Infrastructure Reconstruction: Why Ukraine Needs a New Urban Management Model, expert opinion by Yevhen Kalinin, CEO of Veolia Ukraine
After every major conflict, countries rebuild roads, bridges, and homes. However, history demonstrates that true modernization begins with infrastructure — those essential systems that ensure the functioning of economies and cities. After World War II, one of the largest economic reconstruction projects was the Marshall Plan. Between 1948 and 1952, the United States allocated $13.3 billion to rebuild European economies, equivalent to approximately $140 to $150 billion in today's prices. These funds were not merely financial aid; they launched systematic economic modernization, created new institutions, and enabled the adoption of modern management models.
Today, Ukraine faces reconstruction on an even more larger scale. According to the updated RDNA assessment (Government of Ukraine, World Bank, EU, UN), the total cost of reconstruction for 2026–2035 exceeds $588 billion — nearly three times Ukraine's projected GDP for 2025. This figure reflects the scale of destruction, particularly in the housing and energy sectors. This is not simply about rebuilding homes or roads, but also rebuilding critical infrastructure: energy, transportation, water supply, and heating networks.
Key sectors requiring funding:
Transportation: ~$96 billion (roads, bridges, railways)
Energy: ~$91 billion (production, networks)
Residential sector: ~$90 billion
Commerce and industry: ~$63 billion
Agriculture: ~$55 billion
Mine clearance: ~$28 billion
The Soviet Model Has Outlived Its Time
The majority of Ukrainian urban infrastructure dates from the Soviet era — designed for a different economy, energy sector, and management model. Heating networks, boilers, and heat supply systems were built according to the principle of maximum centralization. Cities received heat from large thermal power plants or boilers, with the entire system functioning as a single monopolistic infrastructure.
Over the decades, these networks have deteriorated significantly. Even before the large-scale invasion, heating network deterioration exceeded 70% in many cities, with heat losses during transport reaching 20 to 30%.
War has merely exposed a problem that has been accumulating for years. Massive attacks on energy infrastructure revealed that excessive centralization makes cities extremely vulnerable. Damage to a major power plant or main network can leave entire areas without heating or electricity. This situation poses a fundamental question for Ukrainian cities: should the old model be restored, or should a different infrastructure architecture be adopted?
Toward Decentralization: The European Example
In many European countries, the modernization of urban energy systems is moving toward decentralization and diversification of energy sources. Copenhagen is an emblematic example. Its district heating system, far from disappearing, has been radically modernized and diversified: the city has integrated dozens of sources, from incinerators to biomass plants and combined heat and power (CHP) facilities. Crucially, the network functions not as a rigid structure, but as a flexible system with multiple generation points that can replace one another. As a result: Copenhagen has not only reduced losses and energy dependence, but has also significantly increased its resilience to crises.
Veolia successfully applies this model in Poznań, Poland, where it has modernized heating networks by integrating combined heat and power plants powered by gas, biomethane, and industrial heat. Previously, over 80% of heat came from coal. Today, a modern multi-source combined heat and power plant already provides heating to 60% of residents (over 330,000 people out of 560,000). This new technology has achieved production efficiency of 92% and reduced CO₂ emissions by 25% (260,000 tonnes per year). By 2030, Poznań will completely abandon coal in favor of gas combined heat and power, biomethane, hydrogen, geothermal energy, and waste heat.
These decentralized systems offer several major advantages:
First, they are far less vulnerable to damage, as the failure of one element does not paralyze the entire system. Second, they use energy more efficiently and reduce transport losses. Third, they create a competitive environment where different technologies and operators can coexist, thereby increasing overall system efficiency.
For Ukraine, this means not only rebuilding destroyed networks, but creating a new urban energy architecture. Paradoxically, war is accelerating this necessary transition.
Reconstruction Beyond Financing: The Role of Public-Private Partnerships
International partners are already establishing financial mechanisms to support Ukraine. Notably, G7 countries have agreed to provide approximately $50 billion in loans, financed by revenues from frozen Russian assets.
The Ukrainian government, in collaboration with international partners, has also created a system for coordinating recovery programs and conducting regular needs assessments — the Rapid Damage and Needs Assessment (RDNA) — which prioritizes reconstruction investments.
However, history demonstrates that large-scale reconstruction efforts do not rely solely on financing. The Marshall Plan succeeded not because Europe received money, but because new economic institutions were created, management models were modified, and modern market rules were established. In most European countries, the modernization of urban infrastructure has been achieved through a combination of state control and private expertise — various public-private partnership (PPP) models, from concessions to long-term infrastructure management contracts. These models allow cities to attract investment, technology, and expertise from international operators while maintaining strategic control over key assets.
For Ukraine, the scale of necessary investments is such that covering them exclusively through the state budget will be difficult.
PPP Models in Europe: References for Ukraine
In France, Germany, Poland, and other EU countries, public-private partnerships are widely used:
France: Veolia manages numerous heat supply systems based on long-term contracts with municipalities. In Paris-Saclay, since January 2023, Veolia operates a fifth-generation geothermal heating and cooling network, combining state control with private technology. The network already provides over 50% of energy from renewable and recovered sources, and its capacity is expected to double by 2028 to meet the heating and cooling needs of over 10,000 households.
Poland: Concession models are actively used to modernize urban infrastructure. In Poznań, Veolia has led a comprehensive modernization project of heat supply with a transition from coal to modern sources, demonstrating the concrete benefits of public-private partnership.
Germany: Mixed companies, where municipalities and private investors hold shares, are common. In Brunswick, Veolia participates in modernizing heat supply: in place of the old coal-fired power plant (dating from the Cold War), modern biomass and gas combined heat and power units have been built. Investments exceeded €200 million, CO₂ emissions decreased by 50% (180,000 tonnes per year), and approximately 50,000 households benefit from heating. This model allows the city to maintain control while receiving private investment and technology for a rapid transition to cleaner energy.
These models make it possible to attract investment, modern technology, and managerial expertise while keeping key assets publicly owned. The choice of model today will determine what Ukrainian cities will be like in 20 to 30 years.
