Legal Report : Construction and Operation of Kyiv City Ring Road
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Legal Report Construction and Operation of Kyiv City Ring Road from Stolychne shose Str. to M-03 Kyiv – Kharkiv – Dovzhanskyi motor road in the Kyiv–Boryspil section on the terms of public-private partnership and concession August 12, 2014 This research was made possible with the generous support of the American people through the United States Agency for International Development (USAID) The Author’s views expressed in this publication do not necessarily reflect the views of the USAID or the United States Government Public Private Partnership Development Program - P3DP 42- 44 Shovkovychna Street, Office 11-D Kyiv 01601 Ukraine Telephone/Fax: +38 044 234 3525 www.ppp-ukraine.org TABLE OF CONTENTS 1. INTRODUCTION ...................................................................................................................................... 2 1.1. Subject Matter of Analysis ................................................................................................................ 2 1.2. Assumptions ...................................................................................................................................... 3 1.3. Limitations and Qualifications........................................................................................................... 3 2. LEGAL ANALYSIS OF THE LEGISLATION IN THE AREA OF ROAD CONSTRUCTION ON THE TERMS OF PPP ................................................................................................................................................. 4 2.1. Major laws and subordinate legislative instruments on public procurement and concessions .......... 4 2.2. Current Tax Laws............................................................................................................................... 6 2.3. Registration and Protection of Investments ....................................................................................... 6 2.4. Legislation on Investments, Construction, and Commissioning ....................................................... 7 2.5. Ukrainian Environmental Law........................................................................................................... 9 2.6. Special Regulations on Kyiv City Ring Road ................................................................................... 9 3. KEY STAGES OF THE ROAD CONSTRUCTION PROJECT: LEGAL DESCRIPTION ................... 10 4. SCENARIOS FOR IMPLEMENTATION OF THE ROAD CONSTRUCTION PROJECT: GENERAL DESCRIPTION ................................................................................................................................................. 11 4.1. Public Procurement .......................................................................................................................... 11 4.2. Project Financing ............................................................................................................................. 12 4.3. Concessions as a Type of PPP ......................................................................................................... 13 5. CONSTRUCTION AND OPERATION OF ROADS ON THE TERMS OF CONCESSION ............... 15 5.1. General description of concession for construction and operation of motor roads. Key legal premises for concession for construction and service of Kyiv City Ring Road ......................................... 15 5.2. Selection and Engagement of a Concessionaire: Procedural Issues ................................................ 16 5.3. Funding of a Concession Project: Legal Aspects ............................................................................ 18 5.4. Project Agreement ........................................................................................................................... 23 5.5. Land Issues ...................................................................................................................................... 30 5.6. Permits and Licensing Procedures for Building a Motor road ............................................................... 38 5.7. Road construction in concession projects .............................................................................................. 40 5.8. The operation of the motor road concession projects............................................................................. 41 5.9. Concessionaire’s return of investment ................................................................................................... 42 5.10. Early termination of the project (concession) contract ........................................................................ 45 5 .11. Dispute Resolution .............................................................................................................................. 46 5.12. Amending the Legislation. Miscellaneous ........................................................................................... 47 6. LEGAL BARRIERS THAT REQUIRE CHANGES IN LEGISLATION ............................................ 49 7. RECOMMENDATIONS ON THE MOST RATIONAL WAYS TO REDUCE THE POSSIBLE LEGAL RISKS ............................................................................................................................................................... 70 1. INTRODUCTION In this legal report (hereinafter the “Report”), we offer your our intermediate conclusions made based on the results of investigation and analysis of several issues regarding the legal aspects of construction and operation of Kyiv City Ring Road from Stolychne shose Str. to M03 Kyiv–Kharkiv–Dovzhanskyi motor road in the Kyiv– Boryspil section (hereinafter referred to as the “CRR”) on the terms of public-private partnership and concession (hereinafter the “Project”). 1.1. Subject Matter of Analysis Based on the nature of the research, we have focused our attention exclusively on the legal aspects that appear to be the most important for the Project, specifically: (i) review of the applicable Ukrainian regulations on concessions, public-private partnership, and 2 / 81 public procurement; (іі) the most practical ways for redemption and expropriation of Land Plots; (ііі) procedure of the concession bidding; and (іv) legal description of a concession agreement. Our research was based on the Ukrainian law effective as of the date of the Report, as well as the application practice established in the respective areas. While forming the recommendations included in the Report, we also took into account the foreign and international experience. The statements made in the Report are of the most general nature, reflecting only the selected aspects of the Project which, in our opinion, have the key importance; the Report only describes several options for the further development of the Project which we believe to be optimal. The report mainly consists of the answers to the questions stated by the customer and generalized conclusions of our legal analysis of the subject matter of our research. We did not raise any other questions other than stated above. 1.2. Assumptions We used the following assumptions while preparing the Report: - The land plots that have to be allocated for the construction of the CRR may include land plots privately owned citizens and legal entities, held for permanent use, or leased. - The land plots that have to be allocated for the construction of the CRR include agricultural and forestry land (covered by tillage or perennial plantations). - The land plots that have to be allocated for the construction of the CRR include plots of especially valuable land, land of the natural reserve fund (in particular occupied by nature reserve areas), and land with bodies of water. - The legal conclusions made in the Report are based exclusively on the information and documents publicly available from official sources. - The CRR construction project will be performed according to the current law, excluding legislative changes that cannot currently be foreseen. The currently effective regulations will not be appealed against according to the procedure specified by law and will not become ineffective. - The Project will be performed without active resistance on the part of certain government agencies which may influence the performance of the Project. 1.3. Limitations and Qualifications The analysis was performed based on the current Ukrainian law; no other law or legislation of other countries were taken into account. Consequently, the Report only covers the matters to which the Ukrainian law applies. The Report is prepared exclusively for the Family Health International (FHI360) for evaluation of legal circumstances for the implementation of the Project in Ukraine, and cannot be used for any other purposes. The Report as a whole or certain provisions hereof shall not be used, distributed, quoted, or used in any other way except for the purpose of your internal evaluation of further activities under the Project. Neither the fact of the preparation nor the content of the Report shall not be disclosed to any third parties. No one except for the Family Health International (FHI360) may use 3 / 81 and/or refer to the Report without prior written consent of a partner of Vasyl Kisil and Partners Law Firm. The Report, as well as our obligations and liability, shall be governed exclusively by the Ukrainian law. Consequently, only the Ukrainian courts may resolve any possible disputes in connection with the Report. With any questions, please contact Oleh Alioshyn, partner of Vasyl Kisil and Partners Law Firm; Nataliia