“Government concessions – broken windows instead of a house construction project” – Roman Semenukha

The ruling coalition together with the ex-representatives of the Party of Regions adopted in the first reading a draft law “On concessions”.

“It is true that being a form of a public-private partnership concessions are an effective tool for attracting foreign investment and managing state property,” says MP Roman Semenukha. “In Europe, it was by means of concessions that such projects as the Channel Tunnel, the Eiffel Tower, national highways in the EU countries were implemented. But there are also other, disastrous examples. And for some reason, the government does not talk about these examples. Moreover, the deputies have not yet explained why in 20 years Ukraine has not been successful in implementing concessionary projects.”

There are valid doubts about whether this bill will make concession effective. “The government suggests choosing a concessionaire by holding a concession tender or by direct negotiations,” says Roman Semenukha. “So, we are offered an out-of-competition concession, that is a crony one? Only residents or associations of enterprises that are residents of Ukraine are proposed to be considered concessionaries. This significantly limits competition, inhibits the flow of foreign investment.

The bill provides for a list of the terms of a concession contract for the provision of state support. But direct government funding and shifting investment risks to the state contradicts the very essence of concession, which should attract private funds to infrastructure development, rather than state ones.

In accordance with the regulations of the draft law, the concessionaire has the right to lease state property out. That is, the concessionaire will not only benefit from leasing (unlike the state) but will also have the opportunity to alienate this property? In addition, extra payments will be made on the part of the state in the event of a decrease in the concessionaire’s income. The state will have a pool of concessionaires on a permanent basis that have no incentive to develop their objects.”

If the government transfers 359 objects of state property (roads, airports, forestry) to concession under these conditions, there are doubts not only whether they will work qualitatively, but also whether they will exist at all.

“Instead of showing the project of a new house, we are offered to just knock out the windows in the old one,” concludes Roman Semenukha. “This is what is happening with concessions today. Ukraine needs a comprehensive law on the policy and strategy for managing state property, instead of shortsighted and low-quality solutions.”

Roman Semenuha
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