This simplifies access to premises and other property needed to locate production facilities and expand manufacturing capacity.
“We are developing Defence City as an environment that offers greater opportunities. Simplified access to state property is another practical tool to support this. The less time a manufacturer spends searching for and obtaining the infrastructure it needs, the faster it can direct resources toward scaling up production,” stated Anna Gvozdiar, Deputy Minister of Defence of Ukraine.
The Cabinet of Ministers of Ukraine approved the relevant amendments to the resolution governing the rules for leasing state property during martial law, following a proposal by the Ministry of Defence.
More Enterprises and Broader Access to State Property
The Government also introduced several other important changes to the mechanism for leasing property without an auction.
First, the list of defence-sector enterprises eligible to use the mechanism has been expanded. The right now also applies to manufacturers of unmanned systems, active countermeasures (electronic warfare) and passive countermeasures against technical intelligence.
Second, defence enterprises previously could lease only state property without an auction under this mechanism. This option now also applies to municipal property. Local self-government bodies are recommended to set the annual rent for such property at 8% of its appraised value.
Eligibility Criteria for Non-Auction Leases
Previously, an enterprise had to meet three criteria simultaneously. Under the new rules, it is sufficient to meet at least one of the following four criteria:
- be designated by the Ministry of Defence as a critically important enterprise in the defence industry or as critical for meeting the needs of the Armed Forces of Ukraine and other military formations;
- be included in the electronic register of participants in the selection process and contractors under state contracts;
- be a manufacturer of unmanned systems, electronic warfare systems, passive countermeasures against technical intelligence, a serial manufacturer of missile systems, a developer of new or upgraded missile weapons, or a manufacturer of explosive materials for military purposes;
- have the status of a Defence City resident.
The conditions for accessing non-auction leases have therefore been significantly simplified.
How to Lease Property Without an Auction
To lease state or municipal property without an auction, an enterprise must submit a written application to the lessor requesting that the relevant property be included in the list of assets available for non-auction lease.
The application must include information confirming that the enterprise meets at least one of the eligibility criteria: a reference to the Ministry of Defence decision granting critical-enterprise status; a decision confirming inclusion in the register of participants in the selection process and contractors under state contracts; a letter from the Ministry of Defence confirming that the enterprise meets the criterion related to the production of relevant defence products; or information confirming Defence City resident status.
Within five working days of receiving the application, the Ministry of Defence sends the lessor confirmation that the applicant meets at least one of the criteria or notifies the lessor that the applicant does not meet any of them.
Expanding opportunities for the development of Ukraine’s defence industry will continue to be one of the key priorities of the Ministry of Defence of Ukraine — from attracting investment to increasing production capacity.
It will be recalled that the Ministry of Defence continues to expand the Defence City ecosystem, with the number of residents among weapons and military equipment manufacturers already exceeding 50.