Public-private partnerships (PPPs)—agreements between governments and the private sector to finance infrastructure or public services—haven’t taken off in Ukraine, at least not yet. From time to time you hear about a PPP conference or workshop, and USAID is funding a new initiative to promote them. There is a concessions law (from 1999) and a newer concessions law for roads (2008). But the overall business environment isn’t very good (152 out of 183 economies in Doing Business) and there are issues with corruption (also an unlucky 152 in Transparency International’s Corruption Perception Index).
But is there even a need for PPPs here? In recent years, infrastructure has been popping up all over Kyiv—a stadium here, an airport terminal there, and brand-new Metro stops, overpasses and bridges. All this seems to be happening without PPPs and yes, it has made life here noticeably easier.
The latest issue of Handshake, IFC’s quarterly journal on PPPs, helps to answer that question by exploring the role of PPPs in cities. It argues that urbanization and development are linked, and that the private sector has a critical role in making this happen. PPPs can do more than create new infrastructure or public services. They can be used to modernize and expand existing facilities, or to improve the efficiency and management of public services.
It’s true that Kyiv already has infrastructure, health and education systems in place. But much of it is old and inefficient, dating from Soviet days. A lot of the new infrastructure has been sourced without open, transparent competition, which has been criticized for cost overruns and in some cases, shoddy quality. The healthcare system is a mess, and educational institutions need to ramp up to meet the knowledge needs of a global economy. There’s a lot that could be done here to make Kyiv a more modern, efficient city, and PPPs should be a part of that.
I wondered, as I read, what I’d most like to see a PPP accomplish here. My vote would be to modernize the heating system, which operates the same way now as it did when the Soviet Union collapsed. Heat is produced centrally—along with hot water—and piped to overheated buildings. I’ve never seen a thermostat here. People regulate indoor temperature by opening the windows. We have heat meters, but they don’t seem to be used to calculate our bill. The waste is just incredible—just think how many tons of greenhouse gases are being pumped into the atmosphere needlessly.
But that’s just one issue. If you live in Kyiv or any city in the former Soviet Union, I’d like to hear how you think PPPs could make a difference where you live.
Further reading: Handshake: Cities and PPPs