Naftogaz Gas Purchase Facility

Location:

Ukraine

Project number:

47283

Business sector:

Natural resources

Notice type:

Public

Environmental category:

B

Target board date:

30 Sep 2015

Status:

Complete

PSD disclosed:

16 Jul 2015

Translated version of this PSD: Ukrainian

Project Description

The EBRD is providing a trade finance loan to the National Joint Stock Company "NAK" Naftogaz of Ukraine (“NAK" or "Naftogaz”) to bridge the gap between purchase and sale of natural gas.  The project aims at supporting the policy of the Government of Ukraine to make NAK operations financially sustainable by establishing commercial mechanisms for trade finance, achieving cost recovery pricing and eliminating the need for budget subsidies

Transition Impact

The project is complementary to the Naftogaz Emergency Pipeline Upgrade and Modernization sovereign loan to Ukraine signed in December 2014 (Op 42608) and aims at further supporting the reform of the Ukrainian gas sector. The transition impact potential of the project is based on:

i) Framework for Markets: Through systemic reforms on unbundling, implementation of Energy Community Treaty requirements and gas market liberalisation, the Bank will support much needed impetus to the establishment of market based principles in Ukraine.

ii) Setting Standards of Corporate Governance and Business Conduct: The project will focus on improving corporate governance of Naftogaz and Public Joint Stock Company Ukrtransgaz (“Ukrtransgaz”), the Ukraine Gas Transmission System operator, and increasing transparency and standardisation of the procurement of natural gas from Ukraine’s interconnectors with the European Union.

The expected transition impact rating is ‘strong’.

The Client

Naftogaz is a 100 per cent State-owned company reporting to the Ministry of Energy and Coal Industry of Ukraine. Naftogaz is the holding of a vertically integrated group of entities with activities including oil and gas production, transportation and storage, refining and supply.

EBRD Finance

Up to US$ 300 million revolving loan to NAK. The loan will benefit from a sovereign guarantee by Ukraine.

Project Cost

Up to US$ 300 million.

Environmental and social categorisation, impact, and mitigation

Categorised B. The environmental and social due diligence will consist of the review of NAK 's corporate environmental and social policies and a review of the implementation status of the Environmental and Social Action Plan (“ESAP”) and Stakeholder Engagement Plan agreed with Ukrtransgaz  for the Naftogaz Emergency Pipeline Upgrade and Modernization sovereign loan signed in December 2014 (Op 42608). An ESAP for the project will be developed and agreed based on findings of the environmental and social due diligence.

Technical Cooperation

The project is associated to the Corporate Governance Review of Naftogaz and Ukrtransgaz (TCRS 739) technical cooperation that was developed in relation to the Naftogaz Emergency Pipeline Upgrade and Modernization sovereign loan to Ukraine signed in December 2014 (Op 42608). The first phase, currently under implementation, includes a review of the regulatory and legislative frameworks governing corporate governance of NAK  and Ukrtransgaz and a review of the corporate governance practices at the two companies. The technical cooperation is funded by the Ukraine Multi Donor Account. The key first phase deliverable is a Corporate Governance Action Plan (“CGAP”) endorsed by all stakeholders. The second phase, subject to separate approval and funding, will support the implementation of the CGAP and the legislative / regulatory reform required to enable it.

Capacity building to strengthen NAK's procurement function and technical assistance supporting the implementation of this project are also under consideration.

Company Contact

Sergiy Oleksiyenko
Chief Advisor to the Chairman of the Board 
National Joint-Stock Company Naftogaz of Ukraine
B. Khmelnytskogo str, 6
Kyiv, 01001, Ukraine
Tel.: +380 (44) 586-39-47
Oleksiyenko@naftogaz.com
www.naftogaz.com

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

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