EBRD provides €20 million to improve district heating utilities in Luhansk

By Anton Usov

The European Bank for Reconstruction and Development (EBRD) is providing further resources to modernise district heating systems in Ukraine, which account for 20 per cent of the country’s total CO2 emissions and consume almost 44 per cent of its resources for heat energy. These investments in district heating systems aim to increase energy and cost efficiencies, improve financial sustainability and support the regulatory reform of municipal utilities.

The latest of these projects will be implemented in the eastern municipality of Luhansk, for which the EBRD will provide a loan of up to €20 million to the Luhansk municipal communal enterprise “Teplokomunenergo” secured by the guarantee of the city of Luhansk and will be co-financed with investment grant funding of up to €5 million from the Eastern Europe Energy Efficiency and Environment Partnership (E5P)* to which the EU is the largest contributor. The proceeds will be channelled to improve energy efficiency, reduce energy losses, gas and electricity consumption and improve district heating services for almost a quarter of a million residents in Luhansk in nearly 90,000 households.

The loan will finance the installation of 300 individual heating sub-stations and the de-commissioning of 15 obsolete basement boilers. It will also enable the replacement of old small and medium-sized boilers with new gas boilers, the modernisation of 50 boiler houses, the replacement of almost 30 kilometres of distribution network pipes with pre-insulated pipes and the installation of a monitoring and dispatching system.

Technical assistance, in the form of consultancy services, necessary for both the preparation and implementation of the project was provided by the government of Sweden.

The EBRD is the largest financial investor in Ukraine. As of 30 November 2013 the Bank had committed more than €8.7 billion (US$ 11.9 billion) through 318 projects in Ukraine.

* The Eastern Europe Energy Efficiency and Environment Partnership (E5P) is a €90 million multi-donor fund managed by the EBRD and designed to promote energy efficiency investments in Ukraine and other eastern European countries. The fund was established under an initiative of the Swedish government during its presidency of the European Union (EU) in 2009. E5P complements energy efficiency loans provided by financial institutions including the European Bank for Reconstruction and Development, the European Investment Bank, the Nordic Investment Bank, the Nordic Environment Finance Corporation and the World Bank Group. Contributors to E5P are the EU and the US, as well as Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, Poland, Sweden and Ukraine.