Ukraine overhauls its PPP regime, facilitating reconstruction and investment
On 19 June 2025, Ukraine’s parliament approved a comprehensive new Public-Private Partnership (PPP) law, which overhauls the infrastructure investment framework by introducing a hybrid financing model. combining state budgets, donor grants, and private capital, to distribute costs and risks more equitably. The new law also creates a fast-track PPP format (applicable during martial law and for seven years thereafter) to accelerate post-war reconstruction in critical sectors. Key features include simplified procedures for small projects and local communities (e.g. a concept-note stage instead of full feasibility), robust protections for investors (e.g. legislative stability guarantees, compensation for adverse regulatory changes, and sovereign immunity waivers), clarified land-use rules, and modern dispute-resolution options. The law explicitly covers a broad range of sectors – from transport, energy, and housing to digital infrastructure, health, and education – and harmonises over 30 existing laws to eliminate previous barriers.
Law structure and scope
The new law completely revises Ukraine’s PPP and concession regulations, unifying them under a single framework. It is organised into clearly defined phases (i.e. preparation, tendering, contract, implementation) and applies to virtually all sectors of public infrastructure and services. The official text explicitly permits PPP projects in areas such as roads, railways, ports, energy (i.e. heating, gas, electricity), utilities (water, waste, reclamation), health care, education, culture, housing development, and even electronic communications and cybersecurity. The list being open-ended. In short, practically any project delivering socially essential services or modernising infrastructure can qualify as a PPP, excluding only areas like raw mineral extraction or endeavours posing no genuine private risk.
Public partners may include central or local government entities (e.g. state-owned enterprises and municipal institutions). The law also clarifies key definitions and contract types – differentiating concession-style projects from standard PPP agreements and allowing “mixed” contracts – so investors can select the most appropriate model. For a more detailed summary of the new concession framework introduced alongside the PPP law, see this Law-Now article: Ukraine passes new concessions law.
Once signed by the President of Ukraine, the law will be published with most provisions taking effect three months thereafter.
Existing contracts remain in force
The 2025 PPP and Concession Law explicitly safeguards previously concluded agreements. All PPP or concession contracts that have already been signed remain under their original conditions, irrespective of changes in legislation. Transitional provisions specify that concession contracts concluded prior to the new law remain in effect until their stated expiration dates, with allowances for war-related amendments to specific assets. Investors can thus be assured of continuity: the new regime does not retroactively modify pre-existing arrangements.
Hybrid financing and public support
A key feature of the new law is its hybrid financing model. Under this arrangement, a project may be financed by a combination of private investment, public funds from national or local budgets, and grants provided by donors or international institutions. In particular, the law permits free or interest-free donor grants for PPPs, along with assistance from public partners in attracting investments, and the collection of funds from private individuals to support housing initiatives. It also contemplates more conventional options, such as co-financing construction or operational readiness fees from government budgets and other forms of government support.
In practice, this means a public partner could be responsible for meeting some costs or covering shortfalls in demand (e.g. by guaranteeing minimum revenue) to render projects more sustainable. Moreover, PPP agreements could include mechanisms such as demand guarantees, raw material provision, direct procurement of services from the private partner, and specialised tax benefits. These measures are designed to spread risk in a way that avoids overburdening the private sector. Public authorities may therefore provide guarantees and grants, while the private sector retains operational risk and profit potential. International organisations and commercial lenders can also participate: the legislation permits creditors to enter direct agreements to protect their interests, possibly intervening if a private partner defaults. By combining social goals (e.g. affordable housing or healthcare facilities) with commercial incentives, the hybrid financing approach aims to attract a diverse range of investors, from local SMEs to major funds and multilateral banks.
Fast-track procedures for reconstruction
An additional innovation is a bespoke fast-track PPP regime for wartime and post-war recovery initiatives. During martial law and for seven years after its conclusion, any PPP project included on an official “recovery list” benefits from expedited procedures. The government will issue lists of priority state and local projects (e.g. the reconstruction of roads, hospitals, or utilities damaged by the conflict), each eligible for accelerated consideration. The law expressly prohibits delaying assistance throughout martial law, stipulating that no caps may be placed on payments owed to private partners within PPPs during times of conflict.
In practice, this means fast-track PPPs may proceed with shortened approvals and procurements irrespective of project size. Whether a hospital reconstruction or a local energy retrofit, they can progress swiftly. The official timetable envisages three months for most provisions to become effective following publication (with certain procurement rules introduced later), ensuring prompt implementation. While oversight remains a requirement through open competition and basic feasibility appraisals, these schemes avoid the protracted delays normally associated with lengthy processes.
Access for small projects and local entities
For the first time, the law lowers barriers to entry for smaller PPP projects and for local governments. It permits the initiation of proposals based on a streamlined concept note rather than a full feasibility study, limiting public partner preparation expenses to 2.5% of the project’s overall value. This enables smaller municipalities, local utilities, and state enterprises to sponsor necessary projects (e.g. water supply, educational facilities, medical clinics, or modular housing) without incurring prohibitive preliminary costs.
Given Ukraine’s reconstruction requirements, projects aimed at housing or local community infrastructure receive special facilitation. Housing PPPs, for example, may draw upon private individuals’ contributions or mortgage pools, as the law specifically allows for collecting the funds of private individuals under PPP conditions. The statute also grants permission for large public enterprises, such as Ukrzaliznytsia (rail) or Ukrenergo (power), to organise PPP tenders without additional authorisation. In essence, smaller-scale projects (up to approximately EUR 5.5 million) benefit from streamlined tender procedures while medium and large projects employ a two-stage process (i.e. concept note followed by full feasibility). This approach unlocks opportunities for local investors and contractors to participate in reconstruction activities without becoming mired in excessive bureaucracy.
Investor protections and legal certainty
The new PPP legislation emphasises investor protection and legal stability. It guarantees that the legal environment in force on the date of signing a PPP contract, including tax regulations, remains applicable for the project term, ensuring investors need not fear retrospective adverse amendments. Furthermore, if subsequent legal changes materially undermine a project’s economic returns, the PPP contract must provide for compensation of those losses. Likewise, if a government decision infringes upon a partner’s rights, the private party is entitled to full damages.
Other protections include waivers of sovereign immunity for PPP contracts involving state assets, enabling international lenders to enforce arbitral awards abroad if necessary, and the option for private partners to open foreign-currency bank accounts dedicated to PPP matters. The law also incorporates equality clauses, ensuring all bidders receive equal treatment during tenders and preventing local regulations from superseding PPP provisions (except for mandatory public safety or environmental requirements). If a PPP contract is terminated prematurely, the public partner is obliged to reimburse the private partner’s unused capital outlays and, depending on the circumstances, compensate for losses associated with the contract’s termination. As a result, the legal framework provides transparency and reassurance, aligning with established international standards.
Land use and permitting
Acknowledging that land-related delays often hinder construction, the law clarifies rules on land use. Public authorities bear responsibility for preparing project sites before a PPP contract is signed: they must consolidate the relevant plots of land by ensuring official registration, proper zoning, and the necessary planning consents. If a complete transfer of land title is not feasible, the law allows private partners to perform these tasks themselves, thereby preventing bureaucratic bottlenecks. Any PPP contract must detail all land parcels (with their sizes and cadastral references) and stipulate the applicable legal regime.
Specific provisions also facilitate housing PPPs. For instance, contractors building social housing may benefit from expedited municipal permits and partial land allocation. By clarifying land matters at the outset, investors can proceed with greater confidence that construction will not be derailed by administrative complications.
Dispute resolution mechanisms
The new law endorses flexible options for dispute resolution. Parties may select domestic courts or international arbitration, and the legislation expressly acknowledges mediation and investor-state arbitration (e.g. ICC or ICSID proceedings). Notably, a PPP contract may include a direct agreement with lenders that addresses potential scenarios such as replacing the private partner, thus allowing a creditor to intervene to safeguard its investment.
For regulated sectors (e.g. energy or water), Ukraine’s general commercial arbitration framework remains applicable. Moreover, the new law introduces a regulatory “safety net” for utilities: if a natural monopoly regulator imposes an unfair tariff or price adjustment on a PPP, the partner can request a suspension of its obligations or an amendment of the contract to avert severe financial damage. This aligns with the concept of “rebalancing” clauses commonly found in international infrastructure agreements. Overall, the new legislation aims to keep dispute resolution processes both commercial and adaptable, while adhering to Ukrainian law whenever appropriate.
Improvements over the old framework
The new legislation significantly consolidates and strengthens the previous PPP and concession regulations. Under the prior regime, the scope of PPPs was restricted, and projects often conflicted with sector-specific laws. For example, health or education facilities could not readily be developed through PPPs. The new law abolishes those hindrances by aligning more than 30 sectoral statutes within a single coherent PPP framework. Hospitals, schools, housing developments, cultural heritage sites, and even broadband networks can now be undertaken with straightforward investor protections.
Furthermore, the law refines the definition of a PPP agreement (explicitly differentiating it from a concession agreement, though mixed models are permitted) and clarifies the tendering process. For instance, awarding a PPP contract may proceed even when only one qualified bidder remains, provided the entity satisfies all requirements. These enhancements result in a more reliable and efficient environment for PPPs. In essence, whereas the previous approach entailed vague procedures and protracted timetables, the new framework sets out clear steps, deadlines, and responsibilities. By specifically addressing reconstruction priorities and providing streamlined processes for smaller initiatives, the new law represents a marked advancement in attracting private investment.
Implications for investors and key sectors
For both domestic and international investors, this new PPP law conveys a distinctly positive message. It furnishes a robust legal foundation and diverse incentives for investment in Ukraine’s rebuilding efforts. By combining public funding and donor contributions with private finance, the legislation makes larger-scale projects economically feasible, potentially unlocking “up to USD 1 billion” in new investment, according to the Minister of Economy, Yulia Svyrydenko.
Likewise, streamlined procedures allow for swifter deployment of resources in crucial ventures (e.g. hospital PPPs or community solar initiatives). The law’s broad sectoral coverage opens myriad possibilities. In housing, investors can construct social and residential units, with prospects for selling or leasing under a PPP structure. In energy and utilities, integrated schemes (e.g. gas, electricity, heating) remain viable, supported by cost-reflective tariffs and state assistance if required. In transport, roads, ports, and urban mobility initiatives can be packaged under PPPs, bolstered by governmental or revenue-based guarantees. And in the digital realm, telecom infrastructure can be established on a PPP basis. Sectors previously excluded (e.g. health care, education, and culture) are now firmly integrated into the PPP framework, enabling new schools, hospitals, or cultural projects through private partnerships.
Against this backdrop, the new law’s blend of financing mechanisms, expedited processes, and robust legal safeguards offers a more attractive environment for investors. Contracts incorporate exit and compensation clauses, while donors and lenders can supply additional capital or grants. The legislation aligns with European standards, facilitating collaboration with EU donors and financial institutions. In essence, this PPP model seeks to strike a balance between urgent reconstruction needs and accountable governance, thus potentially mobilising significant private resources for national development and modernisation.
For more information on new PPP opportunities in Ukraine’s reconstruction programme, contact your CMS client partner or these CMS experts: Natalia Kushniruk, Mykhaylo Soroka.
