EBRD delivers near-record investment in Ukraine in second year of pandemic

By Olga Rosca
@olgarosca

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  • Near-record EBRD engagement of €1 billion in the Ukrainian economy
  • €3 billion worth of investment projects in the past three years
  • Financing combined with support for key economic policies

The European Bank for Reconstruction and Development (EBRD) delivered strong support for Ukraine in 2021, the second year of the Covid-19 pandemic, through a powerful combination of investment and backing for key economic policies.  

In a challenging year, the EBRD invested €1 billion in the Ukrainian economy, the second-largest volume of Bank financing after Turkey, bringing its three-year investment in the country to €3 billion.

The EBRD’s total investment last year stood at €10.4 billion across some three dozen countries on three continents.

True to its ambition to become a majority green bank by 2025, 45 per cent of Bank financing in Ukraine was in support of greater sustainability and energy and resource efficiency.

Examples included a €140 million EBRD loan to modernise district heating and hot water supply in the capital, Kyiv, and a €50 million loan for Kyiv to renew the rolling stock of its metro network and support the shift from private cars to modern, efficient and environmentally friendly public transport.

The Bank also attracted a €5.5 million grant from the E5P to complement an earlier €25 million loan to refurbish, for greater energy efficiency, about 100 public buildings in Dnipro.

Dnipro and Ukraine’s second-largest city of Kharkiv decided to accelerate their investment in green solutions by joining EBRD Green Cities, a flagship urban sustainability programme, following in the footsteps of Lviv, Kyiv, Mariupol, Khmelnitskiy and Kryvyi Rih. Ukraine has more cities taking part in the programme than any other economy in which the EBRD invests.

In the private sector, the Bank teamed up with Kernel Group to help strengthen the company’s climate corporate governance. It is also supported the development of low-emission sustainable property by backing the real-estate portfolio of Dragon Capital, an investment firm.

The Bank joined forces with the European Union in extending grants to innovative Ukrainian firms seeking to improve climate resilience. The beneficiaries included a producer of recycled plastic The Good Plastic Company, architecture studio Ekodar, yeast producer Enzym, engineering firm Dominion, water and rainwater management company Viva Victoria and The Laboratory of Advanced Jet Propulsion, an institution focused on rocket and spacecraft technologies. 

The EBRD’s efforts to advance the sustainability of Ukraine’s economy were encouraged by the country’s newly reviewed Nationally Determined Contribution. The EBRD helped to develop the policy document and stands ready to help set out a low-carbon and climate-resilient pathway for the power generation sector in Ukraine. 

In addition, the EBRD invested US$ 75 million in a US $825 million Eurobond placed by Ukrenergo, the state-owned electricity transmission system operator, in a bid to resolve the payments crisis gripping the country’s renewable energy sector. The first ever sustainability-linked bond issued by a Ukrainian company, it helped restore the credibility of the Ukrainian renewable energy sector, paving the way for much-needed investment to support the country’s green transition.

In the infrastructure sector, the EBRD approved a new €190 million loan tranche for further improvements to the country’s roads. This follows efforts by Ukravtodor and the Ukrainian authorities to implement a comprehensive anti-corruption programme.

This is part of the EBRD’s broader work to promote corporate governance reform in state-owned enterprises and to strengthen their supervisory boards.

In a further move to promote greater private-sector participation in the development of infrastructure, the Bank joined forces with the International Finance Corporation (IFC) on a new advisory engagement with the Ministry of Infrastructure to help structure private-public partnerships in the road sector and to prepare the concession of selected terminals at Chernomorsk port.

Standing by its long-time partner, the city of Lviv, the Bank provided emergency funds to ensure that the vital infrastructure is safe and functioning during the ongoing pandemic.

As social distancing measures remained in place, the EBRD supported companies that facilitated remote entrepreneurship and helped people to stay in touch, such as state-owned postal service Ukrposhta and its privately owned peer, Nova Poshta, as well as Datagroup, a provider of fibre infrastructure and digital services.

Recognising the importance of better access to credit and trade finance, the EBRD channelled €357 million to seven local lenders: Ukrgasbank, Raiffeisen Bank Ukraine, Ukreximbank, OTP Bank, ProCredit Bank, Credit Agricole and Bank Lviv. Backed by EU investment incentives, the Bank increased lending for small and medium-sized enterprises via partner banks under the EU4Business-EBRD credit line.

It also delivered record volumes of trade finance as part of the Trade Facilitation Programme.

Furthermore, the Bank financed successful Ukrainian companies such as car importer Winner, Kokhavynska Paper Factory and gas trader ERU Trading. It also teamed up with USAID and the American Chamber of Commerce to develop an action plan for the consolidation of infrastructure for the capital and commodities markets.

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