Concept of reforming road sector foresees attraction of private companies to exploitation of roads

Kyiv, October 15 (Interfax-Ukraine) – The new concept of reforming the road sector foresees the change of the management system – the division of political, administrative and engineering functions, decentralization of local road management and the removal of a state monopoly on the road maintenance market.

According to a press release spread at the press conference at Interfax-Ukraine, the concept of reforming the road sector drawn up by activists and experts of a working group for the road reform of the Reanimation Package of Reforms and members of the nongovernmental organization My Road includes the necessity of strategic planning, the development of the strategy until 2035 and the medium-term program until 2020.

The advisor to the chairman of the State Agency of Automobile Roads of Ukraine (Ukravtodor) Andriy Martens said at the press conference that private companies should be attracted to the long-term road exploitation market to reform the sector and Ukravtodor will have the function of managing only state roads.

"Only 32,000 out of 170,000 kilometers of roads could be left, not taking into account regional roads – around 50,000 kilometers including them. The rest of the roads should be given to the management of local self-government agencies," Martens said.

It is expected that the financing of the sector will be also reformed, the road fund as a part of the national budget will be created, which funds will be protected from the non-targeted use and they will be automatically distributed between state, local and municipal roads. It is also planned to reform the tender system.

"The system allows non-targeted use of funds from the special fund since 2007. In 2013, only 10% of the funds from the special fund were spent on roads. A total of 42 billion of taxes was collected and only $200 million was sent to Ukravtodor," Martens said.

The functions of external borrowing which now Ukravtodor fulfills should be transferred to the Finance Ministry, the size of the state excise duty should be cut and the local transport tax for maintenance of roads by local self-government agencies should be introduced.

The concept foresees that in 20 years 50% of roads in Ukraine will be in good state, 40% - in the satisfactory state and 10% - in the unsatisfactory state.

"We won't confirm that we'll build new roads by 2020, and the main task until this period of time is to change the system," Board Chairman of My Road organization Roman Khmyl said.

He said that around annual losses of the country's economy due to low-quality roads amount to some UAH 24 billion.

"This is a rough figure, as we cannot calculate the losses of private companies and the real losses could be two or three times larger," he added.

Khmyl said that the concept will be presented in coming weeks and submitted to the presidential administration to be included in the concept of the strategy of reforms until 2020 as one of the top-priority programs.