EBRD Lends €97.3 Million to Ukraine's Electricity Company

Published on: 27 August 2022
by KnowESG
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The EBRD and Ukrainian authorities have agreed to repurpose the final €97.3 million of an existing loan to Ukrenergo, the country's energy transmission company, for emergency liquidity. The first tranche of €50 million was repurposed in May. The goal is to keep the lights on in a country where Russia's conflict in Ukraine has hurt the economy.

The EBRD has agreed to invest €1 billion in Ukraine's economy this year, with risks shared between donors and partners. A sovereign donor guarantor will issue a guarantee for up to half of the €97.3 million.

The European Union's EFSD (European Fund for Sustainable Development), the funding arm of the EU External Investment Plan supporting investment in Africa and the EU Neighbourhood, offered a first-loss guarantee for the previously disbursed €50 million to Ukrenergo.

The EBRD has agreed to invest €1 billion in Ukraine's economy this year, with risks shared between donors and partners. A sovereign donor guarantor will issue a guarantee for up to half of the €97.3 million.

The European Union's EFSD (European Fund for Sustainable Development), the funding arm of the EU External Investment Plan supporting investment in Africa and the EU Neighbourhood, offered a first-loss guarantee for the previously disbursed €50 million to Ukrenergo.

In July 2019, the EBRD agreed to lend €149 million to Ukrenergo to upgrade key transmission infrastructure required to maintain the system stability and backup synchronisation with European electricity networks, as well as to assist Ukraine in aligning its legal framework and operational practices with the EU 3rd Energy Package.

When the war broke out, the original project was in the process of being procured. After the war, that project will need to be evaluated and considered for financing by the bank.

The war has resulted in severe liquidity requirements, prompting Ukrenergo to seek repurposing of undisbursed funds. The EBRD's liquidity assistance will ensure the stable operation of the Ukrainian energy system, including nuclear generators and renewables, as well as the supply of power to industries and households. Since the start of the war, the company has encountered significant nonpayments from its clients, as well as a 30% decrease in electricity use and accompanying revenue losses.

To address Ukraine's most pressing needs, the EBRD is focusing on five areas of the country's economy: trade finance, energy security, vital infrastructure, food security (including the provision of liquidity to farmers via banks for the spring sowing campaign, as well as agribusiness companies and food retailers), and pharmaceutical companies.

Source: EBRD

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