Local authorities have doubled their income from land lease through electronic auctions in the Prozorro.Sale system. This is stated in the report of the World Bank, which studied the impact of transparent online auctions on land lease revenues, reports “ProAgro Group” with reference to the information of the Ministry of Agrarian Policy and Food.
The authors analyzed offline land auctions held since 2015, online auctions within the framework of the “pilot” on SETAM (2018-2019), as well as online auctions in the Prozorro.Sale system (from November 2021 to March 2022).
The report emphasizes that electronic auctions can have an immediate, significant and economically meaningful impact on land lease revenue. And if the 2021 reform, which made it mandatory to hold land auctions for state and communal property plots through Prozorro.Sale, had been implemented earlier, the additional annual revenue for local councils would have been half a billion dollars, or more than $1 million per rayon. In the context of the state decentralization policy implemented in Ukraine, this issue is even more urgent, as it provides for revenues from the lease of state land as the main source of funding for local communities, World Bank experts emphasize.
“With more than 10 million hectares, state agricultural land in Ukraine exceeds the total area of land used for agriculture in most European countries. The efficiency of this asset, which is likely to increase further with climate change and rising global demand for commodities, will affect not only the global food supply, but also the incomes of local communities and the ability to provide public services,” the authors of the study noted.
They also stressed that non-transparent mechanisms often led to the transfer of land to private individuals at below-market prices, which hinders local development. And transparent auctions are an effective tool to prevent this.
According to the authors of the report, Ukraine, which during 2015-20 ranked in the bottom half of global rankings of the rule of law and corruption, has managed to build competitive and transparent public land auctions. These principles will help to further improve the functioning of the land market, spatial planning, property management and revenue planning of territorial communities.
