The European Bank for Reconstruction and Development (EBRD) will allow NPC Ukrenergo to change the purpose of a EUR50 million loan for emergency liquidity support, and the European Fund for Sustainable Development will provide a guarantee to cover the first losses.
“This support is part of the EUR1 billion that the EBRD plans to implement in Ukraine this year in cooperation with donors and partners,” the bank said in a press release on Wednesday.
The EBRD notes that EUR50 million will ensure a stable electricity supply in the country, whose economy was significantly negatively affected by the Russian military invasion in February.
“At a time when Ukrainians are resisting Russian aggression, it is important to ensure proper electricity supply in their country, and therefore support the critical role of Ukrenergo. We are also preparing support with the EBRD for other important areas of the Ukrainian economy, which will be provided in the coming weeks , in particular to meet the liquidity needs of the railway and pharmaceutical industries,” Valdis Dombrovskis, Executive Vice President of the European Commission, is quoted in the bank’s message.
He joined EBRD President Odile Renaud-Basso to sign a European Fund for Sustainable Development (EFSD) guarantee on the loan, which will reduce the bank’s credit risk in the current war conditions, the release said.
According to him, Ukrenergo’s support is part of a total EUR1 billion support that the EBRD plans to implement in Ukraine this year in cooperation with donors and partners. In order to meet the most urgent needs of Ukraine, the bank has identified five priority sectors of the Ukrainian economy: trade finance, energy security, vital infrastructure, food security (providing liquidity through banks for farmers for the spring planting campaign, as well as for agricultural companies and grocery retailers), and maintaining liquidity for pharmaceutical companies.
As reported, in July 2019, the EBRD agreed to provide Ukrenergo with EUR149 million to upgrade key elements of the electricity transmission infrastructure to support system stability and synchronization with European electricity grids, as well as to help Ukraine bring its legislation and operating principles in line. with the Third Energy Package of the EU. This loan has been partially disbursed.
Following a Russian-led war, the EBRD and Ukraine agreed to change the purpose of part of an existing loan for emergency liquidity support.
The EFSD is the financial mechanism of the EU’s External Investment Plan, which provides support for investment in Africa and the EU’s partner countries.
The EBRD immediately condemned the Russian invasion of Ukraine on February 24 and promised to stand with Ukraine. On April 4, the Bank’s Board of Governors voted to suspend indefinitely Russia’s and Belarus’ access to EBRD financing and technical assistance. The bank is closing its offices in these two countries. In addition to the EUR2 billion resilience package, the EBRD has pledged to help finance the recovery of Ukraine when conditions permit/
All EBRD investments in Ukraine under the resilience package for Ukraine and neighboring countries affected by the war will involve risk sharing with partners.
