This chapter examines the transport sector as a cornerstone of Ukraine’s recovery and underscores its significance for economic resilience, export logistics, and EU integration. Transport has suffered extensive wartime damage and now faces reconstruction needs exceeding USD 96 billion, making it both a priority investment domain and a test case for applying Ukraine’s wider financing reforms. The chapter identifies distinct policy challenges across rail, road, ports, and airports, each requiring tailored interventions to strengthen operational resilience and mobilise private capital where feasible.
Infrastructure Policy Review of Ukraine
Abstract
The Ukraine Plan is one of the main strategic documents that are guiding Ukraine’s recovery and EU integration through a set of targeted reforms to promote growth and attract priority investments across key sectors. Transport infrastructure is one of the focus areas identified in the Ukraine Plan to support the recovery of Ukraine’s export-oriented economy and its ambition to strengthen connectivity with the European Union (EU) as part of its EU accession negotiations. The scale and economic importance of the transport sector make it a key entry point for mobilising private investment as part of Ukraine’s recovery and EU integration agenda. From 2016-2021, the transport sector contributed an average of 6.2% of GDP and employed almost 1 million workers (World Bank, 2023[1]). Ukraine counts one of the largest railway networks in Europe, of which 47% is electrified. Prior to Russia’s 2022 invasion, progress was being made in attracting private investment through PPPs and concessions, particularly in the port sector. The State Road Fund, established in 2017, had also led to increased public investment through earmarked funds to upgrade road transport networks.
However, logistics performance, including quality of trade and transport-related infrastructure in Ukraine has been low compared to neighbours (see Figure 8.1). Such underperformance is partly due to chronic underinvestment in infrastructure, with Ukraine’s public capital stock falling gradually since 2009, and faster with the destruction of the full-scale invasion (OECD, 2025[2]). This underperformance constrains export competitiveness and increases logistics costs for businesses.
Logistics Performance Index (1=low; 5=high)
Source: World Bank Group (2025[3]), Logistics Performance Indicators 2.0, https://lpi.worldbank.org/en/home.
In December 2024, Ukrainian authorities published a revised National Transport Strategy 2030. This document presents the strategic priorities for the development of Ukraine’s transport sector, taking into account the impact of the war. Updates to the Strategy consider the challenges of martial law, post-war recovery and European integration aspirations of Ukraine. The strategy also outlines the four key objectives for the development of Ukraine’s transport sector: 1) restoring and developing a competitive and efficient transport system integrated into the Trans-European Transport Network (TEN-T); 2) promoting high-quality passenger transportation and barrier-free mobility; 3) providing energy efficient transport with a focus on decarbonisation that is safe for humans and environment; and 4) developing institutional and human capital and effective management (Government of Ukraine, 2024[4]).
As with other sectors of economic relevance, Ukrainian transport infrastructure has been the target of attacks that have increased the financing needs for its recovery and reconstruction. At the end of December 2025, direct damage to buildings and infrastructure from the war was estimated at USD195 billion, up from USD 176 billion in December 2024, and recovery and reconstruction needs over a 10‑year period at almost USD 588 billion, the latter representing almost three times the country’s estimated GDP in 2025 (World Bank, Government of Ukraine, European Union, United Nations, 2026[5]). This figure will only increase as the war continues. Since early August 2025, Ukrainian authorities have registered more than 400 strikes on railway infrastructure, almost double as many attacks compared to the same period in 2024 (Financial Times, 2025[6]).
Transport has been the most affected sector after housing, with damages amounting to USD 40 billion, largely concentrated in rail and road networks, bridges, ports, airports and Ukraine’s air navigation system, urban public transport assets, and associated equipment. Recovery and reconstruction needs are estimated at USD 96 billion, second only to housing (Table 8.1). Needs have increased by 24.2% since RDNA4 and are the result of attacks on rail and ports during 2025. Needs are heavily concentrated in frontline and industrialised oblasts, notably Donetsk, Kharkiv, Zaporizhzhia, and Kherson, which together account for about 60% of transport sector needs. Beyond interventions to repair, rehabilitate, and replace damaged assets across transport networks, recovery investments should progressively shift toward EU-oriented network modernisation of border infrastructure, Danube ports, and standard-gauge rail connections, structured around Ukraine’s Trans-European Networks for Transport (TEN-T) network (World Bank, Government of Ukraine, European Union, United Nations, 2026[5]).
Note: Damage stands for direct costs of destroyed or damaged physical assets and infrastructure, valued in monetary terms. Loss reflects changes in economic flows resulting from the invasion, valued in monetary terms. Examples include increased operating costs and loss of revenue for authorities/private sector. Needs reflect value associated with the resumption of prewar normality through activities such as repair and restoration, including a premium linked to build back better principles – e.g. improved energy efficiency, modernisation efforts, and sustainability standards – as well as factors such as global inflation, surge pricing due to volume of construction, higher insurance, and so forth.
Source: World Bank (2026[5]), Fifth Rapid Damage and Needs Assessment (RDNA 5). February 2022-December 2025 https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099022026094036395.The Ukraine Plan thus highlights that investments in road, rail, inland waterways, maritime transport and aviation which support the development of the Trans-European Transport Network (TEN-T) and contribute to restore and develop Ukraine’s export potential will remain a top priority. It also notes the importance of adopting reforms that can contribute to increase private investments in transport infrastructure, given the scale of needs for reconstruction of damaged transport infrastructure and for development of new infrastructure which supports Ukraine’s EU integration (Government of Ukraine, 2024[4]).
The rail network in Ukraine is fully controlled by Ukrainian Railways which is the country’s largest employer. Ukrainian Railways is registered as a joint stock company fully owned by the state and operates under the supervision of the CMU through the Ministry for Development of Communities and Territories of Ukraine. The company is classified as strategic and is considered critical to the national economy and security.
Prior to Russia’s full-scale invasion, rail was responsible for 60‑75% of the country’s cargo turnover and provided critical support for the export of Ukraine’s major commodities: construction materials, grain and steel (Bandura, Timtchenko and Robb, 2024[7]). Given the current disruptions to air and sea transport, finding alternative land transportation is even more critical and has led to initiatives such as the EU-Ukraine Solidarity Lanes. Solidarity Lanes have enabled the export of 50% of Ukraine’s grain since the start of the war and the export of around 85 million tonnes of non-agricultural products such as ores, steel, and related products. The initiative also supports the expansion of rail connections between Ukraine, Moldova and EU neighbours (European Union, 2025[8]).
However, increased demand for rail freight has created bottlenecks and exposed the need to overcome differences in Ukrainian and EU rail gauge standards to increase connectivity according to TEN-T requirements. Several projects to better connect Ukraine with its EU neighbours, reduce congestion and adopt the EU’s standard rail gauge by Ukrainian Railways are currently under consideration (see Table 8.2). These projects reflect Ukraine’s strategic objective to progressively integrate its railway network into the European rail system, as set out in the EU-Ukraine Association Agreement (European Commission, 2024).
Note: Projects shown have still not reached financial close.
Source: Ministry of Economy of Ukraine (2024[9]), Ukraine Investment Guide, 66673120c02fe81b61d75096_Ukraine Investment Guide 2024 (2)_compressed.pdf.
Ukrainian Railways has estimated that EUR 1.1 billion of annual capital investments will be needed over the next ten years to develop track, power supply, signalling and communications systems. These investment needs reflect not only post-war reconstruction efforts but also the strategic objective of aligning Ukraine’s railway infrastructure with EU standards and interoperability requirements, as foreseen under the EU-Ukraine Association Agreement. Part of these investments should contribute to the EUR 4.6 billion of investment requirements outlined in the Ukraine Plan to bring forward the priorities of the rail sector which are: 1) rehabilitation of 13 traction substations and at least 30 bridges; 2) reconstruction and repair of 1000 km of railway tracks of the existing 1 520 mm gauge network on the TEN-T network and adjacent sections; 3) rehabilitation and construction of 1 435 mm gauge tracks in the western regions of Ukraine, with a length of about 250 km; 4) purchase of rolling stock, namely up to 250 electric locomotives, up to 40 diesel locomotives, up to 20 intercity+ electric trains; and 5) renewal of the fleet of passenger and suburban trains (Government of Ukraine, 2024[4]).
Ukrainian Railways could finance up to 30% of annual capital investments with its own funds but would require an additional EUR 750‑800 million annually from external sources. Following the company’s debt restructuring in 2022, S&P upgraded the company’s debt to CCC+. In August 2024, Fitch upgraded the company’s rating to CC while noting that the company’s predominantly foreign currency debt had increased by almost 20% between end-July 2023 and August 2024. Fitch also underlined that EBRD and EIB could support the company’s capex requirements for 2024 but highlighted the difficulties of improving its liquidity position to service its debt (Fitch Ratings, 2024[10]). In August 2025, Fitch affirmed the company’s rating at CC but noted the high likelihood of a restructuring in the next 12 months of USD 703 million of Eurobond debt (Fitch Ratings, 2025[11]). The company’s financial outlook is closely linked to Ukraine’s macroeconomic stability and ongoing reforms in the railway sector. Support from international financial institutions, including loan guarantees and technical assistance, is expected to play a crucial role in addressing its capital investment needs.
Ukrainian authorities are aware that railway sector reform will need to underpin scaling up of investments in Ukraine’s rail network and are advancing railway sector reforms aimed at aligning the national rail system with European Union legislation and standards, following several years of stalled legislative efforts. Earlier attempts to adopt a comprehensive law on the railway market, including the draft Law On the System and Features of the Functioning of the Railway Transport Market of Ukraine, failed to progress beyond parliamentary committee stage and were ultimately withdrawn. In response, the government recalibrated its legislative strategy by separating market liberalisation from foundational regulatory reforms. This approach resulted in the preparation of draft Law On the Safety and Interoperability of Railway Transport of Ukraine, which was approved by the Cabinet of Ministers and adopted by the Verkhovna Rada in first reading. This draft law constitutes the first step in a two‑stage reform process, with a subsequent law on market opening, tariffs and public service obligations (PSO) expected to follow.
The draft Law On the Safety and Interoperability of Railway Transport of Ukraine focusses on railway safety, technical regulation and interoperability, transposing a substantial part of Ukraine’s international and EU-related commitments. In particular, it implements core elements of three EU railway directives covering railway safety, interoperability and train driver certification, as well as selected provisions of the Single European Railway Area framework related to licensing. This sequencing reflects a policy choice to establish robust regulatory and safety foundations before introducing competition.
Importantly, the law is designed not as a transitional or purely preparatory instrument, but as a self-standing regulatory framework applicable under both monopoly and competitive market structures. All procedures are formulated with reference to multiple market actors, including railway carriers, infrastructure operators and other sector participants, rather than assuming the continued dominance of a single vertically integrated incumbent. This ensures that the framework remains operational even before market opening, while being compatible with future unbundling and entry of new operators.
Market access is therefore structured around a layered regulatory model. Entry into railway operations requires a licence confirming economic eligibility, while actual operation on the network depends on compliance with safety management systems, technical standards and interoperability requirements. This approach strengthens transparency, reduces discretionary barriers, and creates predictable entry conditions for future private operators.
Overall, the draft Law On the Safety and Interoperability of Railway Transport of Ukraine represents a strategic reorientation of Ukraine’s railway reform agenda. By prioritising safety, interoperability and institutional capacity-building, it creates the regulatory infrastructure necessary for a future competitive railway market. At the same time, it reflects fiscal and wartime constraints by allowing flexibility in institutional design, while committing the government to submit a subsequent market-opening law within a defined timeframe, thereby maintaining reform momentum and credibility vis-à-vis the EU and private investors.
With respect to private participation in the development of rail infrastructure, while concession mechanisms for railway assets exist in Ukrainian legislation, the war and associated economic uncertainties raise significant challenges to use such a mechanism. The pilot concession project for seven railway stations, initially announced prior to the conflict, has been effectively suspended and is unlikely to proceed in the near-term. Once conditions allow, such projects could be revisited. Land value capture measures could also be explored to take advantage of real estate of the rail system and develop commercial properties in transit hubs. Such measures would monetise the brownfield assets of the rail system and generate new income streams for Ukrainian Railways.
Ukraine’s rail system is a critical asset as well as a key enabler of economic activity in the country. Yet, it requires increased capital expenditures to meet war demands and land transport needs, upgrade and modernise its operation systems and adapt to EU standards and connectivity. It is essential that the financial management of the rail sector is improved, with better accountability, stable multi-year funding, competitively priced rolling-stock leasing, and PSO contracts that are transparently funded and regularly reviewed for value for money.
Ukrainian Railways is experiencing serious liquidity challenges and is struggling to finance 70% of its capex needs. There is a strong need for Ukraine to consider how best to meet the company’s debt financing and capex needs while ensuring it is able continue providing a strategic service to the country. If adopted, Ukraine’s draft bill would strengthen Ukraine’s railway regulatory framework by focussing on safety, technical harmonisation and clearer institutional arrangements, reducing regulatory uncertainty and aligning the sector more closely with EU requirements at a critical stage of recovery. Impact of these measures will be dependent on effective implementation and follow-up reforms, notably the timely adoption of legislation on market opening, access to infrastructure and public service obligations. If sequenced and implemented coherently, the current framework can provide a solid foundation for a more interoperable, investment-ready and EU-aligned railway system.
Ukraine’s road infrastructure was already operating at peak capacity prior to Russia’s full-scale invasion and, similarly to rail, has seen increased intensity of freight transport during the war. Since the signing of the Road Transport Agreement between Ukraine and the EU in June 2022, trade volume by road between Ukraine and the EU has increased by about two‑thirds, while export value has risen by one‑third (European Union Directorate-General for Mobility and Transport, 2024[12]).
The conditions of Ukraine’s road network remain one of the key issues, despite significant efforts to improve road quality in recent years. A large portion of roads is in poor condition, primarily due to delays in maintenance, lack of regular medium and major repairs, substandard construction work, inadequate funding, organisational shortcomings, outdated procedures, and the overloading of freight transport. These challenges have been exacerbated by the war, which caused widespread damage to road infrastructure and increased the urgency of repair and reconstruction efforts. Addressing these systemic issues will require co‑ordinated policy action, improved regulatory frameworks, and enhanced investment mobilisation.
The creation of the State Road Fund in 2017 mobilised funding for the construction, reconstruction, repair and maintenance of public roads. Funding sources included a combination of excise taxes on fuel and vehicles; import duties on petroleum products, vehicles and tires; highways tolls on large vehicles and tolls for travel on public toll roads, among other sources. Annual allocations were determined through State Programmes approved by the CMU. Prior to Russia’s 2022 invasion, over 14 000 kilometres of roads had been built or renovated largely with resources from the Fund (Ministry of Economy of Ukraine & Kyiv School of Economics, 2024[9]).
However, since 2022, resources from State Road Fund have been repurposed to support the state budget in its wartime needs. In the 2025 State Budget, approximately UAH 12.6 billion (USD 300 million) is allocated for the maintenance and repair of critical road infrastructure through a new budget programme that replaces the discontinued State Road Fund. Funds amounting to about UAH 43.2 billion (USD 1.03 billion), previously earmarked for the Fund, were redirected to defence and other priority expenditure. The redirection of State Road Fund resources during wartime, while necessary, has reduced the predictability of road financing and weakened incentives for systematic asset management. The absence of a dedicated, ring-fenced funding mechanism for roads increases the risk of deferred maintenance and higher lifecycle costs for the network.
Mobilising private capital for road transport had been identified as a priority prior to the 2022 invasion and will remain critical to support Ukraine’s recovery. The increased intensity of freight transport on public roads – which accounts for around 40% of total freight volume – is putting increased pressure on Ukraine’s road system. Excessive loads beyond permissible limits are leading to premature road damage, which in turn increases maintenance costs. Total recovery and reconstruction needs to address damages from the war on Ukraine’s road network amount to USD 22 billion for national roads, motorways and highways and 7.5 billion for national road bridges (The World Bank, the Government of Ukraine, the European Union and the United Nations, 2025[13]). Ukrainian roads also need to withstand military transportation (Financial Times, 2025[14]).
Similarly to rail, investment priorities to restore and upgrade road infrastructure will need to focus on strengthening the TEN-T network for greater integration with the EU. Prior to the war, public funding was expected to be sufficient to maintain assets but not to finance major road upgrading or new road projects (World Bank Group; IFC, 2018[15]). Donor support will remain critical in the short term but road PPP and concession arrangements could be considered in the medium-term, particularly once uncertainty around the path for Ukraine’s economy subsides. High-traffic corridors could, over time, support toll-based financing models, provided that affordability, demand risk and transparency considerations are adequately addressed.
Given the high volume of traffic in certain major highways and the need for upgrade, Ukraine should consider toll systems that can generate income from some major highways to support the financing of the road network. Ukraine could gradually roll out PPPs for greenfield assets, building on recent reforms to project preparation and to the country’s legal framework for PPPs (see Section 3.3). Maintenance can be carried out using concessions or PPPs. However, transparency of procedures will be paramount to ensure that there is justification for private participation, and integrity is upheld.
Prior to Russia’s 2022 invasion, 60% of foreign trade shipments were conducted through deep-water seaports (Ministry of Economy of Ukraine & Kyiv School of Economics, 2024[9]). By early 2024, Ukraine had lost access to over half of its 18 seaports as a result of Russian occupation, including all ports in Crimea such as Sevastopol and Kerch, and Azov Sea ports like Mariupol and Berdiansk. Among Ukraine’s four largest seaports – Pivdennyi, Odesa, Mykolayiv and Chornomorsk – which accounted for about 80% of total capacity, three were operating at limited capacity due to security threats and infrastructure damage, while Mykolayiv remained blocked because of its proximity to active hostilities and significant destruction of port facilities and logistics networks (World Bank, 2023[1]; National Council for Recovery of Ukraine; Kyiv School of Economics; et al., 2024[16]). According to Ukrainian authorities, in 2025 Pivdennyi, Odesa, and Chornomorsk handled 73.3 million tonnes of cargo, 28% less than in 2021.
Various seaports cannot operate given the blockade of sea routes and the mining of territorial waters. As a result, Danube River seaports and inland waterways have gained significant strategic importance (Government of Ukraine, 2024[4]). In contrast with the pre‑war situation – when the volume of goods transported from Ukraine’s Danube ports towards the EU were decreasing – total cargo throughput Danube ports increased from 5.5 million tons in 2021 to 32 million tons in 2023 (Grigorenko, 2025[17]). However, the sharp increase in traffic through these ports has exposed significant bottlenecks, including limited draft depths, ageing river fleet, insufficient handling capacity, and outdated infrastructure, underscoring the urgent need for modernisation and investment to sustain these critical logistics corridors.
Following Russia’s withdrawal from the United Nations (UN)-brokered Black Sea Grain Initiative in July 2023, Ukraine put in place a Black Sea corridor aimed at reestablishing its export capacity through the deepwater Black Sea ports of Odesa, Chornomorsk and Pivdennyi by creating a route passing through the territorial water of North Atlantic Treaty Organisation (NATO) member states Romania, Bulgaria and Türkiye (Dodd, Welsh and Glauber, 2024[18]). This initiative supported Ukraine’s capacity to maintain 50 million tonnes of cereal exports during 2023 although average exports during the 2022-2025 period are expected to remain 10% below the 2018-2021 average (OECD, 2025[19]). Other estimations of the disruptions have shown that losses have increased by only 8% from 2023 to 2024, with almost USD 15 billion in losses mitigated as a result of Ukraine’s Black Sea corridor (The World Bank, the Government of Ukraine, the European Union and the United Nations, 2025[13]).
Prior to Russia’s 2022 invasion, the port sector had shown commercial viability and capacity to attract private investment due to reforms to develop and operate port infrastructure facilities through concession, joint operation, lease, privatisation or other types of investment agreements. Port terminals were 39% privately-owned either through privatisation, lease or PPPs at that time. Private investors were building five new terminals along the Danube River (World Bank, 2023[1]). Private investment was also being considered for the seaports of Odesa, Olvia, Mykolayiv, Chornomorsk (see Table 8.3) and Pivdennyi with the involvement of foreign companies such as Cargill (USA), DP World (UAE), Delta Wilmar (Singapore), Bunge (USA), POSCO (Republic of Korea), HHLA (Germany) and QTerminals (Qatar). In 2020, large concession agreements for the Kherson and Olvia Commercial Sea Port were also established, although their implementation is currently suspended as a result of Russia’s invasion. In the case of Kherson, the 30‑year agreement initially envisaged the modernisation of the port as well as plans to co-finance the overhaul of roads leading to the port and a new site to develop rail tracks outside the city. The suspension of these concessions highlights the vulnerability of port investments to political risks but also underscores the potential for such partnerships to drive comprehensive port and logistic infrastructure upgrades when conditions permit.
Source: European Bank & IFC (2025[20]), Concession project with respect to the First and Container Terminals in Chornomorsk Port, https://mindev.gov.ua/storage/app/sites/1/uploaded-files/concept-eng.pdf.
Ukraine’s Black Sea corridor initiative could make it possible to regain private investor interest in the Odesa, Chornomorsk and Pivdennyi seaports. However, provision of adequate war risk insurance would be a necessary condition for this, as their importance has made them a target of Russian attacks (see Chapter 6).
Ukraine should also continue the development of the Danube River port cluster to diversify access routes to European and global markets. The Danube cluster offers an alternative export corridor that reduces dependency on Black Sea routes, enhancing Ukraine’s resilience in global trade. Even if the throughput in these ports decreased from 32 million tonnes in 2023 to 17 million tonnes in 2024, the 2024 amounts are 3 times higher than in 2021. The urgent need to reroute grain exports in 2023 led to improvements in infrastructure of Danube River ports, with the opening of new terminals and transhipment points, some of which were developed by private companies. For instance, agricultural company Nibulon invested USD 22.5 million in a transhipment terminal in the Danube Port of Izmail and by the end of 2024 it had already recouped these investments (Ukrainian Shipping Magazine, 2024[21]).
Improving rail accessibility and increasing available depths – which would in turn increase shipping tonnage – across Danube ports will be necessary to develop these routes and make shipping cost-competitive relative to Black Sea deepwater ports. Investments in multimodal transport infrastructure linking ports to rail and road networks will be critical to fully realise the competitive advantage of the Danube ports. Danube River ports could also support the delivery of iron ore to European steel mills, as the experience of large European iron ore producers in Ukraine has shown (Grigorenko, 2025[17]).
Given Ukraine’s export-oriented economy, it is imperative that the port system remain functional. While important seaports remain occupied, blocked or can only operate at limited capacity, the importance of river ports has risen. Investment to improve access, in particular for river ports, could make it possible to exploit the commercial viability that the port system has already shown. Concessions in larger seaports could be revisited as soon as conditions allow. Ukraine should examine how to improve private financing while providing safeguarding with guarantees. The PRI of Ukraine’s ECA as well as those provided by international partners will be imperative for this purpose.
Privatised ports should also seek to access available guarantees to ensure that private financing can take place, and the government should continue to support this. For concessions and PPPs, the use of blended financing instruments to support their capital expenditure needs will be important. Access to concessional financing as well as first loss equity could be a way to bring in more private financing.
Ukraine’s aviation sector was steadily growing before Russia’s full-scale invasion, with airport traffic doubling over the five‑year period which preceded the invasion (World Bank, 2023[1]). In contrast with other transport subsectors, the Ukrainian aviation sector had also made progress in its integration with the European market (Bilotkach and Ivaldi, 2022[22]). This included adoption of the EU-Ukraine Common Aviation Area Agreement, facilitating liberalised air services and enhancing co‑operation.
However, Ukrainian airports were among the first targets of Russian attacks and have been severely damaged. Five airports have been destroyed, and 11 have been partially damaged, contributing to USD 447.6 million in damages. The closure of the country’s skies represents the second biggest loss (USD 12.6 billion or 27% of transport losses) after the Black Sea blockade (USD 28.4 billion, 61% of total), reflecting economic losses from the closure of Ukraine’s aviation industry and loss of overflight revenues (The World Bank, the Government of Ukraine, the European Union and the United Nations, 2025[13]).
Currently, Ukraine’s airspace remains closed to commercial passenger and cargo flights due to security concerns. This prolonged closure severely restricts domestic and international air connectivity, delays recovery efforts, and results in significant revenue losses not only for airports but also for airlines and related sectors. The reopening of Ukrainian airspace will therefore be critical for revitalising the aviation sector. International airlines are projecting a rapid return to Ukraine as soon as a peace deal is signed, signalling the potential of the sector to attract private investment (Financial Times, 2025[23]).
According to preliminary calculations, the airports of Boryspil (which accounted for 60% of air passenger traffic), Lviv and the State Enterprise Ukrainian State Air Traffic Service require about USD 1.2 billion for the complete restoration of airport infrastructure, and their implementation represents around two‑thirds of total recovery and reconstruction needs of Ukrainian airports (USD 1.7 billion) (Government of Ukraine, 2024[4]; The World Bank, the Government of Ukraine, the European Union and the United Nations, 2025[13]).
Ukrainian authorities have identified international donor support and private investment as the main sources to rebuild and develop Ukraine’s air transport infrastructure (Government of Ukraine, 2024[4]). Bilateral development finance combined with Ukraine’s own financing has played a role in some of Ukraine’s main international airports in the past. In 2005, the Japanese Bank for International Co‑operation provided a loan for the development of the Boryspil International Airport with a sub-loan from the State Export-Import Bank of Ukraine. This financing arrangement exemplifies the effective combination of international and domestic funding sources to advance major infrastructure projects. Prior to Russia’s full-scale invasion, the air transport subsector also had a track record of attracting private finance, focussing mainly on the operation of passenger and cargo terminals. Out of the 20 commercial airports in the country, five were privately operated – Dnipropetrovsk, Ivano-Frankivsk, Kharkiv, Kyiv-Zhuliany and Odesa – and six others were identified as having potential for concession arrangements prior to the invasion: Lviv, Zaporizhzhia, Rivne, Kherson, Vinnytsya, and Chernivtsi (World Bank, 2023[1]). Consideration has also been given to explore private participation in Ukraine’s main airports of Boryspil, Odesa and Lviv as soon as conditions allow, possibly through concessions (UNN, 2025[24]).
When a partial or full reopening of Ukraine’s airspace becomes possible, a strategic reassessment of the airport network will be critical. A strategic downsizing or reconfiguration of the airport network may be necessary to align capacity with post-war demand patterns. Given ongoing security concerns, demographic changes including population displacement and shifts in passenger and cargo demand, authorities will need to determine the optimal number of operational airports and prioritise their phased restoration. Significant investments required for reconstruction and modernisation underscore the importance of focussing resources on airports with the highest potential for sustainable traffic and economic contribution in order to avoid overinvestment and stranded assets. Such prioritisation, informed by rigorous passenger flow analysis and market forecasts, will be essential to ensure efficient use of public and private capital, support the sector’s recovery, and enhance its long-term resilience and competitiveness (Ministry for Development of Communities and Territories of Ukraine, 2024[25]).
The destruction and damage to airport infrastructure is immense, as is the impact of the closure of airspace to commercial air traffic. Rebuilding airports will require capital investments which will only be feasible once traffic starts to resume. This may take several years after the end of conflict even though some airlines are expecting a rapid increase in traffic as soon as a peace deal is signed.
Prioritise transport as a critical reconstruction sector. Ukraine should work with donors to redirect some of the grants and other financial support to the economically critical sector of transport, to ensure that connectivity and economic activity of Ukraine can be maintained and damages repaired in the road and rail networks.
Accelerate gauge‑interoperability and EU TEN-T alignment in rail. Ukrainian Railways must modernise its tracks to match EU rail gauges, particularly in TEN-T corridors, given the relevance of these corridors to accelerate EU integration.
Explore mechanisms such as land-value capture and commercial property development around rail stations once conditions allow to support capital investments and reduce long-term reliance on debt. Once conditions allow, land value capture measures could also be explored to take advantage of real estate of the rail system and develop commercial properties in transit hubs. Such measures would monetise the brownfield assets of the rail system and generate new income streams for Ukrainian Railways.
Advance the two‑stage railway reform agenda. Ukraine should pursue its two‑stage reform efforts through the adoption of the draft Law on the Safety and Interoperability of Railway Transport and prepare follow-up legislation on market opening, infrastructure access and public service obligations in order to maintain reform momentum and credibility vis-à-vis the EU and private investors.
Rebuild a predictable funding framework for roads. Initiatives such as the Ukraine State Road Fund could provide a basis to manage the transition towards greater private sector participation in the road and rail sectors. After the war, Ukraine could consider reinstalling the State Road Fund, potentially providing it a more strategic function and mandate so that it can serve as a blended finance mechanism, and its funding be subject to financial additionality.
Apply strict integrity and maintenance‑planning standards once conditions allow for the development of road PPPs. Road maintenance could be carried out through concessions or PPPs. However, transparency of procedures will be paramount to ensure that there is justification for private participation, and integrity is upheld.
Invest strategically in Danube river ports and revisit port concessions once conditions allow. Investing in rail accessibility and increasing available depths across Danube ports will be necessary to develop these routes and make shipping cost-competitive relative to Black Sea deepwater ports. Concessions in larger seaports could be revisited as soon as conditions allow. In both cases, Ukraine could examine provision of guarantees or war risk insurance with support of international partners as needed to ensure that private finance can be mobilised, building on prior commercial interest and hard revenue‑generating capacity.
Promote selective private participation in airports. Concessions and PPPs could be considered in high-potential hubs once airspace reopens, supported by strong governance safeguards, war‑risk coverage and demand‑based prioritisation.
References
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[9] Ministry of Economy of Ukraine & Kyiv School of Economics (2024), Ukraine Investment Guide, https://cdn.prod.website-files.com/621f88db25fbf24758792dd8/66673120c02fe81b61d75096_Ukraine%20Investment%20Guide%202024%20(2)_compressed.pdf.
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[2] OECD (2025), Economic Survey of Ukraine, OECD Publishing, Paris, https://www.oecd.org/en/publications/oecd-economic-surveys-ukraine-2025_940cee85-en.html.
[19] OECD (2025), OECD-FAO Agricultural Outlook Database, https://data-explorer.oecd.org/vis?lc=en&df[ds]=dsDisseminateFinalDMZ&df[id]=DSD_AGR%40DF_OUTLOOK_2025_2034&df[ag]=OECD.TAD.ATM&df[vs]=1.1&dq=OECD.A.CPC_0111...&pd=2010%2C2034&to[TIME_PERIOD]=false&vw=br.
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[1] World Bank (2023), Private Sector Opportunities for a Green and Resilient Reconstruction in Ukraine: Volume 2 Sector Assessments, World Bank, https://www.ifc.org/content/dam/ifc/doc/2023/sector-assessments-pso-green-resilient-reconstruction-ukraine-en.pdf.
[3] World Bank Group (2025), Logistics Performance Indicators 2.0, https://lpi.worldbank.org/en/home.
[15] World Bank Group; IFC (2018), Strategy for Prioritization of Investments, Funding and Modernization of Ukraine’s Road Sector, https://documents1.worldbank.org/curated/fr/908121530528798409/pdf/Strategy-for-Prioritization-of-Investments-Funding-and-Modernization-of-Ukraine-s-Road-Sector.pdf.
[5] World Bank, Government of Ukraine, European Union, United Nations (2026), Fifth Rapid Damage and Needs Assessment (RDNA 5). February 2022-December 2025, https://documents1.worldbank.org/curated/en/099022026094036395/pdf/P514499-22f93f3a-4278-42bc-b907-db9553d12069.pdf.