EBRD bolsters Ukraine’s energy security with €50 million loan to Naftogaz

• EBRD to lend €50 million to gas entity to boost Ukraine’s energy security
• Additional financing considered for the coming months, in partnership with donors
• Support is part of €1 billion EBRD activity in Ukraine this year, with donors and partners

The European Bank for Reconstruction and Development (EBRD) will swiftly disburse a €50 million loan to help Naftogaz (NAK) compensate for the loss of natural gas production and imports from Russia following the invasion of Ukraine.

The loan, backed by Ukraine’s sovereign guarantee, will be complemented by future financing with the support of donors funding.

This aims to safeguard energy provision and access to services for people whose livelihoods and economic security are threatened by the war. It forms part of €1 billion of activity that the EBRD intends to undertake this year in Ukraine, in cooperation with donors and other partners.

Naftogaz aims to raise €1 billion for an emergency purchase of up to one billion cubic metres of gas starting in April, which is critical to ensure there is enough gas in the system for next autumn’s heating season.

President Odile Renaud-Basso said: “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 and electricity to the people and economy of Ukraine.”

Beyond supporting energy security, the EBRD’s loan is designed to support NAK in addressing challenges the hostilities cause staff.

It will also continue to support the Ukrainian gas market’s closer integration with the EU. In particular, NAK will be able to source natural gas, using a competitive procurement mechanism, from its existing pre-qualified EU-based gas traders. The EBRD requires NAK to use contracts based on the standards of the European Federation of Energy Traders.

The EBRD was swift to condemn the Russian invasion of Ukraine on 24 February and pledged to stand by Ukraine. In early April, the EBRD’s Board of Governors voted to suspend open-endedly the access of Russia and Belarus to EBRD finance and expertise, and the Bank is closing its offices in Russia and Belarus.

As well as a resilience package for Ukraine and neighbouring countries affected by the war, the EBRD has committed to help finance Ukraine’s reconstruction once conditions permit.