Credit funds availability period under the $3.65 billion loan agreement between Naftogaz of Ukraine and the China Development Bank has been extended until 25 December 2017. The framework agreement was concluded on 25 December 2012. The decision was announced by the Chinese side at the official meeting of the Trade and economic cooperation subcommittee of the Commission for cooperation between the government of Ukraine and the government of China which took place in Kyiv last week.
Thanks to the extended availability of the loan, Ukraine will retain the opportunity to use the long-term funds to modernize its energy sector. The extension provides additional time for all concerned Ukrainian institutions to reach a consolidated position regarding the application of these funds.
Last year, Naftogaz submitted four investment proposals within the agreement framework to the Ministry of Economic Development and Trade to be evaluated for feasibility and added to Ukraine's State Registry. These include the project of the modernization of obsolete heating systems in standalone houses owned by low-income consumers, two combined heat and power plant construction projects in the city of Kyiv and Lviv region as well as the purchase of drilling and auxiliary equipment for increasing gas production by Ukrgasvydobuvannya. In June 2016, having received no consolidated decision from the government, Naftogaz asked the China Development Bank to extend the project submission deadline. The review of the proposed projects was not included in the last week’s meeting agenda.
For Ukraine, the agreement with the China Development Bank is currently the largest and the most competitively priced source of funds available for projects aimed at raising energy efficiency and decreasing consumption of imported fuels.