The European Bank for Reconstruction and Development (EBRD) and Ukrainian authorities have agreed on the repurposing of the final 97.3 million euros of an existing loan to Ukrenergo, the country’s electricity transmission company for emergency liquidity. Since the war began, the company has faced substantial non-payments by its customers coupled with a 30 per cent reduction in electricity consumption and resulting revenue losses.
The package of agreements was signed by Volodymyr Kudrytskyi, Chairman of the Management Board of NPC Ukrenergo, Minister of Finance of Ukraine Sergii Marchenko and EBRD President Odile Renaud-Basso.
“The additional assistance from the EBRD will allow us to support the market and provide our citizens with electricity wherever possible,” commented Chairman of the Management Board Volodymyr Kudrytskyi adding that they will use the funds for balancing the power system and settling payments with RES producers.
The EBRD has pledged to invest 1 billion euros this year in supporting the Ukrainian economy, with risks shared with donors and partners. A guarantee for up to half of the 97.3 million euros will be provided by a sovereign donor guarantor. The European Union’s EFSD (European Fund for Sustainable Development), the financing arm of the EU External Investment Plan promoting investment in Africa and the EU Neighbourhood, provided a first loss guarantee for the earlier 50 million euros already disbursed to Ukrenergo in full.
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 original project was undergoing procurement when the war began. That project will need to be reassessed and considered for financing by the Bank after the war.
The war has triggered urgent liquidity needs that prompted Ukrenergo to seek the repurposing of undisbursed funds. The EBRD says that its liquidity support will enable the stable functioning of the Ukrainian electricity grid, as well as nuclear generators and renewables, and maintain power supplies to industries and households.