The provision of up to EUR 300 million sovereign-guaranteed loan to the National Energy Company Ukrenergo ("Ukrenergo" or the "Company") aimed at restoring the Ukrainian power transmission grid that was severely damaged by Russian bombings. The loan consists of up to EUR 150m for procurement of equipment to implement emergency repairs of Ukrainian power transmission system and up to EUR 150m of capital structure support (the "Project"). The EBRD loan is supported by the donor "funded guarantee" of up to 50% to be provided by the United States through its contribution to the EBRD Crisis Response Special Fund (the "Crisis Fund"). Furthermore, the loan is also going to be complemented by an investment grant of up to EUR 72m to be provided by the Netherlands via the Crisis Fund.
The Project is strategically important, especially during the upcoming winter season, since it will enable the Company to secure energy supply to population and businesses throughout the country and ensure the stability of the country's energy system. The Project will also strengthen the Ukrainian power system's ability to maintain commercial flows with ENTSO-E.
ETI score: 70
The Project aims to support the resilienceof the Company and its operations as well as to improve energy security by providing emergency financial support to Ukrenergo (Resilient). The Project will also preserve and enhance human capital by safeguarding access to electricity for households and businesses affected by the war. Moreover, the Company will engage on strategic workforce management activities to address its skill-related needs in line with the evolving crisis by identifying crisis management skill gaps and putting in place essential support to management and affected workers (Inclusive). In addition, Ukrenergo will update its Gender Action Plan in light of the war and launch an outreach campaign promoting access to career opportunities for internally displaced young women, which will help filling workforce gaps within its own staff and across the vital energy industry (Gender SMART). Part of the capital structure support tranche will be also channelled towards payments to renewables.
NATIONAL POWER COMPANY UKRENERGO PJSC
National Energy Company Ukrenergo is a 100% state-owned company, a natural monopoly and the sole electricity transmission system operator (TSO) of Ukraine.
EBRD Finance Summary
Total Project Cost
EBRD is offering financing, which is not available in the market due to the ongoing war and high level of risk and uncertainty in Ukraine. Additional investment grant funding of up to EUR 72 million provided by the Netherlands for the purpose of the Project will be blended with the loan, enhancing Project's additionality. The loan will also benefit from the "donor funded" guarantee provided by the United States through the Crisis Fund to cover 50% of exposure, where local commercial financiers cannot provide such risk-sharing mechanism. EBRD funding and application of Bank's PPR will ensure wider market outreach, particularly in the current high-risk environment.
Environmental and Social Summary
Category B (ESP 2019). The Bank's use of proceeds will be applied to finance equipment deliveries and provide capital structure support for the Company to pay its OPEX and pay amount due to renewables, procure electricity to perform its balancing function and cover technical losses. The ongoing war limits the ability for the Bank to carry out its environmental and social due diligence (ESDD) and project implementation and monitoring. Therefore a derogation to the Bank's Environmental and Social Policy, due to the limited possibility to do ESDD, has been applied for and granted by the Board.
Overall, the Bank has good experience with Ukrenergo, and the Company has been implementing, to the satisfaction of the Bank, environmental and social undertakings agreed under previous financing agreements (including existing ESAP). As part of the current loan the Bank undertook a desk based due diligence using questionnaires and past monitoring reports. Based on this the Bank updated the existing ESAP to take account of new EU regulatory requirements (such as Sustainability Reporting under CSRD, which will include climate risk disclosures). All newly procured equipment using the Bank's proceeds will be EU compliant and environmental, health and Safety (EHS) issues will be considered in all operations of the Company and the planned investment. An independent E&S audit will be undertaken of the Project and corporate ESG management once hostilities stop and it is possible to do so in 2023. Based on this audit the ESAP will be updated in 2023-2024.
Technical Cooperation and Grant Financing
TC 1: Pre-Shipment Testing and Validation to support Ukrenergo in engaging a specialised company(ies) to carry out testing and inspection of "second-hand" equipment sourced from neighbouring/regional TSOs.
TC 2: Human capital emergency response TC support under the Gender & Economic Inclusion Technical Assistance Framework to support Ukrenergo on a series of strategic workforce management activities, develop needed re-skilling and up-skilling programmes and strengthen its Gender Action Plan.
TC 3: ENTSO-E Synchronisation Advisory Support to Ukrenergo in completing the synchronisation of the power system of continental Europe.
Company Contact Information
+380 (93) 079 9546
Symona Petlyury St, 25, Kyiv, 01032
PSD last updated
24 Nov 2022
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