The Ministry of Defence of Ukraine is working to establish a systematic mechanism for developing protected production infrastructure for defence industry enterprises.
The proposed changes are intended to simplify the construction of underground production facilities and create opportunities to attract private capital, developers, and investors to such projects.
Protected Production Infrastructure as a Separate Area of Defence Industry Development
One of the key elements of this work is amendments to Resolution of the Cabinet of Ministers of Ukraine No. 1494. They are intended to establish a separate legal framework for the construction of underground production facilities, as well as above-ground infrastructure that is technologically and functionally connected to them.
“Our task is to create conditions in which Ukraine’s defence production can scale up while becoming better protected at the same time. To achieve this, we need to draw not only on the resources of the state and defence industry enterprises themselves, but also on the capabilities of private capital, developers, and the construction sector,” stated Anna Gvozdiar, Deputy Minister of Defence of Ukraine.
According to Hanna Hvozdiar, the new model will make it possible to develop new protected production capacities more quickly and reduce the dependence of such projects on budget funding.
The draft amendments have already passed the main stage of interagency review. The document is currently being finalised following legal and anti-corruption reviews before being submitted to the Cabinet of Ministers of Ukraine for consideration.
Developers and Private Investors in the Development of the “Underground Defence Industry”
The proposed mechanism provides that the customer commissioning the construction of protected production facilities may be not only a defence industry enterprise, but also another legal entity, including a developer or investor.
Such an entity will be able to use its own or borrowed funds to construct a facility for subsequent transfer to a defence industry enterprise through ownership, lease, or other form of use.
This will make it possible to attract non-budgetary resources to the development of protected defence infrastructure. At the same time, implementation of the mechanism itself will not require additional expenditure from the state budget.
It is also proposed to formally define the concept of an underground production infrastructure facility and extend the simplified mechanism to above-ground structures and structural elements that are technologically and functionally connected to such a facility.
The aim is to create a separate segment of protected industrial infrastructure that can be developed jointly by defence industry enterprises, construction companies, developers, and private investors. Consultations with representatives of the construction sector have demonstrated business interest in such a model.
The new mechanism is expected to accelerate the creation and expansion of protected production capacities, simplify the relocation of defence industry production facilities, facilitate private investment, and support the development of an underground industrial construction market in Ukraine.
Earlier, the Ministry of Defence explained how defence industry enterprises can scale up production more quickly through the preferential leasing programme.