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EBRD marks Ukrainian President's visit with US$ 75M in Bank commitments
More than US$ 75 million (ECU 59 million equivalent) of funding to Ukrainian enterprises was committed by the European Bank for Reconstruction and Development (EBRD) in the presence of the Ukrainian President, HE Leonid Kuchma, on the occasion of his visit to the EBRD’s headquarters in London. The EBRD also signed its first commitment under a new US$ 50 million trade finance programme for Ukraine. Small businesses, a fertiliser terminal and the power sector as well as private Ukrainian banks are to benefit from this financing.
Jacques de Larosière, President of the EBRD, said: “Ukraine’s recent success in stabilising its macroeconomic situation, though it faces continuing challenges, is spurring growth of the country’s private sector. The Government has also made tremendous strides in this past year in restructuring the power sector. The projects being signed today are a testament to that progress. They provide an important impetus to the overall transition process.”
President Kuchma commented that: “Perhaps the most urgent issue for Ukraine today concerns the country’s energy sector. With the EBRD’s loan we can strengthen our existing resources, in this case thermal power plants.”
US$ 61.9 million is being lent to the National Dispatch Centre, to support the current restructuring of the Ukrainian power sector. The loan, which is being partly on-lent to the country’s four newly created thermal generating companies, will finance repair and deferred maintenance at the country’s largest thermal power plants to improve the reliability of power generation. Importantly, the loan will also finance more accurate meters in anticipation of the wholesale electricity market which is soon to be started. Assistance will also be provided to the utilities for modern accountancy and financial management techniques.
In recognition of the strong performance of its Ukraine Fund, the first private venture fund to be established in Ukraine (the fund has lent US$ 5 million to 18 companies), the EBRD is increasing its capital base by a further US$ 6.5 million. Companies in such sectors as medical equipment, construction materials, and food processing and distribution have been able to benefit from access to equity funding to support their early development.
The construction of a fertiliser terminal, Transinvestservice, based in Odessa and part-owned by the State Property Fund, the Norwegian company Norsk Hydro plus local investors, will be finished with the assistance of EBRD financing. The EBRD is investing US$ 5 million in the company. The terminal is to be used mainly for the export of fertlisers from Ukraine and other CIS countries and will facilitate additional exports to markets in Latin America and Asia.
The EBRD also finalised a US$ 50 million trade finance agreement under which it will guarantee the obligations of participating Ukrainian banks to their foreign correspondent banks. Ukrainian Innovation Bank (Ukrinbank), a local private bank, is the first to join the programme with several other Ukrainian banks expected to join shortly. Through EBRD guarantees, the perceived payment risk related to both import and export trade finance instruments issued by local banks will be alleviated.
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