legislation: 
Resolution of CMU No. 29 dated 13 January 2023 establishing the Rebuilding Agency (in Ukrainian)
CMU resolution No. 193 dated 21 February 2023 establishing the authority of the Rebuilding Agency (in Ukrainian)
Procedure for Pilot Rebuilding approved by resolution of CMU No. 382 dated 25 April 2023 (in Ukrainian)
Procedure for the use of the Fund’s money approved by CMU’s resolution No. 879 dated 29 July 2022 (in Ukrainian)