Up to EUR 300 million revolving credit facility to National Joint Stock Company "Naftogaz of Ukraine" (the "Company", or "NAK") to finance emergency gas supply. The proposed transaction will be a part of EUR 1.0 billion package needed to buy up to one billion cubic metres of gas. The loan will be backed by the Ukraine's sovereign guarantee. In addition, EBRD shareholders will guarantee up to 66% (EUR 200 million) of the loan.
The strategic importance of the transaction is driven by the energy security objective to ensure uninterrupted gas supply in Ukraine. This is essential to safeguard basic needs and economic livelihoods of local population, industrial industries and utilities affected by the war.
ETI score: 65
The transition impact of the project will stem from the following two transition impact qualities:
Resilient: the project aims to support energy security in Ukraine through emergency gas purchases to compensate for the disruption of natural gas production and imports. The transaction will also support reform objectives of previous engagements with NAK aimed at Ukrainian gas market integration with the EU, in particular through application of competitive procurement mechanism and EFET based gas supply contracts.
Inclusive:the project will help safeguard access to vital energy services for people, whose livelihoods and economic security is at immense risk due to the war in Ukraine. The project will also support NAK in tackling critical workforce challenges due to involuntary relocation, workforce losses and attrition.
NAFTOGAZ OF UKRAINE PJSC
NAK, 100% state-owned vertically integrated oil and gas holding in Ukraine is the country's largest natural gas producer (accounting for 75% of domestic gas production), importer, wholesale trader and supplier of last resort for the needs of population and the district heating utilities.
EBRD Finance Summary
Total Project Cost
Innovative financing structure - as financing is not available in the market to close the Company's funding gap; by using EBRD's procurement expertise and client relationships to facilitate support from shareholder countries and EU; and standard-setting by assisting NAK in designing an approach to critical workforce challenges caused by hostilities.
Environmental and Social Summary
Use of proceeds will fund emergency gas purchase; therefore, the project definition is limited to the trading activity only. The EBRD Performing Requirements (PRs) shall apply to this activity and to the corporate environmental, social, labour and health and safety policies and management systems of NAK. Once the gas is purchased, the impacts associated with the actual physical transportation and storage of gas can be readily identified and mitigated. Given the emergency situation for this loan, project appraisal relied on results of previous projects with NAK, which concluded that the Company has the capability and resources to operate in line with the Bank's PRs. There is no GET component associated with this project. The project is considered Paris aligned for climate mitigation, but no assessment can be made on the Paris alignment for adaptation given that the source of gas and infrastructure used for shipping and storage is not known. Physical Climate Risk screening is not applicable for this project.
Technical Cooperation and Grant Financing
Inclusion TC: Main objective of assignment is to support NAK to tackle critical workforce challenges due to relocation, workforce losses and attrition. The Phase I TC will cover a combination of needed inclusive measures, including workforce mapping and emergency management in terms of recruitment and retention, as well as training of replacement staff and skills recovery and development programmes to support workers with the strengthening of their adaptability skills. The Phase II TC could cover medium-term strategic workforce planning solutions and the development of an Equal Opportunities Action Plan to support women's access to economic opportunities and ensure that the share of women in the workforce does not decrease compared to the pre-conflict baseline, while gradually increasing during reconstruction.
Company Contact Information
+380 (44) 5863509
Bohdana Khmelnitskogo Str. 6, Kyiv, Ukraine, 01601,
PSD last updated
21 Jun 2022
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