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UKRAINE: PUBLIC INVESTMENT MANAGEMENT PERFORMANCE ASSESSMENT
these issues will hinder the prospects for assessing future projects based on comparative indicators of economic value such as EIRR or BCR. 3.18. No evidence was found of mechanisms for rejecting proposals on grounds other than the necessary documentation is missing / not complete. Essentially any project that follows the correct procedures and administrative steps can be put forward for funding from the budget. 3.19. The appraisal system, such as it is allows the weakest projects to have an equal chance of receiving budgetary funds as those projects that might offer the best economic returns for the nation’s investment.
Independent Review of Appraisal 3.20. MEDT’s Department of Investment and Innovation Activity (DIIA) is the main entity responsible for providing limited oversight of project proposals. At the moment because rules permit projects that are not classed as SIPs to avoid the need for appraisal, less than 10% of projects that might be classified as PIPs are appraised and reviewed. Since DIAA also prepares economic appraisals for proposing entities based on supplied data, the potential for conflicts of interests needs to be managed carefully. 3.21. The 2011 revision to the Law on Investment Activities now includes a definition on what represents an investment project but this is subject to further clarification and as yet does not appear to capture those projects that are still considered ‘construction projects’. It also mentions the need for a Registry of Investment Projects, which is currently maintained by MEDT) and that an economic appraisal for each proposal is required before it can enter on to the Registry. These new requirements have increased the work load of DIIA. 3.22. There are 5 positions available for appraisal staff in DIIA. In 2011 the department handled approximately 1200 projects. This means that each official needs to assess 240 projects each per year in the event that all 5 positions are permanently filled and the staff is engaged full-time only in those duties. The quality of the appraisal and review that is possible under these conditions appears to frustrate officials and raises the question of what can be achieved in so little time. Another capacity constraint is that all of these 1200 projects don’t arrive in a consistent manner throughout the year. Instead they arrive in greater numbers in the run-up to the budget deadline making it impossible to provide any meaningful assessment. 3.23. Projects coming in to the department can be as low in value as 100,000 UAH ($12,500) up to very large infrastructure projects. There appears to be no formal minimum threshold for projects within the MEDT. 3.24. The main sources of projects by sector to DIIA for assessment and review are Highways, Water/Wastewater, Mining, Social and culture (including tourism). 3.25. Such guidelines that exist to date appear to be a checklist of documents to be submitted e.g., Environmental statement, Energy efficiency etc. All projects that submit the correct documentation theoretically go onto the Registry after the DIIA has done its checking. Therefore it is perfectly possible for bad projects (but nonetheless compliant), scoring just 1 point to be on the same Registry, as good projects with 100 points. Good projects and bad projects go on the Registry together. 3.26. The Registry is still a work in progress. It is intended that basic information will be shown on the Ministry of Economy’s website.