Ukraine passes new concessions law creating a modern framework for public-private partnerships

On 19 June 2025, the Ukrainian parliament, having considered the text of the draft law that was finalised on 11 June 2025, approved changes to the public-private partnership framework, updating legislation that governs public-private partnerships, concessions, and related issues.

This article outlines the principal features of the revised Law “On Concessions”, which replaces most of the former regulations and represents a fundamental shift in how concession projects are regulated and implemented in Ukraine. The new framework is designed to encourage private sector participation in public infrastructure development while ensuring transparency, legal certainty, and protection of public interests. Specifically, the new Law structures concession projects through clearly defined phases (i.e. planning, competitive selection, contract execution, and implementation) and creates provisions for various project types.

This following article describes the Law's key points.

Implementation and transitional arrangements for ongoing and previous projects

After being signed by the President of Ukraine, the law will be published, and most of its provisions will take effect three months after publication.

For concession projects initiated by the government before the new Law comes into force, but where no decision on the concession has yet been made, the preparation process should be finalised, and the decision should be taken under the old law (the law in force at the time the project started). However, the subsequent steps—such as tender announcements, selection of the concessionaire, and signing of the contract—must adhere to the procedures established by the new Law, if it is in effect at that time. In addition, if the deadline for submitting proposals has not yet expired as of the date the new Law comes into force, the Law requires that the draft concession agreements be amended to comply with the new requirements.

The Law includes transitional provisions allowing for amendments to concession agreements in force as of 24 February 2022 for assets located in the specialised seaports of Olvia or Kherson. These amendments may include temporary suspension of the concession period due to force majeure (from 24 February 2022, but not beyond 24 February 2027), temporary return of the object to the grantor, and exemption from concession payments during the suspension period.

Purpose and scope of the Law

The new Law on Concessions provides a comprehensive legal framework for the planning, awarding, and implementation of concession projects, serving as an instrument for modernising public infrastructure and delivering higher-quality services. The legislation is organised around a sequence of procedures, starting with the preparation of proposals, the submission and assessment of bids, and the eventual execution of a concession agreement. The Law also contains provisions relating to financial support for concessionaires, the distribution of operational risk, protections for investor rights, and the management of broader public interests.

The Law explicitly states that the preparation of a concession project must not be aimed at circumventing the law or providing undue advantages to potential concessionaires. It introduces a requirement that the preparation of concession projects should not be used to avoid the application of the law or to grant improper preferences.

The Law appends a list of international conventions in the fields of environmental, social, and labour law that are mandatory for concessionaires to comply with, including several International Labour Organisation conventions and the Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade.

Core objectives and project types

The Law’s objective is to ensure that infrastructure projects in Ukraine receive adequate investment and expertise from private entities through concession arrangements while safeguarding the public interest and state assets. It highlights both “classic” concessions (i.e. where concessionaires undertake full or partial financing and long-term operational responsibilities) and special categories (e.g. concessions for housing construction projects or smaller-scale initiatives with “below-threshold” value).

Concessions for housing projects

Concessions for housing construction projects have been specifically designed to address the need for residential development. These projects involve the concessionaire financing the construction of housing units, which may include apartments, houses, and other residential buildings. The Law stipulates that such projects can also encompass the development of social infrastructure, such as schools and hospitals, to support the residential community. The concessionaire is responsible for the construction and may also be involved in the management and maintenance of housing units. Importantly, the Law allows for the possibility of private ownership of the newly constructed housing, distinguishing these projects from other types of concessions where the public authority retains ownership of the infrastructure asset.

The Law introduces the concept of registering special property rights to divisible and indivisible objects of unfinished construction and future real estate objects for the concessionaire and/or beneficiaries as defined by the concession grantor, under the terms and procedures established by the concession agreement.

Simplified rules for small-scale projects

Smaller-scale projects with “below-threshold” value are defined as those having an expected cost of less than EUR 5.538 million. These projects are subject to simplified procedures compared to larger concession initiatives. The Law states that these smaller projects must be conducted through electronic auctions, ensuring transparency and competitiveness. The concessionaire for these projects is selected based on the best financial and technical proposal submitted. Unlike larger projects, there is no requirement for a detailed feasibility study or extensive pre-qualification process, making it easier for smaller entities to participate. These provisions are intended to encourage private investment in smaller-scale infrastructure improvements, fostering local development and innovation.

Exclusions and mandatory compliance

The scope of the Law excludes projects where concessionaires would operate without making any direct investment, projects promising full reimbursement from public funds without the private partner’s assumption of meaningful risk, or projects involving raw-material extraction and similarly restricted sectors. Where the concession model does apply, it must conform to the Law’s terms, mandatory procedures, and provisions that ensure a transparent and competitive selection process.

Risk allocation

In the Law, a concession is described as a public-private partnership arrangement in which the concessionaire finances, designs, constructs, or further develops an infrastructure asset (often referred to as the concession object) and typically acquires the right to manage and operate it or to render public services. Crucial to this arrangement is the transfer of operational risk from the public authority to the concessionaire. The concessionaire’s returns are based on revenues from users or from specified public contributions, depending on the project’s financial structure. The Law repeatedly emphasises that the bulk of the operating risk must pass to the concessionaire, and that the private investor must assume the bulk of the risk. There must be a genuine possibility that revenues might not fully cover costs of delivery, should demand or external factors shift unfavourably.

Exclusive rights

The Law allows for the granting of exclusive rights to concessionaires as part of concession agreements, provided these rights are necessary for the project, are clearly defined in the agreement, and do not contravene legal or competition requirements. Such rights are protected from arbitrary limitation by local or executive authorities, except for reasons of public safety, health, or environmental protection. The process is designed to be transparent and non-discriminatory, ensuring fair competition and legal certainty for concessionaires.

Project initiation and feasibility

At the outset, the Law details the preparatory process, centred on the drafting of a conceptual note or a thorough feasibility study, depending on the size and nature of the undertaking. This preparatory stage can be triggered by the public authority (i.e. the concession grantor). A private entity may not submit a proposal for the project. Preparation of a concession project as well as the review and analysis of the concept note and assessment of the effectiveness of implementing the PPP, shall be conducted in accordance with the procedures established by the Law of Ukraine "On Public-Private Partnership", subject to any specific provisions set out in the Concession Law.

Tendering and competitive selection

After the preliminary analysis is approved, the public authority issues a formal decision to proceed. The Law then compels it to organise a competition to select a concessionaire unless an exception has been established by law. The competition has been made to be as open and objective as possible: from announcing the project and publishing tender documentation, through the stages of receiving submissions, to evaluating and negotiating final proposals. Notably, the Law describes several competitive procedures – including “open” tenders in which participants submit bids simultaneously, “restricted” tenders that screen participant qualifications before obtaining detailed proposals, and a “competitive dialogue” process that requires ongoing discussions with bidders to determine the optimal configuration for more complex or innovative projects.

During these procedures, the Law also prescribes how the public authority must handle issues such as ensuring confidentiality of sensitive information, verifying the absence of any grounds for mandatory disqualification (e.g. bankruptcy, ties to blacklisted foreign jurisdictions, or serious misconduct) and objectively comparing each participant’s technical and financial offer.

The technical portion of a proposal generally includes engineering specifications, operational plans, risk-sharing models, and projected performance. The financial portion includes cost projections, proposed net value of concession payments, user tariffs (if applicable), and any other payments to be made by or to the public authority. Under some circumstances, electronic auctions are required, allowing bidders to improve the financial terms of their proposals in real time on an electronic platform.

Contract formation and mandatory terms

Following the selection of the winning bidder, the parties negotiate the final version of the concession contract. The Law sets out key mandatory terms for that contract. They include a detailed description of the concession object, the nature of the private party’s obligations (particularly the creation, refurbishment, maintenance, or operation of the infrastructure), the duration of the concession (which must be set by how long it will take to build, operate, and recoup a fair return), and the allocation of risks between the grantor and the concessionaire. It also addresses such issues as land allocations, the possibility of state subsidies or co-financing, duties regarding environmental impact assessments, and potential obligations to employ workers from an existing entity that formerly operated the concession asset.

Legal limits and public ownership safeguards

Notably, the Law establishes that concessions cannot be applied to projects that contravene direct legislative prohibitions (e.g. certain public assets cannot be transferred for private use, and concessions may not serve for the outright privatisation of property). The public authority remains the ultimate owner of the asset unless the concession arrangement envisions private ownership of newly built housing or auxiliary infrastructure in specific contexts. Where the state or municipal authority holds ongoing responsibilities (e.g. setting public tariffs or guaranteeing a minimum level of funding), the concession contract must include robust mechanisms ensuring that any modifications are balanced and do not improperly shift risk back onto the public sector. There is also explicit provision for direct agreements between lenders and the public authority, so that creditors funding a concession project may step in if the concessionaire fails to fulfil its obligations.

Transparency and electronic systems

The Law devotes attention to transparency, stating that almost all aspects of the tender process, from pre-qualification criteria to the content of final bids, must be handled using an electronic trading system (ETS) so that participants and observers can monitor developments. Additionally, the public authority is obliged to publish key documents such as the announcement of the competition, essential procedural steps, any clarifications or amendments, and the final concession contract. There are limited exceptions for confidential information that might pose threats to security or legitimate commercial secrets.

The transitional provisions of the Law establish a clear framework for the introduction and operation of the ETS in the context of concession projects. Specifically, the law stipulates that:

• Until the ETS is fully operational, but no later than 1 January 2027, concession tenders are to be conducted in accordance with the law, but without the use of the ETS.
• During this transitional period, all information that would otherwise be required to be published or made available in the ETS must instead be published on the web portal of the authorised body.

Sector regulation and tariff adjustments

Once the contract is underway, the concessionaire must comply with any sector-specific regulation, particularly if the project involves areas deemed natural monopolies, such as public utilities or transport networks, where the state regulates tariffs. In such scenarios, the Law offers a remedy for concessionaires if the regulator imposes rates below the level deemed economically reasonable by reference to the contract’s original risk and cost allocation. Concessionaires could be entitled to bring negotiations, pause certain project obligations until fair rates are restored, or pursue other compensatory adjustments – all to ensure that the investment climate remains appealing and that the project does not falter due to regulatory divergences.

Legal stability and investor protection

Embedded in this legal structure are multiple safeguards for concessionaires. The Law assures them of ongoing legal stability by stipulating that any legislative changes that worsen the concessionaire’s situation may trigger contract amendments, compensation, or other balancing measures, unless those legal changes concern matters of criminal liability or improved tax conditions. This “stability guarantee” also ensures that concessionaires are compensated for any losses caused by unjust official decisions and that they may pursue dispute resolution through negotiation, mediation, or arbitration, including international commercial or investment arbitration if certain conditions are met.

Contract termination and asset return

The Law addresses the conclusion of the concession. at the end of the contract term, the investor must return the object to the concession grantor in a condition that guarantees operability and conformance with contractual obligations. The text recognises the possibility of building new subsidiary assets or making improvements. Ownership of these secondary or auxiliary facilities can vest in the private party if permitted by the contract, while the core public asset normally remains in public ownership. The Law bars any permanent alienation of these public assets during the concession term. In certain cases, if the asset has been newly constructed under a “concession for housing,” there may be partial private ownership rights spelled out in the contract.

Hierarchical role of the Concessions Law

Finally, in order to tightly coordinate the requirements for multiple statutes in Ukraine, the Law on Concessions will serve as the primary enactment governing concession relationships. Other legislation will apply only if the Law specifically references this or if parallel requirements do not contradict the text. The overall thrust is to unify concessions under a single coherent legislative framework. It answers practical challenges, including how to handle direct negotiations with private initiators, how to structure public financial support, how to conduct fair and efficient competitive tendering, and how to implement or terminate the contract without undermining the public benefit.

Conclusion: a modern, expedited and risk-oriented framework

In conclusion, this Law establishes a detailed roadmap for concession projects in Ukraine, ranging from broader infrastructure like roads, bridges, and utilities, to specific tasks such as housing. It reflects Ukraine’s decision to leverage private investment and expertise for the public good through a structured, transparent, and risk-oriented approach. By enshrining competitive tender principles and robust contractual safeguards, it has been designed to attract both domestic and foreign investors while defending core public functions and ensuring the continuity of vital services. Through its provisions on due diligence, risk allocation, regulatory oversight, and contractual stability, the Law offers investors clarity and protection. Simultaneously, it seeks to ensure that concessions genuinely serve the national interest, that public assets remain under appropriate governance, and that citizens benefit from enhanced infrastructure without bearing excessive economic burdens.

For more information on new concession opportunities in Ukraine’s reconstruction programme, contact your CMS client partner or these CMS experts: Natalia Kushniruk.