Financing of projects from the State Regional Development Fund (SRDF) was suspended by the new Government because it wanted to understand how effectively the funds from the SRDF were used on the ground. The status of the projects, terms and conditions for the resumption of financing were discussed yesterday, on 17 September, during a meeting of the Commission at MinRegion for the evaluation and selection of investment projects and programmes for regional development, which can be implemented at the expense of the State Regional Development Fund.

In 2019, a sum of UAH 7.67 billion is provided in the state budget for the SRDF. In July this year, the Cabinet of Ministers approved a list of 707 projects to be financed by the State Regional Development Fund for a total amount of UAH 6.96 billion. Thus, a sum of UAH 707 million remains unallocated. According to MinRegion, a sum of UAH 500 million refers to the All-Ukrainian Public Budget, and a sum of UAH 207 million is a balance, for which the regions did not submit any project proposals.

At present, the Government has suspended funding for all 703 approved projects. “We stopped funding the projects of SRDF because we needed to understand what the situation with the projects was. It is our common responsibility as managers of the funds,” said Alyona Babak, Minister of Development of Communities and Territories of Ukraine, during the meeting of the Commission.

According to the Minister, MinRegion has already analysed the projects submitted by oblasts for receiving finances from the State Regional Development Fund, and it has information on the status of tenders, the volume of performed works, cash expenditures, as well as photographs of the objects being implemented.

“First of all, we drew attention to the interest of the construction contractors in implementing projects submitted to the State Regional Development Fund as a priority. The indicator was the actual allocation of local budget funds to these projects. Unfortunately, we have seen a lack of interest from some local authorities and local self-government bodies to implement projects at the expense of the SRDF. We should also note the low level of control over the use of state budget funds by their managers – oblast state administrations, some of which have formally approached the use of the state support,” said Alyona Babak.

She reported that out of 707 projects approved by the Government, the tender procedures have not been completed for 120 projects for a total amount of UAH 988 million. Of these, no tenders were announced for 43 projects for a sum of UAH 364 million. These are projects in the field of education (21 projects), sports (4), medicine and social protection (4), road transport infrastructure (9), water supply and drainage.

The largest number of projects with unannounced tenders are in the Ivano-Frankivsk (9) and Sumy (5) Oblasts. All tenders were held in the Dnipropetrovsk, Kirovohrad, Poltava and Rivne Oblasts and in the city of Kyiv.

The Minister also emphasized the unsatisfactory speed of project work fulfilment, in which the tender procedures had been completed. Works have not started as for 192 projects for the sum of UAH 1.6 billion.

“It is almost the end of September, but we have such a situation. We need to correct it quickly to effectively use the state support,” Alyona Babak said.

As a result of the discussion, the Commission decided that the oblast state administrations should additionally elaborate the list of projects and propose projects that should be excluded from the list or reduced, because of the threat of not using the funds from the SRDF. First, this applies to projects that have not even been tendered. The OSA’s proposals must be submitted to MinRegion by an official letter today, on 18 September. If any Oblast State Administration does not submit its proposals, MinRegion will independently decide on the exclusion of projects that it considers problematic.

So, today MinRegion will have the final list of projects to be financed by the SRDF. According to the Ministry’s officials, it will take another 3-4 days to resume their funding.

The material is prepared within the Modeling Administrative and Territorial Structure on Sub-regional Level Project of the Ukrainian Association of Rayon and Oblast Councils implemented with the support of the Council of Europe Programme “Decentralisation and local government reform in Ukraine”.