Brussels, 23/10/2015 (Agence Europe) - On Friday 23 October, Ukraine and the European Bank for Reconstruction and Development (EBRD) signed an EBRD loan agreement for $300 million (€270 million) to finance Ukraine's purchases of gas for the coming winter.
This agreement, signed by Ukraine's Finance Minister Natalie Jaresko and EBRD Vice-President Phil Bennett on the sidelines of the Germany-Ukraine economic forum in the presence of Germany's Chancellor Angela Merkel and Ukraine's Prime Minister Arseniy Yatsenyuk, is conditional on a reform programme for restructuring Ukrainian gas company Naftogaz.
The reform programme includes the creation of a Naftogaz supervisory board of independent and qualified directors, the introduction of internal audit, anti-corruption and risk management functions and the implementation of an ownership and governance structure in line with best international practice.
Naftogaz will use the loan for purchasing around 1.1 billion cubic metres of gas, which will be used to fill Ukraine's strategic storage facilities ahead of winter.
“We are thankful to the EBRD for this loan agreement, a true milestone of our shared commitment to Ukraine's energy sector reform. With the EBRD's support, we have taken a significant step forward in ensuring financing for continuous gas supplies for the winter”, said Jaresko. “By providing this loan to Naftogaz, we are not only helping to strengthen energy security in Ukraine but we also foster the reform agenda in the energy sector making it more open, transparent and efficient”, Bennett commented.
The EBRD says that its loan to Naftogaz is a three-year revolving credit facility, which means that the company will be able to pay back and re-borrow this amount over the next three years, to facilitate advance gas purchases ahead of winters. The EBRD is the largest international financial investor in Ukraine and as of 1 September 2015, it had a total cumulative commitment of €11 billion in 346 projects throughout the country.
This support from the EBRD is part of the international community's efforts to strengthen Ukraine's energy security and to support the reform of Ukraine's gas sector. In parallel, the World Bank and European Investment Bank (EIB) are also working on a programme of financial facilities aimed at improving the energy security in Ukraine, and on 12 October they signed an agreement for a $520 million loan benefitting from an EU counter-guarantee to facilitate the purchase of gas by Naftogaz (see EUROPE 11408).
On 25 September, Ukraine agreed on a binding memorandum of understanding with Russia - under the EU's mediation - for the supply of Russian gas for winter 2015-16. This involved commitment from the three parties to guarantee this supply of gas (see EUROPE 11398). (Original version in French by Emmanuel Hagry)