The scale of the destruction suffered by Ukraine as a result of the war is difficult to comprehend. The housing stock has been severely damaged, with Ernst & Young's research indicating that the scale of damage to Ukrainian real estate exceeds the volume of all new housing commissioned over the past seven years. No wonder that speaking about the Ukraine Recovery Program, Prime Minister Denys Shmyhal noted that it will be the largest reconstruction project since World War II. The Ukrainian Real Estate Club and Property Times summarised what is known about the program in an article prepared for Property Forum.
For example, in just one year of the war, the infrastructure of Bucha was destroyed by 30%, Irpin by 70%, and Izyum by 80%. It is currently impossible to estimate the exact extent of the destruction, as Russia continues to destroy Ukrainian towns and villages. Some towns in eastern Ukraine have been almost completely destroyed: Sievierodonetsk, Popasna, Rubizhne, Shchastia, Kreminna, Mariupol, Lysychansk, Vuhledar, Volnovakha - where the scale of destruction reaches 90%. Among the destroyed facilities are power plants, a network of educational institutions, cultural centres and museums, churches and various infrastructure facilities.
Damages
According to the data released by the KSE Institute, the total amount of direct documented damage to Ukraine's infrastructure caused by Russia's full-scale invasion as of April 2023 is $147.5 billion.
The amount of damage to the housing stock is $54.4 billion. The total number of damaged or destroyed residential buildings, including private, apartment buildings and dormitories, is almost 158 thousand.
The amount of damage to infrastructure and industry is $36.2 billion, while the assets of enterprises were destroyed or damaged by another $100 thousand, bringing the total amount of such losses to $11.4 billion.
The war has caused $9.1 billion in damage to the education sector infrastructure. As of April of this year, the total number of damaged and destroyed educational facilities reached 3,200.
Losses due to damage to energy infrastructure amounted to $8.3 billion.
Damage to the healthcare sector amounted to $2.7 billion. In total, 806 facilities were destroyed or damaged as a result of the war, including 367 hospitals and 341 outpatient clinics.
The updated estimate of the amount of damage to the housing and utilities sector in the first year of the full-scale war was $1.4 billion, and as of April 2023, it was $2.7 billion.
Financing
At a joint press conference with Prime Ministers of the Netherlands Mark Rutte and Belgium's Alexander de Kroo in The Hague, President of Ukraine Volodymyr Zelenskyy said that Ukraine needs more than $400 billion to rebuild after the destruction caused by the war waged by Russia. And these are only preliminary figures, as the war continues and the scale of destruction increases every day.
Currently, several main sources of funding have been identified for reconstruction projects:
- Confiscated Russian assets. The government of Ukraine has already transferred UAH 17 billion of confiscated funds from Russian banks to the budgetary Fund for the Elimination of the Consequences of Armed Aggression. The process of confiscation of Russian assets continues.
- Budget funds. In 2023, UAH 35.5 billion from the state budget will go to the Fund for the Elimination of the Consequences of Armed Aggression through the National Bank of Ukraine’s payment of a portion of its profit.
- Funds from international partners. Many countries, including Norway, Japan, France, and others, have already declared their readiness to contribute to the restoration of Ukraine's infrastructure. As well as the world's largest investment banks.
- Donor funds raised on the UNITED24 fundraising platform. These funds will be used to restore apartment buildings that have been partially damaged so that people can return to their homes as soon as possible.
Who is responsible?
The State Agency for the Reconstruction and Development of Infrastructure of Ukraine will be responsible for implementing the country's reconstruction projects.
The new institution is being created on the basis of the State Agency for Infrastructure Projects and the State Road Agency.
"In order for the new Agency to successfully cope with its tasks, we are initiating negotiations with our partners to update the Reform Support Team on the basis of the Agency and launch an anti-corruption office in the centre and in the regions," Oleksandr Kubrakov, Vice Prime Minister for Reconstruction of Ukraine - Minister of Communities, Territories and Infrastructure Development.
To make the reconstruction accountable and transparent and based on the needs of communities and regions, legislation is being updated and various digital solutions are being launched.
DREAM
To systematize all information on the reconstruction of the country, the digital platform DREAM (Digital Restoration Ecosystem for Accountable Management) has been created, which will contain information on financing, management and control of housing, buildings and road reconstruction projects. DREAM will be a single digital channel for absolutely all reconstruction projects at the national, regional, and local levels.
The system will collect all available data from state registers and place it in the passport of each object online.
The platform will be as open as possible, and every citizen will have access to it, which is an indirect deterrent to corruption. After all, everyone will be able to monitor the reconstruction, and in case of violations by local authorities or contractors, donors, the media, or members of the public will be able to contact the Ministry of Community Development, Territories and Infrastructure or the Agency for Reconstruction and Infrastructure Projects to suspend the work.
"Thanks to DREAM, international organizations will be able to select projects for funding through a 'project showcase'. Having information on procurement and regular progress reports, investors will be able to track the progress of all funded projects," MinRegion said.
DREAM currently contains more than 5 thousand projects. The system will be officially presented to the international community on June 21-22 in London at the Ukraine Recovery Conference.
