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EBRD approves $300 mln loan for Ukraine to buy gas from Europe

EBRD approves $300 mln loan for Ukraine to buy gas from EuropeThe Board of Directors of the European Bank for Reconstruction and Development (EBRD) has approved a loan worth up to $300 million to NJSC Naftogaz of Ukraine for buying natural gas on the European market to fill storages for the winter heating period, according to a statement posted on the EBRD's website.

"The loan will strengthen Ukraine's energy security by supporting diversification of natural gas suppliers and delivery routes," the EBRD said in the statement.

It is closely linked to a previous Naftogaz pipeline project to upgrade and repair a key section of Ukraine's gas transmission system, the western part of the Urengoy-Pomary-Uzhgorod pipeline, which was signed between the EBRD and Ukraine in 2014.

Both projects are designed to stimulate reforms in the Ukrainian gas market that will help move the sector towards best practice in market-based principles and liberalization. They will strengthen corporate governance at Naftogaz and introduce greater transparency and efficiency in its purchases of natural gas. Proceeds from the loan will be used in strict compliance with the EBRD's Procurement Policies and Rules, best European practice and the European Federation of Energy Traders documentation.

"Our loan will support key areas such as the establishment of a truly independent regulator, the improvement of tariff methodology as well as the introduction of a gas network code. It will contribute to better governance and financial sustainability of Naftogaz," EBRD Managing Director for Energy and Natural Resources Riccardo Puliti said.

Technical assistance for the implementation of a Corporate Governance Action Plan for Naftogaz is provided by the EBRD-Ukraine Multi-Donor Account established at the Bank in 2014, and funded by Finland, France, Germany, Netherlands, Sweden, Switzerland, the United Kingdom, the United States, Denmark, Japan and Norway.

The EBRD is the largest international financial investor in Ukraine. As of September 1, 2015, the Bank had a total cumulative commitment of EUR 11 billion in 346 projects throughout the country.

NJSC Naftogaz of Ukraine is a state-owned Ukrainian holding company consisting of a vertically integrated group of businesses active in oil and gas production, transportation, storage and refining as well as the supply of fuels.

Source: UNIAN
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