Only six out of 15 projects being implemented in Ukraine with loans or grants from IFIs successful - survey

MOSCOW. Aug 31 (Interfax) - Out of 15 major projects which are being implemented in Ukraine with loans or grants from international financial institutions (IFIs) two have failed, seven have been implemented with delays and only six are successful, Ukrainian media reported citing a survey on absorptive capacity of Ukrainian cities undertaken by the Center for Economic Strategy.

The absorptive capacity, or the ability of cities to draw and efficiently use funds, is an important aspect when discussing the use of foreign assistance and foreign loans.

In total, of the 15 projects analyzed by the Center for Economic Strategy with the implementation period from 2000 to 2021, six are successful and implemented on time, seven were implemented with significant delays, and two were recognized as failed.

The failed projects are the Lvov water supply and sewerage project (2003-2008, the targets for each of the indicators and parameters were not met) and the delayed project to extend the high-speed streetcar line from Borschagovka to the Palace of Sports in Kiev.

The Kiev-Chop highway repair is an example of a successful project. This project was implemented with the European Bank for Reconstruction and Development (EBRD) funding and aimed to bring the M-06 Kiev-Chop highway to the European standards of transportation and operational condition. The number of road accidents dropped by more than 90%, and the consumption of motor fuel and harmful emissions into the atmosphere fell by 10%-20%.

The cases on improvement of urban public transport in a number of Ukrainian cities have been recognized as relatively successful. The agreement with the European Investment Bank was ratified in April 2017, and the procurement and tender offers for subprojects started in 2019. During 2020-2021, contracts were signed for the delivery of new 97 trolleybuses and 30 streetcar cars, of which nine streetcars were delivered to Kiev and 29 trolleybuses to Lutsk as of the end of 2021. Now there are no updates on the project, so there is a high probability of postponing its implementation.

Almost half (47%) of the projects under implementation are inefficiently absorbing loan and grant funds from the IFIs. The survey revealed that most of the ongoing projects are suspended due to the crisis.

However, the systemic problems are not related to it: these are constant delays in tenders, drawing up and approval of necessary documentation and the signing of contracts, and so on. For example, the Chernovtsy municipal water management project, stage 1, which has been funded with Germany's development bank KfW assistance since March 2016 and was supposed to be completed in 2021, is still under implementation. With a total budget of 23.5 million euros, about 538,600 euros of the 17 million euro loan available until the end of 2024 has been used so far.

One of the main problems in the project implementation are breaches in the feasibility study and the delay in its implementation due to constant changes in the procedure for drafting project documentation for the construction of the facility. Most of the subprojects received a positive conclusion from the Ukrgosstroyexpertiza state-owned enterprise with a large delay at the end of 2021, and it became impossible to conclude contracts for them and make interim payments due to the crisis. At the same time, the Chernovtsyvodokanal utility had a problem with customs clearance of special equipment due to changes in the rules of customs clearance of goods of critical import and the equipment is still at the temporary storage facility since July 9, 2022 to date. Therefore, it became impossible to achieve certain targets in 2022.