KYIV

International Finance Corporation (IFC) is ready to help Ukraine to modernise and expand the country’s irrigation and drainage sectors critical to unlocking the agriculture industry’s potential.

In a move to increase private sector participation for an inclusive and climate-resilient agricultural sector, IFC, a member of the World Bank Group, signed a Memorandum of Understanding with Ukraine’s Agrarian Policy and Food Ministry that envisages joint work on sector reforms, including identifying the proper institutional approach to improve the irrigation and drainage systems. IFC will also support the government in designing a viable public-private partnership (PPP) model to address the financing gap and attract private sector investments in the manufacturing of irrigation equipment, IFC said.

According to the World Bank, irrigating 1 million hectares of land in southern Ukraine, the country’s warmest and driest region, would require $2 billion of investment. Public funds are not enough to address the massive financing gap in this sector, making private sector solutions essential.

Due to years of underinvestment and degradation of the water supply system, Ukraine’s irrigation infrastructure currently operates at just one-quarter of its potential capacity, significantly hampering agricultural production. Given the importance of appropriate irrigation and drainage for the sector, the need to invest in rehabilitating the system is clear. In addition, the recently launched land market will open up opportunities for landowners to invest in high-cost technologies such as irrigation.

‘The memorandum defines the fundamental principles for structuring the national water operator according to the international standards of corporate governance,” Roman Leshchenko, Ukraine’s Agrarian Policy and Food minister, said.

“It also creates preconditions for attracting investment in the rehabilitation and modernisation of Ukraine’s irrigation infrastructure, from private investors, development banks, and international financial institutions,” he said.

Leshchenko added that these investments would improve the performance of agricultural production, as well as contribute to the prosperity of agricultural regions of our country.

In addition, IFC will help the government develop a plan for launching a national operator for the main irrigation infrastructure. This will help provide timely repairs including proper maintenance of irrigation assets.

In 2020, IFC, in partnership with the Austrian Federal Ministry of Finance and the Hungarian Export-Import Bank, launched a project to help Ukraine develop the irrigation sector. The aim is to promote legislative and policy reforms and create a viable business model to help Ukraine mobilise private finance, essential to rehabilitate and maintain the country’s water supply infrastructure.