July 2025 – During the last three years as a result of Russia’s ongoing aggression, Ukraine’s infrastructure has sustained extensive damage, representing a profound challenge to the country’s long-term development. Delays in reconstruction risk having severe social and economic repercussions not only for Ukraine but for the broader region over the coming decades.
Ukraine’s post-war recovery nonetheless represents a huge opportunity for private investors, bringing considerable stimulus and economic growth in its wake.
Which leads to a number of questions: What are the principal legal and regulatory challenges currently confronting Ukraine in its recovery efforts? Moreover, what concrete measures has the government implemented to capitalize on this opportunity and promote long-term national development and private sector engagement?
Challenges and needs
Key challenges surround the effects of the destruction of over 330,000 critical and social infrastructure facilities, along with a lack of funding and skilled professionals to ensure fast and high-quality project preparation and management.
According to a multilateral analysis by the World Bank, UN, EC and Ukrainian government, the cost of reconstruction and recovery in Ukraine is estimated at USD 524 billion over the next decade, with pressing financing needs of approximately USD 10 billion for 2025 alone, posing a significant burden on the national budget. The highest estimated needs are in housing (almost USD 84 billion), transport (almost USD 78 billion), energy and extractives (almost USD 68 billion), commerce and industry (over USD 64 billion), agriculture (over USD 55 billion), social protection and livelihoods (USD 39 billion), and explosive hazards management (almost USD 30 billion).
Surprisingly, out of UAH 7.7 billion allocated for 199 projects in 2024, only 10 projects had been completed by July 2024. Imperfect project selection, poor quality design and estimate documentation, and weak project management were named by the experts among the key reasons for such delays. Clearly, rebuilding and modernizing the country's infrastructure will require:
- reform of the institutional and regulatory framework to simplify procedures and to improve the quality of project preparation, financing and implementation;
- the involvement of private investments and donors.
Comprehensive reform of the PPP and concessions framework
In June 2025, the Ukrainian parliament carried out a significant overhaul of the country's PPP law, underscoring the government’s strategy of deeper collaboration with the private sector.
The new PPP framework establishes a specialized regime for recovery projects that will remain active during martial law and for seven years after its expiry. The scope of eligible projects has been significantly widened to include infrastructure vital to societal well-being, such as healthcare, transportation, energy, housing, education, and other social services. A notable development is the inclusion of the defence sector within the scope of PPPs. Private investment is now permitted in military-industrial projects, signalling the government's commitment to a broad, cross-sectoral recovery strategy that does not exclude traditionally state-controlled industries.
Several procedural changes have been introduced to streamline project approvals. For smaller projects, particularly those valued at or below EUR 5,538,000, detailed feasibility studies are no longer required. These projects can now proceed based on brief conceptual proposals, reducing preparation times and simplifying entry for investors. Larger infrastructure initiatives also benefit from an expedited process that eliminates many pre-war bureaucratic hurdles. This is expected to shorten tender timelines by several months, allowing for the quicker initiation of projects.
The updated PPP legislation significantly simplifies the preparation of PPP projects in the road construction sector by allowing private partners to build and operate roads on the basis of agreements on the assignment of employers/developers with the respective public partner without going through lengthy bureaucratic land allocation procedures and the conclusion of land lease agreements (which was previously required). The law also simplifies the legal structuring of PPP projects by establishing a PPP agreement as a single legal instrument to govern all relations under a project and excludes the necessity of using complicated mixed-type agreements or a bundle of agreements (as per the previous system).
The parliament also broadened the list of entities who can initiate and act as a PPP and concession grantor. Key national enterprises, such as national railway and energy transmission operators, now have the authority to develop and propose PPP projects independently. Additionally, the updated framework accommodates international financial contributions more flexibly, permitting grants and donor funds to be channelled directly to private-sector participants or through public administration.
Under the influence of the European Commission, the Ukrainian parliament excluded the possibility for the development and submission of unsolicited proposals by the private sector. This, alas, may negatively affect the speed of preparation of post-war recovery PPPs, as the public sector lacks qualified human resources to ensure the fast and qualitative preparation of a huge number of projects. Nevertheless, to deal with this issue the government is establishing a Project Preparation Facility managed by the Public-Private Partnership Agency of Ukraine. This facility is responsible for screening, selecting and preparing projects for joint implementation with the private sector.
The PPP law provisions include several protections aimed at making Ukraine’s infrastructure market more attractive to international investors. These protections address concerns over political and currency factors by offering safeguards such as a “grandfathering law,” the use of foreign currency and its withdrawal, private partner independence safeguards, prohibitions on cutting off payments to private partners during martial law, and compensation mechanisms linked to foreign currency to mitigate financial exposure. The government has further incentivized investment through streamlined competition approvals, exemptions from certain local taxes, and state-backed insurance against war-related risks.
Sources of financing beyond public budgets
Given the scale of Ukraine’s pending reconstruction efforts, the government has actively sought to mobilize financial resources that supplement national and local funding.
The updated PPP law now provides legal pathways for international grants and donor contributions to be used directly in PPP projects, fostering blended financing structures that combine public, private, and donor capital. Such measures should simplify the financing of projects and exclude the necessity of going through lengthy and complicated procedures involving the justification and approval of public assistance for PPPs.
We consider this as a very positive improvement, given the clear willingness of numerous international organizations, funds and IFIs to finance post-war recovery, which should not only help Ukraine, but also stimulate regional economies.
As an example, the European Commission has introduced the Ukraine Investment Framework (UIF), aiming to mobilize approx. EUR 40 billion in investments for recovery, reconstruction, and modernization. The UIF is equipped with financial instruments totalling 9.3 billion, including 7.8 billion in loan guarantees and 1.5 billion in blended finance. Additionally, the European Investment Bank has provided EUR 55 million in EU guarantee-backed funds under the Ukraine Recovery Programme to reconstruct critical social infrastructure, such as hospitals, educational facilities, and basic utilities.
The EU Ukraine Facility is one of the primary sources of external financing. This facility offers substantial support through grants, loan guarantees, and co-financing arrangements and is designed to mitigate investment risks and to encourage private sector participation in Ukraine’s recovery.
Complementing this, the EU for Ukraine Fund, managed by the European Investment Bank, aggregates financial contributions from multiple European countries to back infrastructure and development projects with additional guarantees and financial support.
Support from multilateral development banks remains a cornerstone of Ukraine’s recovery financing strategy. The World Bank has provided significant funding through emergency assistance, guarantees, and dedicated recovery trust funds. The European Bank for Reconstruction and Development has also committed substantial resources to Ukraine, with a strong focus on modernizing infrastructure and improving energy resilience.
Recent investments by the International Finance Corporation and the EBRD in Ukraine’s telecommunications sector illustrate a strategic approach by the banking sector to strengthening the country’s critical infrastructure as a foundation for broader economic recovery.
Various national financial institutions such as JICA (Japan), EDCF, KIND, KOICA (South Korea) are also allocating funds to finance post-war recovery projects in Ukraine.
Public finance management reform and digital governance
The Ukrainian government is implementing public finance management reforms aimed at establishing a "single project pipeline" for post-war recovery projects.
Among others, this initiative sets criteria to prioritize projects for procurement, whereby priority projects should be utilized based on traditional procurement methods financed by the state and municipal budgets, debt financing and donor grants. Less urgent projects are planned for implementation through private investments, including public-private partnerships (PPPs) and concessions.
Ukraine has prioritized the digitalization of recovery project governance to ensure transparency and accountability. The government has developed a digital ecosystem known as DREAM, which is publicly available and will accumulate information on all restoration projects in order to ensure transparent and efficient implementation at the national, regional, and local levels. The platform is presently being populated with information and incorporates over 11,000 specific projects valued at over USD 20 billion across 11 economic sectors.
Collectively, these measures aim to centralize information on post-war recovery projects, ensuring accessibility for potential investors.
Further integration is underway, with the government planning to merge the Unified Information System for Public Investment Projects (PIP) with DREAM. This integration aims to create a centralized database that consolidates all recovery-related investments, enabling more effective planning and monitoring.
Future perspectives
Ukraine’s vast size means that reconstruction efforts offer major opportunities in terms of infrastructure projects and access to a growing market in Eastern Europe. As the country rebuilds, this will lead to an increased demand for goods, services, and infrastructure, creating new avenues for business expansion. Financing Ukraine’s recovery and the participation of regional players in such projects will provide economic stimulus to both Ukraine itself and to the entire region.
Ukraine’s ongoing integration into European and Western institutions brings countless economic and commercial opportunities, including favourable trade agreements and access to broader European markets.
Many foreign investors, including construction contractors, are still hesitant to establish a presence in Ukraine due to ongoing security concerns. However, planning for post-war recovery projects is already well underway. To avoid missing out, companies are advised to begin preparations now, including: market studies; looking for local partners, suppliers and subcontractors; screening investment opportunities; dealing with licensing matters, feasibility studies and planning. Many companies are of course already implementing projects in Ukraine (e.g. suppliers of equipment and technology, design services, etc.) – and these stand to benefit from even stronger insurance mechanisms to mitigate risks. Agencies such as UK Export Finance (UKEF) and KUKE, DFC and others already offer war-risk insurance for investments in Ukraine, along with coverage against political and military risks.
Ukraine's reconstruction is expected to be a dynamic process, influenced by geopolitical developments and substantial international support. Nevertheless, such reconstruction will likely occur via at least some deficit public financing along with considerable competition among the various players. The role of public-private partnerships will dramatically increase, becoming one of the most effective mechanisms for private sector participation in the post-war recovery of Ukraine. The most pro-active and decisive investors capable of quick decision-making will be able to participate in implementing the largest projects and will get the “cream of the crop” of projects and gain priority access to this dynamic and developing market.
The European Bank for Reconstruction and Development (EBRD) forecasts that Ukraine's economy could experience growth of approximately 5% in 2026, provided a ceasefire is established by the end of 2025.
Accordingly, our key message to foreign infrastructure investors and contractors is as follows:
- Concentrate on Ukraine's prioritized sectors, such as transport, logistics and social infrastructure development, and energy sector modernization, to maximize impact and returns.
- Don’t postpone market studies and project preparation until the end of hostilities. Do as much preparatory work as possible now to enable fast decision-making once recovery projects start;
- Cooperate with national governments in your region and study the potential benefits of bilateral inter-governmental agreements;
- Collaborate with IFIs and overseas development organizations allocating funds for post-war recovery projects in Ukraine.
- Collaborate with international bodies; engage with institutions such as the European Commission's Ukraine Facility, which is designed to mobilize up to EUR 50 billion for Ukraine's recovery, reconstruction, and modernization efforts.
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By approaching Ukraine's reconstruction with strategic foresight and a collaborative mindset, investors can play a pivotal role in the nation's revival while potentially reaping substantial rewards.