The European Bank for Reconstruction and Development (EBRD) has issued an official announcement on consideration of a gas purchase facility for Naftogaz. The trade finance loan of up to US$300m is to be used to bridge the gap between purchase and sale of natural gas.
Provided that the project successfully passes all required approval stages, the money can be disbursed to Naftogaz not earlier than September 2015.
According to the EBRD announcement, the project aims at supporting the policy of the Government of Ukraine to make Naftogaz operations financially sustainable by establishing commercial mechanisms for trade finance, achieving cost recovery pricing and eliminating the need for budget subsidies.
With this loan, the EBRD aims to support the impetus to the establishment of market based principles in Ukraine. According to the Bank, the project will also focus on improving corporate governance of Naftogaz and Ukrtransgaz, Ukraine’s gas transmission system operator. It is also expected to involve commitments to increasing transparency and standardisation of the procurement of natural gas from Ukraine’s interconnectors with the European Union.