Ukraine struggles to fund road construction and renovation- focuses on maintaining old roads

Evgeny Prusenko, the head of the Ukrainian motorways agency Ukravtodorsaid at a press conference on 20 May that the organisationwill not take on any new large scale projects due to its difficult financial situation. According to Mr Prusenko the organisation's annually growing debt burden means that it has to focus on maintaining the existing road network. He accepted that these measures were unpopular, but stressed that they were necessary or the integrity of the entire road network might be at risk. According to Mr Prusenko in future major road construction projects could be financed by public-private partnerships or inexpensive credit provided by international institutions such as the European Bank for Reconstruction and Development and the World Bank.

Vadim Slobodanyuk, an expert at the centre of political and economic analysis who participated at the press conference, stressed that the existing road network was in a “critical” situation. Ukravtodor needed to focus on maintenance and repair of existing roads, according to Mr Slobodanyuk. He noted that there was chronic underfunding of the maintenance and construction of roads. This year the situation was particularly difficult, he said, due to the harsh winter damaging road surfaces. Potholes affected 4.6 million m2 in 2013, which was approximately twice the area affected by the milder winter of 2012.

According to Ukravtodor, 97% of Ukrainian roads (out of the total 169,000 km) require overhaul and repair. They noted that Ukraine occupies 37 place from among 40 European countries by the ratio of the length of its roads (in km) to the country's surface area. The agency will require between $40bn to 50bn (€31-39bn) annually by 2018 to sustain a programme of road development but only $7.6bn (€5.9bn) is available in 2013. A further $3.2bn (€2.5bn) will be spent on road maintenance. These two combined figures barely cover the interest payments of UAH 8.4bn (€786m) on funds loaned to the agency. Mr Slobodanyuk noted that the agency would not increase its debt burden but look for other income sources. Mr Prusenko suggested that an increase in road tax was necessary but this was unlikely to happen in the immediate future.