Infrastructure in Ukraine Slowly Becoming Modernized

Ukraine has a history of attempts toward developing its infrastructure that have failed thus far. Infrastructure in Ukraine has great potential, but its development has been delayed for multiple reasons, including mismanagement during Soviet rule and periods of economic instability.

The local energy sector, in particular, is in a poor state. Earlier this year, radical politicians blockaded coal from the unrecognized People’s Republic of Donetsk region of Donbass from delivery to the rest of the country, exacerbating the issue of underdeveloped infrastructure in Ukraine. This threw the country into turmoil, as Ukraine does not have enough resources to serve its power plants without the coal, leading to a downward economic spiral and state of emergency.

Currently, Ukraine is working on modernizing its infrastructure with a focus on making it more energy-efficient. Konstantin Grigorishin, owner of Energy Standard Group and vast assets in the energy sector of Ukraine, stated in an interview with RealClearEnergy, “We should not reconstruct the old infrastructure but introduce complete modernization of the Ukrainian energy system in line with the latest industry trends.”

The World Bank ranks infrastructure in Ukraine at 80 out of 160 countries in its annual Logistics Performance Index. This is mediocre at best, and its transportation systems are out of date with respect to speed, safety, and efficiency. To remedy this issue, Ukraine came out with a plan, Ukraine’s Transport Strategy 2030, that focuses an updating all its internal transportation systems until it is on par with the rest of Europe.

Ukraine is strategically located between the E.U., Russia and the Black Sea, forming a critical point for maritime trade. Its position, and the Dnipro River linking its coast to the interior of the country, makes it uniquely capable of both international and regional trade. The only thing required to make this trade plan possible is a viable route along the Black Sea and the Dnipro River, and this is where issues arise.

Infrastructure in Ukraine requires an investment of at least $2 billion from private investors for maritime trade to be a viable option. To increase investments, the Ministry of Infrastructure intends to establish private-public partnerships (PPPs) with businesses. The Ministry signed a Memorandum of Understanding with the International Finance Corporation (IFC) on November 14, 2017, declaring their intention of mobilizing infrastructure development through PPPs.

The Minister of Infrastructure, Volodymyr Omelyan, has stressed the importance of these partnerships, stating, “Ukraine’s infrastructure needs are enormous. We need to crowd-in private investment to modernize the country’s infrastructure and upgrade it. IFC’s support and technical expertise will help ensure we are implementing the best possible solutions efficiently and transparently.”

Ukraine’s economy is relying on the success of these investments and the jobs they will create. With continued cooperation between the government and the PPPs, the country will steadily overcome its obstacles to infrastructure development.

– Kayla Rafkin

Photo: Flickr