Business news from Ukraine

Ukraine’s Verkhovna Rada has passed at first reading the law on concession foreseeing the amendments to some legislative acts aimed at improving legal regulation of concession activities.
An Interfax-Ukraine correspondent reported that bill No. 1046 was supported at first reading at the plenary meeting of the Rada by 293 MPs on Friday. Some 254 MPs backed shortening the terms of preparation of the bill for second reading.
According to the authors of the document, the bill should contribute to improving the legal regulation of concession activities, which, in turn, will provide the opportunity of effectively attracting domestic and foreign investment in the Ukrainian economy for infrastructure development. The document also defines a clear mechanism for selecting a concessionaire and introduces concession conditions in line with international practice.
According to the text of the bill, the term “concession” defines a form of public private partnership (PPP), which implies granting by a concessor the rights to create and/or build (repair/ re-equip, and other actions), and/or manage the concession facility to a concessionaire, and/or to provide services on the terms determined under a concession agreement, and foresees the transfer of most of the operational risk to the concessionaire.
The bill, in particular, defines: a clear separation of regulating concession and other forms of PPP implementation; a unified procedure for initiating and making decisions on the implementation of PPPs for all forms of PPPs (including concessions); introduction of a transparent procedure for selecting a concessionaire (a concession tender, a competitive dialogue), consistent with international practices, as well as the possibility of attracting advisers and independent experts to prepare PPP projects in the form of concession.
The document also provides additional guarantees for concessionaires and creditors, in particular, the determination of the right to replace the concessionaire with another concessionaire in the concession agreement.
In addition, the bill simplifies land allocation procedures for PPP projects in the form of concessions; defines the features of the concession in markets that are in a state of natural monopoly, as well as the features of the concession for the construction and operation of roads.
At the same time, the new version of the bill introduces a clear regulation of the ownership of the facility under concession, the purpose of which is to preserve the state/territorial community’s ownership of the concession facility.
In addition, the document provides potential concessionaires with the opportunity of initiating a concession.
The bill also stipulates that concession facilities cannot be forests, but aerodromes can be, and concession charges for roads will serve as a source of filling the Road Fund.
At the same time, according to the conclusion of the parliamentary committee on Ukraine’s integration with the EU, the bill does not comply with the Ukraine-EU Association Agreement and needs to be revised taking into account the relevant remarks.