ERU Trading

Location:

Ukraine

Project number:

52380

Business sector:

Natural resources

Notice type:

Private

Environmental category:

B

Approval date:

09 Jun 2021

Status:

Concept Reviewed

PSD disclosed:

15 Apr 2021

As permitted by paragraph 2.6 of Section III of the Access to Information Policy, disclosure of this PSD was deferred in accordance with paragraph 1.4.4 of the Directive on Access to Information.

Project Description

EUR 10 million two-year committed local currency-denominated working capital loan to ERU Trading. EBRD funds will be used to support growing gas trading operations of ERU Trading in order to secure low cost gas from EU during summer season and store it in Ukrainian gas storages with further sale in Ukraine (primary option) or re-export to the EU (secondary option) during winter heating season.

Project Objectives

Facilitate further development and competition at the Ukrainian gas trading market by means of supporting activities of transparent and efficient privately owned energy traders.

Transition Impact

ETI score: 63

The proposed project supports a private, independent trader in competing with the dominant player, Naftogaz, in an increasingly liberalised market, and facilitates increased liquidity and competition on the private energy exchange UEEX following the MoU signed by the EBRD in July 2019. 

The project also increases overall security of gas supply to Ukraine by diversifying supply from the EU; it provides for greater utilisation and integration of the country's transportation and storage infrastructure with the EU gas market.

Client Information

ERU TRADING LLC

ERU Trading LLC is a Ukrainian energy and gas trading company established in 2016 with the launch of the largest and most successful gas market reform in Ukraine's history. Its core activities have been natural gas import and trade, electricity export and domestic supply.

EBRD Finance Summary

EUR 10,000,000.00

Total Project Cost

EUR 10,000,000.00

Additionality

The EBRD will be the first IFI and international bank in the client's existing loan portfolio providing not only favourable financial terms (with an up to two-year transaction tenor and "committed" status of the facility), but also helping to mitigate the non-financial risks. The project will also support the promotion of gender equality as the client will be committing to the Women's Empowerment Principles developed by the UN and conducting a career event at a Ukrainian university. 

Environmental and Social Summary

Categorised B (2019). Use of the loan proceeds will fund the gas trade activities only, which are low E&S risk. The Client  has no fixed assets or activities associated with gas storage and transportation infrastructure, which are operated by the Ukrainian state-owned companies. Brief Environmental and Social Action Plan (ESAP) has been developed for the Company to address potential E&S issues associated with labour and grievance management, gender aspects,  and to a limited extent the primary supply chain. ESD confirms that the project is considered aligned with the mitigation goals and adaptation goals of the Paris Agreement, as presented in the FRM and outlined in the attachment to the FRM. ESDD was completed using in house resources and comprised a review of a completed corporate questionnaire, existing E&S procedures, and follow up Q&As. The main possible E&S impacts are considered to be associated with the Client's administrative and sales personnel's social aspects. The Client has been found to be compliant with the local legislation pertaining to the social and labour issues of the Client's workforce. Current Project is for trading of natural gas only.  The client does not own or operate any facility or infrastructure for transportation or storage of the gas. Therefore, no Associated Facilities or Existing Facilities are associated with this project.  Nonetheless, as part of the appraisal of this project ESDD reviewed available information on the status of gas transmission and storage infrastructure owned by other entities/suppliers, where reporting was readily available from other Bank's Projects. Through other projects EBRD has agreed to ESAPs with Client's suppliers that were developed to structure their facilities to be compliant with EBRD PRs over time, and we can confirm that they are making progress in this regard. The Bank will monitor the project through the review of the Annual Environmental and Social Monitoring Reports.

Technical Cooperation and Grant Financing

N/A

Company Contact Information

Olga Mamedova
olga.mamedova@eru.com.ua
+38 044 428 70 16
-
www.eru.com.ua
58, Yaroslavska Street,10th Floor, Kyiv, 04071, Ukraine

PSD last updated

19 Apr 2021

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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