Euro-2012 once being a far future has already finished. The Cabinet estimates the total preparation expenses at more than $5 billion. The majority of economists agree that the championship has become a serious drive for the development of sport and transport infrastructure of Ukraine. Hence, the construction/reconstruction of only two main stadiums - in Kyiv and Lviv - cost about $750 million. The rest of the means were spent on infrastructure (airports, roads, railway stations, hotels). 1500 km of roads were constructed in 2011, and the plans for this year include the construction of another 2000 km. The mass construction has sustained the domestic demand for building supplies and metal, though not as much as expected.

The championship has gone and a number of experts wail that the unique drive for the country's development has gone with it. The Prime Minister Mykola Azarov, however, disagrees. According to him, the large infrastructure projects, started for Euro, will continue. The matter concerns the combined Podolsko-Voskresenski bridge crossing in Kyiv, new bridges in Zaporizhya, reconstruction of railroads, etc.    

In addition, investing in the infrastructure is a well-know anti-crisis method. Hence, in 2009 the EU countries, namely Germany, France, Italy, activated various construction processes (buildings, roads, ports). A political scientist and economist Vitaly Kulik reminds that mass investments in the development of national infrastructure enabled the United States to come out of the Great Depression of 1930ies.

Road development

ForUm's interlocutors believe that with proper approach the same effect can be reached in our country. According to economy analyst Ruslan Pavlenko, the state was the principle investor during the preparation works for Euro-2012. In Europe (the same as in US during the Depression), the governments are also the main initiators and organizers of large-scale projects. Only such large projects can support the economy and bring it out of the crisis.

What can it be in Ukraine? First of all, it is the construction and reconstruction of roads and bridges. We've already mentioned two large 'bridge' investment projects, realization of which has been lasting for many years. Apart from them, there is an old project of the bridge between Crimea and Kuban, 10 km in length and $600 mln in cost. It's obvious that the preparation works for such large-scale construction will take not one year and will require multimillion investments. As a result, this large project will load building companies in Crimea, as well as in all southern regions.

Another promising road project is the completion of the minor circular road around Kyiv with a new bridge across Dnipro. The head of the state agency on investments and national projects Vladislav Kaskiv says that this object is included into the national projects program, so the state share of financing should not exceed 5%. Besides, the new highway will become the first Ukrainian concession highway, which will attract investors to the road-transport market. 

It is also expected to continue the reconstruction of railroads (including the development of train rapid transit, separation of freight and passenger traffic), airports, water transport. The vice PM and minister for infrastructure Borys Kolesnikov confirms that more than $100 billion, including private investments, are expected to be attracted for the development of the infrastructure under the National transport strategy till 2020.

According to the estimations, the construction/reconstruction of roads require $55 bln, of railroads - $17 bln, air transport - $15 bln and sea and river transport - $13 bln. Ukraine expects the European Union to finance these projects and in return obliges to reach certain standards in the transportation sector (to improve safety, to carry out institutional reforms, to improve the traffic flow). "By 2021 it is quite possible for Ukraine to create the best transportation network in the Eastern Europe," the minister believes.

According to Azarov, the developed infrastructure is a magnet for investments. "If we want to get real growth of investments into the domestic markets, our highways, railroads, stations and airports must look European and be of European quality." At the same time, Kulik underlines that we need to find a proper approach. The state should not only finance the investment programs and involve private investors, but should also take systemic measures to improve the investment attractiveness of the country. Such measures include the deregulation of economy, improvement of legislative base and introduction of proper investor's rights protection. In this connection, Kaskiv recalls the progressive initiatives as "single investment window" and simplification of taxation system (namely the reduction of the income tax).

The state program on affordable housing is also among the key projects. The program provides for construction of up to 100 thousand m2 of housing annually for the next ten years. Unfortunately, at this stage the program faces usual problems as lack of financing and poor legislative base regarding the housing market. However, this program is an important project for the country and its economy. According to the first deputy head of the budget parliamentary committee Vladislav Lukianov, the investing of one billion hryvnias into the construction sector results into additional growth of domestic commodity production by two billion hryvnias. And if the affordable housing program is carried out in a proper way, Ukraine's economy will get about 100 billion hryvnias.

Olympic dreams

According to Kaskiv, the bid for holding winter Olympic Games-2022 may become some sort of a replacement of Euro-2012. The head of the state agency on investments admits that Ukraine will hardly win the bid, but the very participation will force the country to improve the standards up to the European level. The infrastructure, investment climate and business sector will continue developing, as in order to bid for Olympic Games the country should demonstrate its capacity first. First of all, Ukraine needs to have modern sport, transport and tourist infrastructure in the Carpathians, the region bidding for the Games.

In this respect we want to remind that the cost sheet of the Olympic Games in Sochi has already reached 1.4 trillion of rubles (about $47 bln). The means are mainly spent for infrastructure objects, including the basic Olympic complex and regional transportation network. "Russia is a huge country and even such large strategic project is of local importance, while for Ukraine the Games may bring even better benefits than Euro-2012. Even if the investments do not pay off, the successful staging will certainly improve the image of the country, which in its turn will bring more investments," Kulik says.

According to the State agency on investments, under the favourable development of events the preparation works for the Olympic Games will take up to 7 years and will require up to 11 billion hryvnias. "However, the very idea of bidding draws investors' attention to the Carpathian region. The initiative to hold the Games in Ukraine does not mean budget expenses. Having included the project in to the national projects program, we have an opportunity to develop tourism industry in the depressive Western regions. The interest in winter infrastructure growths among the European investors and our task is to prove to be worthy," Kaskiv says.

So, we have all the backgrounds for infrastructural improvement. If the government carries out the announced goals and tasks and applies a proper program of infrastructure development, Ukraine has a chance to overcome the crisis in several years. As a result, the country will end up with new modern transportation network and high-quality domestic market of industrial production.

Andriy Boyarunets


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