EBRD in loan to boost local services in western Ukraine

By Anton Usov

The EBRD is making a loan to the western Ukrainian city of Ivano-Frankivsk aimed at improving the quality of heating and hot water delivery services to this community of 200,000 people.

The €11.7 million credit to the city’s municipal utility company, Ivano-Frankivsk Teplokomunenergo, will finance its programme to cut energy losses and to reduce the consumption of gas and electricity. The modernisation of the heating network will involve the replacement of old boilers, the installation of biomass fired boilers and introduction of gas fired co-generation units. An important element in the overall programme to modernise the district heating network and improve hot water supply is the promotion of a new tariff system recently introduced in the city.

The project shows the continued commitment of the Bank to support the municipal and environmental infrastructure sector of Ukraine, where investments of nearly €150 million have been made to date in water, district heating and municipal transport across the whole country.

The Swedish International Development Agency will provide a separate grant funding of SEK50 million, which will also be used for the district heating network upgrades.

Energy efficiency measures are expected to reduce Teplokomunenergo’s CO2 emissions by up to 90,000 tonnes between 2008 and 2012. This is likely to make the company eligible to sell carbon credits via the EBRD’S Multilateral Carbon Credit Fund.

The EBRD Ukraine Country Director André Küüsvek said this project would promote the innovative two-tier tariff system. “This will be a good example for other District Heating operators in Ukraine showing the benefits of consumption based billing and the need for metering”, he said. The transaction will have significant demonstration effects for other cities and utilities in Ukraine.

Technical cooperation funds for the project were provided by the Netherlands, the International Bank for Reconstruction and Development’s public-private infrastructure advisory facility and EBRD’s shareholders’ fund.

The European Bank for Reconstruction and Development is the biggest financial investor in Ukraine. As of 1 March 2009, it had committed €4.4 billion through 173 projects.