The European Bank for Reconstruction and Development (EBRD) and the Ukrainian authorities have agreed the repurposing of part of an existing loan to Ukrenergo, the country’s electricity transmission company, to provide €50 million of emergency liquidity. The aim is to keep the lights on in a country whose economy has been hard hit by the Russian invasion.
The EBRD originally agreed to lend €149 million 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’s Third Energy Package. The loan has yet to be disbursed.
Since the war began, Ukrenergo has been contending with substantial non-payments by its customers coupled with a 30 per cent reduction in electricity consumption and resulting revenue losses. Urgent liquidity needs prompted Ukrenergo to seek the repurposing of these funds to enable the stable functioning of the Ukrainian electricity grid as well as nuclear generators and maintain power supplies to industries and households.
“This EBRD 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,” said EBRD President Odile Renaud-Basso.
“The loan will provide emergency liquidity that compensates for Ukrenergo’s temporary revenue losses caused by Russia’s military aggression,” said Executive Vice-President of the European Commission Valdis Dombrovskis. “More immediately and importantly: it will make sure that Ukraine’s electricity grid and nuclear generators continue to operate.”
He added that the EU is working with the EBRD to support other operations in key sectors in the coming weeks: the EU intends to cover two more loans provided by the EBRD that will address the liquidity needs of Ukraine’s railway and pharmaceutical sectors.
Dombrovskis also noted that the EU is finalising negotiations with the EBRD for a further €200 million in guarantees to support Ukraine and EU neighbouring countries.
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