By Teona Gelashvili
As reconstruction efforts accelerate, Avellum Managing Partner Mykola Stetsenko, Imagine Lawyers Partner Illya Sverdlov, Redcliffe Partners Partner Albert Sych, and LCF Law Group Partner Ivan Bondarchuk outline how financing models, PPP legislation, and investor sentiment are evolving.
A More Structured Landscape
Looking at Ukraine’s reconstruction market, “the overall landscape is becoming more structured, and the pace tends to improve where projects are communicated transparently;” Stetsenko notes. “A key 2025 development in this respect is the start of operation of DREAM’s State Single Project Pipeline (SPP) – a consolidated pipeline of priority public investment projects and programs, The SPP is constantly updated and expanded and can be accessed easily via the DREAM platform in both Ukrainian and English languages, thus making information about the current reconstruction projects available to the widest possible audience.”
Yet Stetsenko highlights a sharp contrast between needs and available funding. “Currently, there are nearly 8,500 active reconstruction projects with an estimated total budget of EUR 32.7 billion, while available secured financing covers only 10% of that,” he notes. “Funding is still driven primarily by state and local budgets, with a very material contribution from international partners (including foreign governments, donor funds, and international organizations). Ultimately, the pipeline of projects continues to exceed available financing, so mobilization of additional donor instruments and private capital remains a defining obstacle as the market moves forward.”
“If I had to describe the reconstruction landscape in Ukraine today, I’d put it this way: the emergency chaos is behind us, and a more coordinated, structured system is finally taking shape,” Sverdlov explains. “Major donors – the EU through the Ukraine Facility, G7 partners, and IFIs – are now aligned through the Multi-Agency Donor Platform, and public projects are increasingly channeled through DREAM and the Single Project Pipeline. It’s not flawless, but it’s a far cry from the fragmented approach of the early war years.”
This shift can be a part of a broader market transition, according to Bondarchuk. “The current landscape of reconstruction in Ukraine is defined by a transition from emergency response to structured, investment-driven development,” he notes. “Early rapid-repair efforts are giving way to scalable, bankable projects supported by medium- and long-term financing instruments.”
Where the Action Is
Several sectors consistently emerge as the most active and promising, Stetsenko sces activity “most visible in housing, energy, and transport/logistics – the sectors that combine the greatest scale of damage with immediate social urgency and, in the case of energy, a heightened priority in light of ongoing electricity supply constraints, especially during winter peaks.” He emphasizes investor momentum in energy: “we are seeing renewed momentum in renewables, alongside growing demand for fast-deployable, flexible capacity.” Distributed generation, especially “rooftop and ground-mounted solar and smaller-scale gas-fired units, remains particularly attractive because it can be delivered quickly, is modular, and directly addresses local supply deficits and grid constraints.”
Sverdlov describes a similat pattern, saying that “the busiest areas right now are those linked directly to people’s daily needs.” He notes a concrete example: “a very visible trend is the rollout of BESS. These projects are no longer just concepts; they’re being implemented as part of grid-resilience and network optimization efforts.” He also highlights that “a particularly interesting development on the private capital side is the Rebuild Ukraine Fund managed by Dragon Capital. The EBRD and IFC have jointly anchored it with USD 50 million, giving the fund a strong first close and sending a clear market signal that Ukraine is investable. The fund aims to deploy around USD 250 million into Ukrainian SMEs and mid-caps – companies in sectors like consumer services, healthcare, construction ma-terials, finance, and agri-business.”
Sych also sees strong activity in energy, transport, housing, and social infrastructure. In particular, “both national security and investor interest create appetite for energy projects,” he says. “Donors and private energy groups are already investing in grid-scale battery energy storage systems to stabilize supply and integrate renewables.” Bondarchuk identifies similar strategic priorities, adding that on top of energy, “transport and logistics are the next most active segment, especially ports, multimodal hubs, and rail corridors linked to the EU’s ‘Solidarity Lanes.’ War-driven shifts in trade routes have made logistics a strategic priority, attracting interest in port concessions, inland container terminals, rail-fleet modernization, and export-driven infrastructure. Several landmark projects are expected, such as the concession of Chornomorsk Sea Port and the first toll-road concession for the Kovel-Yahodyn highway.”
Rewiring the PPP System
Ukraine’s revamped PPP framework is beginning to shape how large projects are structured and financed. Stetsenko explains that the recent reform “signals that there is an explicit policy objective of making PPP a more practical, repeatable tool for recovery rather than a complex multi-year exercise.” The reform also “explicitly allows donors’ participation in the PPP financing” He remains cautious, however, saying that “it is still early to conclude whether the reform will translate into a material volume of closed PPP transactions.”
Sych views the legislative upgrade as a major enabler. “The recent overhaul of PPP and concessions legislation introduces a more fexible, investor-friendly toolkit,” including hybrid fi-nancing, a fast-track PPP format, and streamlined procedures for smaller projects. “The 2025 Agreement between the Government of the United States of America and the Government of Ukraine on the Establishment of a United States-Ukraine Reconstruction Investment Fund of Ukraine, and related agreements (the so-called Minerals Deal, as dubbed in the media), bridges the production of critical minerals, hydrocar-bons, and other natural resources with the related infrastruc-ture,” he notes. “Notably, the Reconstruction Investment Fund agreements do not introduce any new PPP mechanisms, but rather accommodate making good use of Ukraine’s newly streamlined concession and PPP legislation.”
“Ukraine’s updated PPP framework is starting to change how large projects are prepared,” Sverdlov notes, adding that “pub-lic authorities are now far more focused on bankability: proper feasibility studies, realistic risk allocation, and early outreach to lenders and IFIs. The new legislation also simplifies things by narrowing tools to concession and PPP contracts, which makes structuring cleaner. We’re seeing more attention to matters like dispute resolution and sovereign immunity waivers – details that used to be an afterthought but now often determine whether a project gets financed.”
Bondarchuk echoes the importance of PPPs. “These tools are increasingly discussed for highways, municipal energy systems, industrial parks, and waste infrastructure,” he notes. “Interna-tional partners encourage both municipal and central authorities to apply PPP standards even outside formal concession procedures. The new PPP law adopted in June 2025 supports this shift by enhancing transparency and simplifying proceedings for smaller projects under EUR 5.5 million.”
Cautious, But Moving Forward
Investor attitude toward Ukraine is shifting from hesitation to structured, risk-managed engagement. As Stetsenko notes, “a key positive shift in 2025 is that war risk is no longer an automatic deal-breaker. Instead, it is increasingly treated as a factor that can be allocated and mitigated – provided the project is well structured, governance and execution risks are managed, and the revenue profile and exit pathways are sufficiently pre-dictable.”
At the same time, several uncertainties still shape how investors assess new opportunities. According to Sverdlov, “the market still has legitimate questions: What are the realistic security scenarios? How much can local authorities absorb without overload? Will regulation, especially in energy and con-struction, stay predictable over a 15- to 25-year PPP horizon? And will donor coordination remain centralized or drift into parallel programs?”
Still, “even with these uncertainties, the direction is clear: reconstruction is no longer theoretical. It’s a real, evolving market – and for those willing to engage with the practical realities and take the risk, it offers genuinely meaningful opportuni-ties,” Sverdlov concludes.
This article was originally published in Issue 12.11 of the CEE Legal Matters Magazine.