Ministry of Defence proposes attracting private capital to build underground defence facilities

Ukraine’s Ministry of Defence is developing a mechanism to attract private capital for the construction of protected production infrastructure for defence industry. Amendments to Cabinet of Ministers Resolution No. 1494 are being prepared to establish a separate legal framework for constructing underground production facilities and associated above-ground infrastructure.

Under the proposed mechanism, the construction project could be commissioned not only by a defence enterprise but also by another legal entity, including a developer or investor. The entity would be able to build the facility using its own or borrowed funds and subsequently transfer it to a defence company through ownership, lease or right of use.

“Our task is to create conditions in which Ukraine’s defence production can simultaneously scale up and become better protected. This requires us to draw not only on the resources of the state and defence-industrial enterprises themselves, but also on the capabilities of private capital, developers and the construction market,” Deputy Minister of Defence Hanna Hvozdiar said.

The proposed mechanism would not require additional expenditure from the state budget. The Ministry of Defence also proposes establishing a statutory definition of an underground production infrastructure facility and extending simplified procedures to above-ground structures and structural elements technologically and functionally connected to it.

According to the Ministry, the new model should accelerate the creation and expansion of protected production capacity, facilitate the relocation of defence-industrial enterprises and support the development of the underground industrial construction market.

The draft amendments have completed the main stage of inter-agency review. The document is currently being revised following legal and anti-corruption assessments before being submitted to the Cabinet of Ministers for consideration.