This EBRD loan facility of US$ 100 million will provide one year’s working capital to four Ukrainian state-owned generation companies, with the proceeds advanced under an APEX type structure, which is well tested in the Bank. The proceeds of the loan are to be used for the purchase of fuel for this coming winter. As is usual with APEX structures, the EBRD will make a loan to an intermediary that will on-lend the proceeds of the loan in back-to-back arrangements to four separate generation companies who will repay the loans from funds due to them from the Energomarket collections. In this case, the EBRD will make a sovereign loan to Ukraine, which will act as the intermediary. The fuel purchased with the proceeds of the EBRD loan must be procured following the EBRD’s Procurement Policies and Rules. Proceeds will be disbursed against firm supply contracts directly to the fuel suppliers winning open, competitive tenders.
The operation’s objective is to increase transparency of fuel purchase process and to support the restructuring of the Ukrainian power sector bypromoting transparency in recently instituted measures to improve cash collection and promote privatisation of power distribution companies.
The conditions of the loan have been tailored to achieve a transition impact in three specific areas: system cash flow and collections, privatisation, and fuel procurement.
Government of Ukraine
Four State-Owned Thermal Generation Companies ("Gencos"), to receive fuel and repay loan:
With a combined capacity of 28,120 MW, these companies represent 55 per cent of Ukraine’s installed generating capacity and, although managerially autonomous, are majority state owned.
US$ 100 million loan (€111 million) with a tenor of one year and repayments of six equal monthly installments following a grace period of six months.
The total loan will account for less than 10 per cent of the generating companies annual fuel requirements, but will serve to establish minimum inventory before the winter months make delivery difficult.
The project was screened B0. The key environmental issues associated with this project are air emissions and solid wastes (ash) generated from the use of fuels purchased under this loan. It is envisaged that the Bank's Fuel Procurement Adviser will identify realistic minimum fuel quality standards which will ensure that emissions/wastes do not exceed current levels and are, if possible, below those levels.
TC funding has been used for a due diligence report on fuel procurement practice and a design of procurement strategy.
The source of funds, €46,640, is the UK Department for International Development (Fund for Eastern Europe and Central Asia) under the Projects Preparation and Monitoring Support for Power/Energy Utilities Framework TC.
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