Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Selling to the Government
Many governments finance public works projects through borrowing from the Multilateral Development Banks. Please refer to “Project Financing” Section in “Trade and Project Financing” for more information.
National law regulates the public procurement of goods, works, and services. According to Ukrainian law, public tenders must be held for the procurement of goods, works, and services if the cost of goods is equal to or greater than UAH 100,000 (roughly $4,500) and if the cost of works is equal to or greater than UAH 1,000,000 (roughly $45,000). The government must publish the announcement of the tender and its results. Open international tenders must be used when procurements are financed by foreign entities. Government procurement is also governed by international treaties to which Ukraine is a party, including Chapter 8 of Title IV of the Association Agreement with the EU, as well as the WTO Government Procurement Agreement.
Starting on August 1, 2016, all government agencies in Ukraine began using an e-procurement system, the PROZORRO portal. Ukraine’s implementation of the e-procurement system will create significant opportunities for American companies to participate Ukrainian government tenders. American suppliers interested in current public procurement opportunities in Ukraine may register for notifications at the Ukrainian Public Procurements Official National Web Portal and at the open source government e-procurement system PROZORRO.
The Anti-Monopoly Committee of Ukraine has the power to review disputes arising from public procurements related to procurement procedures through its Complaint Board.
Courts may also hear government procurement-related cases. Cases must be filed on tight timelines, within 10 days of alleged violations. U.S. companies may also file a complaint with Ukraine’s Business Ombudsman Council. The post of Business Ombudsman is an essential element in Ukraine’s fight against corruption and is supported by the EBRD, the OECD, and multiple business associations, including the American Chamber of Commerce in Ukraine. The Business Ombudsman’s regulatory status allows the ombudsman or his/her representatives in the field to report claims of unfair treatment and corruption. The Business Ombudsman Council assesses the claims. Where it concludes that the alleged business malpractice may have occurred, it can request further investigation by the relevant bodies and seek to have these complaints addressed by governmental authorities. The ombudsman periodically reports to the public, including the business community, about the progress made in the fight against corruption.
In addition to direct government tenders, Ukraine currently receives international assistance from multiple multilateral development banks for major infrastructure development projects. These projects create significant export opportunities for U.S. companies. Tender announcements for these projects are on the websites of the World Bank, the European Bank for Reconstruction and Development (EBRD); the International Finance Corporation (IFC), and the United Nations Development Program (UNDP).
U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.”
Financing of Projects
In January 2019, the Export-Import Bank of the United States of America (Exim Bank) reopened its short- and medium-term programs for public and private sectors in Ukraine after a four year suspension due to the uncertainty of repayment caused by Ukraine’s then economic crisis and the Russian-backed conflict in eastern Ukraine. The coverage term is from one to seven years. Where support is not available (over a total term of 7 years), Exim Bank can still consider financing arrangements that eliminate or externalize country risks.
Exim’s Cover Policy for Ukraine
Maximum total term is seven years. Total term includes both the drawdown and repayment periods. Typically limited to transactions which commit the full faith and credit of the government via the Ministry of Finance.
Maximum total term is seven years. Total term includes both the drawdown and repayment periods. Typically limited to transactions with a commercial bank as obligator or guarantor.
U.S. International Development Finance Corporation (DFC) has officially opened its doors in Ukraine, ushering in a new era of U.S. development finance and foreign policy. As America’s development bank, DFC will help businesses expand into emerging markets, foster growth, and improve lives in the developing world, while reinforcing U.S. foreign policy and national security interests. DFC combines and modernizes the existing development finance functions of the U.S. Government – namely the U.S. International Development Finance Corporation (DFC) and USAID’s Development Credit Authority (DCA).
U.S. International Development Finance Corporation (DFC) is America’s development bank. DFC partners with the private sector to finance solutions to the most critical challenges facing the developing world today. DFC invests across sectors including energy, healthcare, critical infrastructure, and technology projects. DFC also provides financing for small businesses and women entrepreneurs in order to create jobs in emerging markets. DFC investments adhere to high standards and respect the environment, human rights, and worker rights.
In addition to DFC and DCA’s previous capabilities, DFC is equipped with new resources and tools to multiply its impact. Enhancements include an investment cap of $60 billion—more than double DFC’s $29 billion limit—and new financial tools such as equity investments, technical assistance, and feasibility studies to more proactively address development needs.
DFC advances a private sector-led model that supports development by providing businesses with financing, insurance, and other financial tools when they are unavailable or insufficient from commercial sources. These development finance tools can mobilize significant private capital into the developing world, where government resources alone are not enough to meet pressing needs and challenges.
Multilateral Development Banks
The European Bank for Reconstruction and Development (EBRD) is the single largest foreign investor in Ukraine with debt and equity investments in the financial sector for small and medium sized businesses, food production and processing enterprises, municipal and state infrastructure and transport, agricultural machinery, and electric and nuclear power generation. It is important to note that the U.S. is the single largest investor in the EBRD. The cumulative EBRD investment in Ukraine amounts to $17.6 billion and its current investment portfolio is around $4.8 million (https://www.ebrd.com/ukraine.html). As of July 1, 2021, about eight EBRD projects totaling about 2 million U.S. dollars were in the process of implementation in Ukraine. In 2021, EBRD plans to allocate $2.1 billion and has already released $1 billion, mostly to support the development of SMEs (https://mof.gov.ua/en/ebrr)
The World Bank provides loans and grants in the central government, agriculture, energy, trade and services, banking institutions, public administration, environmental protection, healthcare, as well as private sector development. Since Ukraine joined the World Bank in 1992, Bank commitments to the country have totaled $13 billion in 70 projects and programs. Since May 2014, the World Bank Group has provided a total of more than $5 billion to Ukraine (including four development policy loans, seven investment operations and one guarantee) from the International Bank for Reconstruction and Development. The World Bank’s current investment project portfolio in Ukraine amounts to about $3.3 billion in 11 ongoing investment projects and one Program for Results operation.
Since 2004, the International Finance Corporation (IFC) has invested in 86 projects worth $3.2 billion implemented in Ukraine. Through a combination of investment and advisory services, IFC continues to partner with clients in strategic sectors crucial for Ukraine’s sustainable development, and with a focus on agribusiness, infrastructure, and energy efficiency. IFC’s strategy for fiscal years 2017-2021 in Ukraine is designed to create favorable conditions for attracting investments in the energy sector, to support municipal projects aimed, first of all, at enhancing energy efficiency, in establishing partnership relations with state-owned enterprises for the purpose of reconstruction of the transport infrastructure - roads and ports in cooperation with farmers in the context of increasing their operational efficiency, introducing the latest technologies and standards, and thus opening up access to new markets.
- U.S. Export Import Bank
- World Bank