DONOR
UPDATE
MEETING
MINISTRY OF INFRASTRUCTURE OF UKRAINE
February 2016
1. Reform Update: Progress Amidst Opposition
2. Funding Needs Pipeline
3. Ongoing and Planned Projects
4. High Priority Projects
• Seaport Strategic Study
• Inland Waterways
• Smart Infrastructure
• E-Ticketing
• Open Data
• COsT
5. Discussion
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1
CHANGING
PERSONNEL
MARKET-LEVEL SALARIES
EFFECTIVE
MANAGEMENT
Increasing budget for salaries is a key step to reduce corruption
2
2
SOEs
RIVERS
Privatization
Private
Operators
Implementation
of the Law on
Railways
RAILWAYS
Private
Operators
POST
PPP projects
3
Implementation of
the Law on Inland
Waterways
Transport
SEAPORTS
AIRPORTS
Terminals
Concession
PPP
ROADS
Concessions
Amendments to
the Law on
Concessions
Incremental reforms are the building blocks of change
3
4
4
ACCOMPLISHMENTS
 Corporatization of UZ
 Appoint Board of Directors
 Procurement Transparency:
• Independent Procurement Monitors
• Cooperation agreement to be signed with
UNOPS
TO DO
 Strategy Development:
Capital Investment Strategy
Financial Strategy
 Revise Tariff Regime:
Implement Law of Railways
Increase Operational Efficiency
5
5
ACCOMPLISHMENTS
 Competitive tariff system
 Simplification of control procedures
Introduced ‘single window’
 National seaport strategic study
 Amending Law of Concession
 Creation of joint working group
 Funding requested from EBRD for
international legal technical assistance
TO DO
 Institute transparent tender process
Increased transparency will result in increased
trade
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6
ACCOMPLISHMENTS
 New Financing Sources:
• Devolution of road funding &
maintenance to local governments
• Customs revenue allocated for roads
 Independent Quality Control
 Truck Weight Control System
 Improved Transparency:
• COsT Initiative – World Bank Program
TO DO
 Ukravtodor Reform
Increased input by local governments in road7 decisions
7
ACCOMPLISHMENTS
 Local Open Skies Regime: Odessa, L'viv
 US-Ukraine Open Skies Agreement
 New airline operation procedures
 New low cost airlines: Atlas Jet
TO DO
 Negotiate EU-Ukraine Open Skies Agreement
 Implement transparent tender process
Increased competition will expand routes and 8lower prices
8
EUROPE
UKRAINE
GEORGIA
AZERBAIJAN
KAZAKHSTAN
CHINA
Southern Silk Road train will take 9 days from
9 China to Ukraine
9
 15 Government orders and
45 plans for implementation of EU legislation
 25 roadmaps were adopted to reach EU
directives and regulations
 New action plan for the implementation of
Section IV "Trade and issues related to trade”
Association Agreement, 2016-2019
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Integration will require assistance to overcome legacy issues
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SUCCESSFULLY COMPLETED PROJECTS
 Transport Policy and Strategy projects
 Railway Transport Twinning
 Multimodal Transport Twinning
 Transport Networks
 Air Transport Twinning
 Maritime Transport Project
 Transport Safety Twinning
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(8,8 mln €)
(1,8 mln €)
(1,5 mln €)
(7,8 mln €)
(2,5 mln €)
(10,7 mln €)
(8,9 mln €)
Twinning has proven successful in knowledge transfer
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





Concession Law Amendment (EBRD, US Treasury)
Road Safety Twining
Support to the Implementation of National Strategy (EU)
Road Safety Technical Assistance (EIB)
Strategic Port Study Technical Assistance (US Treasury)
Railroad and Airports Expertise Technical Assistance
(US Treasury)
 Sector Budget Support (EU)
 Open Data Project
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RATIONALE:
Currently there are four concession laws, none of which are effective in
incentivizing private investment in SOEs.
PROCESS:
 Joint task working group was formed led by the State Property Fund
including the Ministry of Infrastructure, Ministry of Trade and
Economic Development, US Treasury Office of Technical Assistance
with the input of members of the EBRD, and various legal and
consulting firms actively participating in this sector
 Decision made to have one Law covering a variety of sectors
 Areas in existing laws impeding development of concessions have
been identified
 TOR drafted for international legal advice on crafting amendments
and organizational strategy using successful models in other
countries.
STATUS:
 Awaiting submission by EBRD of TOR for funding of tender for legal
technical assistance
 Anticipated timing: within coming month
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13
 Improvement of infrastructure cycle management
 Railways
 Railway Transport Twinning
 E-Ticketing for Railways
 ERP for Ukrainian Railways
 Multimodal Transport Safety Twining
 Aviation Twinning (Airports)
 Construction Sector Transparency Initiative (CoST) Project
 Open Data Project
 Inland Waterways Strategic Study
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•
•
•
•
13 Seaports (not including 5 in Crimea)
Ukraine is an export nation
Most ports are dominated by bulk cargo – grain, metal ore, coal, vegetable oils
Odessa is the principal port for container traffic
Mariupol
Berdyansk
Mykolayiv
Yuzhniy
Oktyabrsk
Odesa
Kherson
AZOV SEA
Illichivsk
Bilgorod-Dnistrovsk
Reni
Skadovsk
Ust-Dunaisk
Kerch
Izmail
BLACK SEA
Yevpatoria
Azov Sea
Black Sea
Feodosiya
Sevastopol
Yalta
Major ports
Small ports
Crimean ports
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 The goal is to develop a comprehensive master
strategic plan for allocation of resources

Implications for economic development and ties
into critical issues with railroad and road sectors

Ministry has the ability to leverage existing
funding from Ministry budget

Four part study that also impacts transparency
and anti corruption goals
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RATIONALE:
National seaport strategic master plan vital for making resource
allocation decisions to increase and enhance:
• Private investment
• Staff capabilities
• Facility capacity
• Cargo volumes
• Export growth
PROCESS:
 USAID funded initial technical assistance to evaluate sector needs
and develop TOR for in-depth master planning technical assistance
project
 Ministry worked with Ukraine State Ports Authority (USPA) to
identify budget allocation funding roughly 50% of anticipated costs
for international consultants.
STATUS:
• Ministry approached United Nations Office of Project Services
(UNOPS) for assistance in tendering port consultants.
• Request Donor Funding of €394,000 for stages 3 & 4
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 USAID funded initial technical assistance to evaluate sector needs and
develop TOR ($25,000)
 STAGE I: Assessment of physical conditions and legal agreements at
each port (USPA funded €165,000)
 STAGE II: Develop strategy to improve port utilization and intermodal
connectivity at each port including terminal and road, rail and utility
configuration
(USPA funded €222,000)

STAGE III: Strengthen institutional performance
and capabilities (€94,000)
• Examine the current port management and identify stakeholders
• Prepare plan for introducing autonomous port authorities including
key staff perception of current and potential roles
• Develop plan for recruiting and educating staff in modern port
management practices
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 STAGE IV: Implementation of Port Demonstration Project (€300,000)
• Develop conceptual Master Plan for terminals, related land and
road and rail network within and connecting to the port
• Develop conceptual design for three or more terminals including
both the layout and potential uses
• Provide technical review of suitability of existing facilities (marine
infrastructure, land infrastructure, services and utilities) for their
identified market role
• Identify any significant environmental issues
• Prepare marketing study to identify demand and potential bidders
for operating these terminals
• Develop terminal concession tendering procedures reflecting best
practices
• Prepare tender documents including a pro-forma operating
agreement
• Coordinate with the MUI to implement and document these
procedures for initial terminal operating agreement up to the point of
commercial closure
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RATIONALE:
 National Strategy for inland waterway development
 Increase river transport capacity
 Reduce wear on roads from overloaded trucks by shifting
cargo to river transport
PROJECTS:
 TOR Technical Assistance
 National strategic plan
 Lock reconstruction
 Mitigation natural obstructions on Dnipro
TIMING: Depend on funding
19 PORTS AND
TERMINALS
WATER LOCKS
ON DNIEPER RIVER
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($50,000+ /project)
($TBD)
($27.2 million)
($2 million)
OPEN DATA PROJECT
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RATIONALE:
Increased Transparency of SOE will:

Decrease corruption

Increase public trust

Enhance corporate governance

Generate additional GDP via mobile apps
PROJECT:

Establish automatic disclosure process for detailed financial and
operating data of SOEs

Produce report templates for 50 different datasets, issue
Ministry’s order, implement data collection IT system, connect to
data.gov.ua
STATUS: Competed
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RATIONALE:
Construction sector cost transparency focused on:
• Efficient public spending
• Improved investment environment and accountability
• Contract award on price and quality
• Promote fair competition and public confidence
CORE FEATURES:
•
•
•
Multi stakeholder approach: government, civil society & industry
Disclosure
Verification
PROJECT:


Establish a multi-stakeholder group (MSG) comprising of the
government, NGOs and business to supervise publicly financed
construction
Form an MSG, select pilot projects to test disclosure and
assurance functions
TIMING: Semi-annually
FUNDING REQUEST: $10,000
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Innovative management of infrastructure
complexes in Ukraine:
CORE FEATURES:
 Integrated ERP solution for SOEs
 Contact center
 Informational and Situational centers
 E-Post
 Clouds and Technology
 Mobile applications
TIMING: 3 years
FUNDING REQUEST: $18,5 mln
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RATIONALE:
Securing Revenue with Customer Apps:
 Guarantees revenue assurance, fraud prevention and
detection
 Enforcing operational integrity of the business mode
PROJECT STAGES:
 Pre Feasibility Project
 Feasibility Study
 Trial phase Project
 Continuous roll out
TIMING: 2 years
FUNDING REQUEST: 5 mln €
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SOE DIRECTOR SELECTION PROCESS*
Position announced by Ministry of Economic Development & Trade
Candidates submit credentials to Ministry for review
Interviewed by Ministry selection panel including subject area expertise
Winning candidate nominated by Ministry Panel
Minister signs work
order to assume
position of Acting
Director
Approval of Oblast Governor/Local Authority
YES
NO
Approval of Cabinet
of Ministers
Minister &
Governor
discuss
differences
Director Appointed
*For SOE with asset value of >2 billion UAH, for SOEs valued below this announcement and
interviews done by the Ministry of Infrastructure.
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WHAT I FOUND IN KERSON PORT:
 Low productivity on both pier and storage side

Lack of storage space and facilities

Corrupt environment

Low workforce motivation
MY PLAN FOR RESPONDING:
 Implement changes in technological schemes and
customer service practices
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
Use left bank of the port to increase storage capacity

Enforce strict control over purchases and resources

Guide the port towards concession to attract
investments
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LET’S START THE
DISCUSSION
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