Ukraine Fuel Purchase Loan Facility

Location:

Ukraine

Project number:

14561

Business sector:

Power and energy

Notice type:

Public

Environmental category:

B

Target board date:

03 Oct 2000

Status:

Complete

PSD disclosed:

04 Sep 2000

Project Description

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.

Transition Impact

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.

The Client

Government of Ukraine

Four State-Owned Thermal Generation Companies ("Gencos"), to receive fuel and repay loan:

Dniproenergo
Donbasenergo
Zakhidenergo
Tsentrenergo

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.

EBRD Finance

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.

Project Cost

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.

Environmental Impact

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.

Technical Cooperation

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.

 

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

Public Information Policy (PIP)

The PIP 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. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.