Ukraine will receive USD 300 mln from EBRD to Naftogaz Ukrainy to finance gas purchase

9/30/15

Ukraine will receive a loan of $300 million USD from the European Bank for Reconstruction and Development (EBRD) for the state-owned company ‘Naftogaz Ukrainy’ to purchase natural gas. The loan has been approved today by the Managing Board of the EBRD in London. Repayment of the loan is guaranteed by the Government of Ukraine.

The loan will help Ukraine secure sufficient gas supply to meet the demands of households and industry in the winter season.

Deputy Finance Minister Artem Shevalev, representing Ukraine in the loan negotiations, said during the meeting of the Managing Board of the EBRD: “The EBRD loan will allow Ukraine to stick to commerce-driven gas purchases and transparent contracting procedures, in line with international standards. This means that Naftogaz will not need to be supported with state funds in the future. The loan also contributes to Ukraine’s energy security by allowing us to diversify our gas supply. According to the terms of the loan, the gas will be purchased on the Western border of Ukraine only.

The loan is part of an extended program of international support for Ukraine, made possible due to Ukraine’s active cooperation with the IMF. This loan is a further vote of confidence from the international community for the Ukrainian Government’s reform agenda.

The loan is aimed to further facilitate the comprehensive reform of Ukraine’s gas sector, and comes after the December 2014 EBRD loan program targeting the reconstruction and modernization of Ukraine’s pipeline system The loan was made available due to Ukraine’s implementation of a renewed Corporate Governance Action Plan for Naftogaz, which is being jointly led by the EBRD, World Bank and the EU.

The loan contract between Ukraine and the EBRD is expected to be signed next week.

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