Publication date: 11.06.2024
Legal aspects of attracting investment in municipal infrastructure
Introduction
Attracting investment in municipal infrastructure is critical for the development of local communities and ensuring a high standard of living for residents. Given the limited public funding, municipalities are increasingly turning to private investors to implement infrastructure projects. In this article, we will examine the legal aspects of attracting investment in municipal infrastructure in Ukraine, including the legal framework, mechanisms and instruments for attracting investment, as well as the main challenges and prospects.
Legal and regulatory framework
The legal aspects of attracting investment in municipal infrastructure are regulated by a number of Ukrainian legislative acts, among which the key ones are:
The Constitution of Ukraine:
- It defines the basic principles of economic activity, property rights and state obligations to ensure a favorable investment climate.
The Law of Ukraine "On Investment Activity":
- Regulates general issues of investment activity, including the rights and obligations of investors, state guarantees and conditions for making investments.
The Law of Ukraine "On Local Self-Government in Ukraine":
- Establishes the powers of local governments to make decisions on attracting investment and implementing infrastructure projects.
The Law of Ukraine "On Public-Private Partnership":
- Defines the legal framework for cooperation between state (municipal) bodies and private investors, the procedure for concluding contracts and implementing joint projects.
The Law of Ukraine "On Concessions":
- Regulates the provision of municipal infrastructure facilities for concession to private investors, the terms and procedure for concluding concession agreements.
Mechanisms and tools for attracting investment
Various mechanisms and tools are used to attract investment in municipal infrastructure, including the following:
Public-private partnership (PPP):
- Cooperation between municipalities and private companies to implement infrastructure projects. PPPs can include the construction, reconstruction, management, and maintenance of infrastructure facilities.
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Concessions:
- They involve the transfer of municipal facilities for temporary use to private investors for the purpose of modernization and operation. The terms of the concession are determined by an agreement between the municipality and the investor.
Investment contracts:
- Direct agreements between municipalities and private investors to finance and implement specific infrastructure projects.
Municipal bonds:
- Issuance of bonds by local councils to raise funds to finance infrastructure projects. Bonds can be purchased by both private investors and institutional investors.
Challenges and prospects
Attracting investment in municipal infrastructure is accompanied by a number of challenges, including:
Imperfection of the legal framework:
- The need to improve legislation on public-private partnerships, concessions and investment activities to create favorable conditions for investors.
