Toll Roads in Ukraine: Why It Is Becoming Inevitable

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Ukraine’s road infrastructure is entering a phase where old approaches no longer work. Time for Action analyzed the situation and concluded the question is no longer whether the financing model for roads will change, but how quickly it will happen and what form it will take. After the winter, the condition of roads has sharply deteriorated. This is not only about local damage, but about a systemic breakdown of road surfaces, including international highways. In such conditions, routine maintenance loses its effectiveness. It is no longer sufficient and becomes economically inefficient, as the problem must be addressed at the level of capital reconstruction.

The main reason is financial. Only a few billion hryvnias are allocated for road maintenance and repair, while the real need is measured in tens of billions. In previous years, spending was significantly higher, but even those volumes would no longer match current prices. The cost of materials has increased multiple times, fundamentally changing the economics of any project. It is also important to consider that key materials are imported and dependent on global markets. Fluctuations in oil prices directly affect road construction. As a result, even if previous funding levels were maintained, the efficiency of spending would still decline. The problem is not limited to a lack of money. It is systemic and linked to how the sector is financed. Previously, the Road Fund played an important role, providing a clear logic drivers pay excise tax on fuel, and part of these funds is directed toward road construction and repair. This allowed for planning and maintaining infrastructure in a stable condition.

“For drivers, it is a simple logic: they pay excise tax on fuel, and part of these funds is directed toward road construction and repair.”

Today, this model effectively does not function as intended. Formally, the fund exists, but its resources are used differently. As a result, the sector has lost long-term planning. Roads are repaired not systematically, but selectively, which leads to faster deterioration and higher costs in the future.

At the same time, the state is forced to shift priorities. A significant share of resources is directed toward defense, as well as critical logistics frontline, medical, and evacuation routes. Under these conditions, infrastructure projects move to the background, even as their condition worsens. At the same time, the logic of transport flows is changing. The war has already reshaped the economy and shifted key routes. Some directions now carry significantly higher loads than before. This means that part of the road network must not just be repaired, but fundamentally rebuilt expanded, upgraded, and adapted to new realities.

All of this creates a new reality in which the state budget can no longer remain the sole source of financing. This is where the idea of toll roads emerges. It is not presented as an experiment or an alternative, but as a gradual transition to a different model. The logic behind this approach is clear: the user pays for the use of infrastructure, and these funds are directed toward its maintenance and development. This creates a more stable source of financing that does not depend on annual budget decisions.

At the same time, another instrument is being considered concession projects. This involves attracting private investors who build infrastructure and recover their investments through its operation. This model is widely used globally but requires long-term guarantees and clear rules. This is where a key challenge arises. The state budget is approved annually and does not provide investors with the long-term certainty needed for projects spanning decades. This complicates the attraction of large-scale investments and makes the transition to a new model more difficult. Despite this, the overall direction of change is already clear. Ukraine is gradually moving away from centralized financing toward a combined system that integrates public funds, user-based payments, and private investment.

What changes in road financing are effectively taking shape

reduction of the state budget’s role as the primary source
the budget can no longer cover the full needs of the road sector
loss of functionality of the Road Fund in its traditional form
funds no longer operate as a stable planning tool
increase in construction and repair costs
rising material prices make even basic work significantly more expensive
transition to a “user pays” model
toll roads are seen as a way to create a stable financial flow
preparation for concessions and private capital involvement
the state is seeking partners for large infrastructure projects
reconfiguration of logistics and traffic loads
new routes require expansion and modernization
dependence of infrastructure on defense priorities
resources are being redistributed toward critical sectors

As a result, the road sector has reached a point where delaying decisions only increases future costs. The choice effectively comes down to two scenarios either a gradual transition to a new financial model, or continued accumulation of problems that will require significantly greater resources later. In this logic, the emergence of toll roads does not appear as an isolated initiative, but as part of a broader transformation. That is why it is increasingly discussed not as a possibility, but as a likely outcome.