The loan provided by the European Bank for Reconstruction and Development (EBRD) to Ukraine’s electricity transmission system operator, Ukrenergo amounts to nearly 100 million euros after the UK government announced to guarantee up to 50 million US dollars (46.5 million euros) of further financing to ensure the stable operation of the company in the ongoing war situation.
This is the second tranche of European emergency assistance provided for the Ukrainian transmission system operator. The first part of the guarantees under this loan amounting to 50 million euros has already been provided by the European Union through the European Fund for Sustainable Development. Ukrenergo is the first Ukrainian state-owned company to receive such financial support from Europe.
“The willingness of European partners to provide financial guarantees for Ukrenergo’s loans demonstrates that they see our efficiency and the tremendous work that has been done to achieve the integration with ENTSO-E,” said the CEO of Ukrenergo Volodymyr Kudrytskyi thanking the donors and partners.
The European Network of Transmission System Operators for Electricity (ENTSO-E) has granted Ukraine’s power company the status of Observer Member at the end of April after a successful emergency synchronisation.
EBRD President Odile Renaud-Basso said that the EBRD’s support to the Ukrainian electricity company is vital to help maintaining everyday access to vital services for citizens. “It is more important than ever to keep the real economy working,” emphasised the President.
The EBRD originally agreed to lend 149 million euros to Ukrenergo in July 2019 to upgrade key transmission infrastructure required to maintain system stability and back-up synchronisation with European electricity networks, as well as help Ukraine align its legal framework and operational practices with the EU 3rd Energy Package. The loan has yet to be disbursed.
The war has triggered urgent liquidity needs that prompted Ukrenergo to seek the repurposing of these funds. It needs to enable the stable functioning of the Ukrainian electricity grid as well as nuclear generators and maintain power supplies to industries and households.
Since the war began, the company has been contending with substantial non-payments by its customers coupled with a 30 per cent reduction in electricity consumption and resulting revenue losses.
The European Fund for Sustainable Development has provided guarantees for the EBRD loan. Ukrenergo can use these to cover the loss of payments for electricity transmission and dispatching services, to ensure the solvency and liquidity of the company and to meet its financial obligations.
The EBRD has pledged to invest 1 billion euros this year in supporting the Ukrainian economy, with support of donors and partners.