Supporting two major goals of the government of Ukraine – improving the national road infrastructure and fighting corruption – the European Bank for Reconstruction and Development (EBRD) is providing a €450 million loan to the state road agency Ukravtodor.
The funds will be used to finance the rehabilitation of sections of the M05 Kyiv-Odessa road and the construction of a new northern bypass around the city of Lviv. Both are part of the Trans-European Transport Network (TEN-T) and of strategic importance for Ukraine’s domestic and international connectivity, in particular with the European Union.
Under the project, the government of Ukraine is committing to enhance Ukravtodor’s procurement system and to strengthen its internal controls, policies and procedures to prevent bribery and corruption. This is the pilot programme under the Memorandum of Understanding signed in October 2020 between the government of Ukraine and the EBRD to strengthen corporate governance in the state sector and to implement robust anti-corruption and procurement controls in state-owned enterprises.
Ukravtodor initiated the anti-corruption programme with the EBRD earlier this year, as the total length of rehabilitated roads saw record levels.
Denys Shmyhal, Prime Minister of Ukraine, commented: “The European Bank for Reconstruction and Development consistently supports investment projects in Ukraine and the government is grateful for this partnership. We are interested in infrastructure development not only because it makes people’s lives more comfortable, but it also creates a multiplying effect for economic growth."
Oleksandr Kubrakov, the head of state road agency Ukravtodor, said: “This project is the largest in the 10 years of cooperation between Ukravtodor and the EBRD. Projects with international financial organisations are of great importance, not only because of the direct impact on the economy, but also for the development of the road sector.
“We are grateful to our partners for their trust and as a result of the project we expect to receive not only rehabilitated and newly built highways, but also sustainable solutions to minimise corruption risks.”
Matteo Patrone, EBRD Managing Director for Eastern European and the Caucasus, added: “I welcome Ukraine’s continuous investment in transportation. The need to upgrade aging roads and build new ones provides an opportunity to invest in resilient, safe infrastructure that will have a direct impact on people’s lives. A better road network will also become an engine of growth and will support the private sector’s post-pandemic recovery.
“This cooperation to strengthen anti-corruption measures in the road sector will serve as a pilot – and a litmus test – for a broader anti-corruption and good-governance programme backed by the EBRD and target all Ukrainian state-owned enterprises and public sector entities.”
The EBRD financing for Ukravtodor will consist of three tranches. Tranches I and III totalling €290 million will support the rehabilitation of 275 km of the M05 Kyiv-Odessa road, connecting the capital and the Black Sea ports. The highway is part of TEN-T Corridor IX, a critical road link connecting northern and southern Europe.
Meanwhile, the €160 million Tranche II will finance the construction of a 24 km northern section of the circular bypass around Lviv, the largest city in western Ukraine. The city has four international highways passing through it, two of which are part of TEN-T Corridors III (Brussels-Kyiv) and V (Venice-Kyiv).
Citizens of Lviv will benefit from reduced travel time and an improved environmental situation in the city as the new bypass will help relieve long-distance transit traffic running on the existing southern bypass and through the city centre.
In addition, EBRD funds will finance strategic road safety assessments across the national road network to identify and prioritise high-risk sections and implement relevant mitigation measures. Funds will also be used to introduce systems to manage the impact of overweight vehicles.
The EBRD is the largest institutional investor in Ukraine. To date, the Bank has made a cumulative commitment of almost €14.5 billion through 486 projects in the country. It is currently fully dedicated to helping the economies where it invests overcome the impact of the coronavirus outbreak.