After the full-scale invasion of Ukraine and the resulting large-scale destruction, hundreds of social and infrastructure facilities were either completely destroyed or damaged, requiring restoration and reconstruction. This will demand significant investment, and government funds alone will not suffice. Therefore, attracting private capital is essential. The most effective mechanism for doing so is the public-private partnership (PPP), which Ukraine now identifies as one of its key legal tools for post-war recovery.
Although PPP mechanisms were already established under Ukrainian law, of the 193 signed agreements, only 18 were implemented, 13 were suspended due to the Russian aggression, and 162 were never executed. This low success rate resulted from the complexity and lengthy preparation period for PPP projects, which often took 18 to 24 months. Considering this, reforming the PPP framework became a priority after the invasion – to make it more attractive to private investors and capable of delivering fast, effective reconstruction of war-damaged and new facilities. The shortcomings of the previous system were analyzed, international experience reviewed, and both domestic and foreign experts and businesses engaged. The outcome was the Law of Ukraine “On Public-Private Partnership” (Law), adopted by the Parliament on June 19, 2025, and entering into force on October 31, 2025, with some provisions effective later.
The Law introduces new terminology, replacing “state-private partnership” with “public-private partnership,” and defines the state partner as a public partner. This change expands participation beyond central government agencies to include local authorities, state and municipal enterprises, and other public-sector entities. State-owned companies such as Ukrposhta JSC, Ukrzaliznytsia JSC, and Ukrenergo JSC will now be able to directly attract private investments to rebuild and develop their infrastructure.
The Law eliminates property management and joint activity agreements as PPP forms. From now on, PPPs will be implemented under two types of contracts – a PPP agreement and a concession agreement. These will be governed respectively by the Law on Public-Private Partnership and the Law on Concessions, which have been synchronized to ensure a consistent and transparent legal framework for cooperation between the state and business.
The Law significantly broadens the areas where PPPs can be applied. These include the reconstruction of destroyed infrastructure such as roads, bridges, airports, railways, energy facilities, logistics centers, and utilities (water supply, heating, and sewage systems), as well as social infrastructure (hospitals, schools, kindergartens), housing, and digital infrastructure. Thus, it opens the door for private partners to participate in nearly all key sectors of the economy and social sphere, at both national and local levels.
To accelerate project preparation, the Law introduces a simplified procedure for PPP projects valued below EUR 5.538 million. These smaller projects will no longer require a full feasibility study; instead, decisions will be based on concept notes within half the usual approval time.
During martial law and for seven years after it ends, this simplified procedure will also apply to all PPP projects aimed at restoring infrastructure or the economy, regardless of their cost. To qualify, a project must be included in either the List of National PPP Projects for Infrastructure and Economic Recovery or the List of Local PPP Projects for Infrastructure and Economic Recovery, following a procedure established by the Ukrainian government. These lists will prioritize projects needed to rebuild facilities destroyed or damaged by the aggressor or those essential for meeting needs in healthcare, energy, transport, and social infrastructure, as well as projects supporting Ukraine’s integration with the EU’s transport and energy sectors.
Financing for PPP projects will come not only from public budgets but also from the funds of state and municipal enterprises, public-sector companies, and grants provided by international donors – including financial institutions, agencies, foundations, and organizations. Donor funding can be channeled either through the budget or directly to the private partner as a grant, loan, technical assistance, or co-financing arrangement with the public and private partners. The Law also gives the parties the freedom to choose the governing law for their PPP financing agreements.
In summary, the PPP reform introduced by this Law creates a modern, flexible framework designed to attract private investment into Ukraine’s recovery and development. It enables faster project implementation, expands opportunities across key sectors, and provides transparent, investor-friendly conditions. Beyond accelerating the reconstruction of transport, energy, logistics, housing, and social infrastructure, the new PPP system establishes an effective model for cooperation between the public and private sectors – one that will drive Ukraine’s long-term economic renewal and integration with European markets.
By Serhiy Piontkovsky, Partner, and Nataliya Tyschenko, Senior Associate, Baker McKenzie Ukraine
This article was originally published in Issue 12.10 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
