Author: Oleh Malskyy
On 31 October 2025, a new law ‘On Public-Private Partnership (PPP)’ came into force. Most sources focus on the innovations of the law from the point of view of the state and the prospects for attracting investment for reconstruction. However, few analyse the advantages and disadvantages of this document for entrepreneurs or describe the algorithm of actions for the implementation of such projects.
In general, the PPP mechanism in Ukraine is 22 years old. The first law was adopted in 2003 and updated in 2010, 2015 and 2025. According to information from the Ministry of Economy, as of 1 January 2025, 200 public-private partnership agreements had been concluded in Ukraine, of which 22 were implemented. Of the rest, 114 are not being implemented, 53 have been terminated or have expired, and 11 have been suspended due to the war.
In other words, in the 22 years of the mechanism’s existence, 22 projects (effectively one per year) have been implemented (and are still being implemented), which is 12% of the 200 agreements concluded. Few regions other than Kyiv can boast more than one PPP project.
Perhaps the reason for this state of affairs with PPPs is not mistrust of the state side of the partnership, but rather a lack of understanding on the part of private partners of the full range of opportunities offered by this mechanism?
Window of opportunity
So, let’s take a look at what opportunities the more than 200 pages of the new law open up for entrepreneurs and how they should act to seize these opportunities.
First of all, entrepreneurs need to determine ‘who to talk to’ and ‘what to invest in.’ Regarding the latter, the new law has expanded the scope of PPPs to almost all sectors: energy, transport and digital infrastructure, support services for government agencies, and housing construction.
As for the former, previously, PPPs could only be implemented in consultation with local and central authorities, but with the new law, the circle of initiators has expanded to include ‘public sector business associations’. Now, for example, a school principal can initiate a PPP and agree with an entrepreneur to build a gym for students with the right to build a private underground car park underneath it.
It should be noted that as of February 2024, there were 3,116 state-owned enterprises in Ukraine. However, only 854 (27%) of them were operational, and 475 (15%) were profitable. The majority of inactive enterprises (56%) are not operational at all. According to the State Statistics Service, as of 1 January 2025, there were 13,883 municipal enterprises in Ukraine. This means that a private entrepreneur can choose a public partner for cooperation from among approximately 17,000 enterprises.
What can an entrepreneur gain from such cooperation?
The previous law clearly stipulated that after the expiration of a PPP or concession agreement (the maximum term was 49 years), the object would become state property. The private partner had to receive a return on investment and profit from operating income during the term of cooperation. The new law, however, firstly, does not have a maximum term, and secondly, allows for full or partial acquisition of private property in the form of newly constructed objects.
When implementing a project in the field of residential construction, it is possible to transfer the constructed apartments to private ownership. Previously, such projects did not provide for privatisation, but now a private partner can acquire ownership of newly built residential properties, and individuals designated by the public partner (for example, citizens who have lost their homes) can obtain ownership of them. Also, the concept of ‘ancillary property’ is introduced as part of a public-private partnership facility.
A general rule has been established: all property created or acquired for the implementation of the project belongs to the public partner – the state, community or state (municipal) enterprise. At the same time, a PPP agreement may provide for the allocation of part of the property that is not a direct component of the partnership object (e.g., offices, warehouses, parking lots necessary for the private partner) and recognise such property as the investor’s property.
This change opens up opportunities for bank financing of PPPs, as the private partner will be able to pledge the property that will be built and will belong to it on the basis of private ownership.
Given that the new law has removed the maximum term for PPPs, it is interesting to consider whether such an agreement could be concluded for thousands of years. The legislation does not directly prohibit this. For example, the longest lease agreement in the world belongs to Arthur Guinness, who in 1759 signed an agreement to lease the St. James’s Gate brewery in Dublin for 9,000 years. This contract marked the beginning of the famous Guinness beer brand.
If the project is below the threshold (expected value less than €5.5 million), the conclusion on its feasibility is made on the basis of a concept note, rather than an expensive feasibility study, within 45 days by the public partner independently and does not require approval by the Ministry of Finance or the Ministry of Economy if there is no funding from the state budget.
The preparation of a concept note or TEE required to initiate the PPP procedure may be paid for by the private partner or donor. The public partner may oblige the winner of the tender to compensate for the costs of such development. In addition, the PPP itself may be financed through grants, and the donor or international organisation may pay the private partner directly.
The law allows for the choice of law for contracts concluded for the performance of a PPP contract. The parties may also apply national or international commercial or investment arbitration, including abroad (if the private partner or its founder is a foreign-invested enterprise), to resolve disputes.
The law stipulates that the private partner will be selected exclusively through one of three competitive procedures:
- limited participation tenders;
- open tenders;
- competitive dialogue.
This means that even if a private partner is interested in a project, has conducted an economic analysis, or has found an international grant for it, they will still have to win one of three types of competitions. For many entrepreneurs, the time spent on this procedure may be unjustified. Many may believe that it is not worth getting involved with municipal or state assets due to the opacity, incomprehensibility, or future political risks of the project.
Despite the fact that, under the new law, unlike the previous one, private partners can no longer officially initiate projects, the government expects that the mechanism will finally work and bring in up to $1 billion in investments in the coming years.
It is not entirely clear why private initiative was excluded from the new law. Perhaps this will allow donors or international organisations to have more control over which projects to fund and which projects will be initiated by public partners. Private partners will have to initiate projects unofficially, and officials will decide whether to proceed.
Overall, the new law demonstrates the Ukrainian government’s desire to modernise the public-private partnership sector and opens up additional opportunities to attract long-term financing for national development projects, provided that a balance is struck between government strategies and the expectations of the business community.
