Naftogaz has entered into a loan agreement with the European Bank for Reconstruction and Development (EBRD) for opening a revolving loan facility amounting to up to EUR 300 million to purchase imported natural gas to overcome the heating season sustainably.
The company intends to expand this loan facility to import additional volumes of gas needed for the next heating season.
CEO of National Joint Stock Company “Naftogaz of Ukraine” Yuriy Vitrenko said: “Naftogaz highly appreciates its strategic partnership with the EBRD. The fact that we can rely on the EBRD during the most difficult circumstances is proven by this project under the war conditions. This will definitely contribute to Ukraine's resilience. We are also grateful that together with the EBRD we can help modernize Ukraine by implementing best practices in both the purchase of gas and the sustainable development of the energy sector in Ukraine”.
President Odile Renaud-Basso added: “The urgency to act is clear. Gas is needed: for the next heating season, for electricity production, and more broadly for supporting the economy. The replenishing of gas stocks must start now to avoid serious consequences in the autumn. This operation is very simply about providing heating to the people and economy of Ukraine.”
The loan forms a part of €1 billion program that the EBRD intends to undertake this year in Ukraine, in cooperation with donors and other partners to support the country’s real sector of economy.
All EBRD investments to Ukraine under this package involve risk-sharing. In Naftogaz’s case, the EBRD shareholders will guarantee 66 percent (€200 million) of the total EBRD loan, which is also backed by Ukraine’s sovereign guarantee. After the initial payment, donor guarantees will cover all of the subsequent €100 million disbbursed and 66 percent of the remaining €150 million.
Beyond supporting energy security, the EBRD’s loan is designed to support Naftogaz in tackling workforce challenges related to the employees affected by the hostilities that forced millions of people in Ukraine to flee their homes and workplaces.
The loan provided will also ensures closer integration of the Ukrainian gas market with the EU. In particular, Naftogaz will be able to source natural gas using a competitive procurement mechanism from its existing pre-qualified EU-based gas traders. In addition, the EBRD requires Naftogaz to use contracts based on the standards of the European Federation of Energy Traders.