National joint-stock company Naftogaz Ukrainy seeks to start using the $500 million loan secured by the World Bank in February 2017, Commercial Director Yuriy Vitrenko told reporters in Kyiv on Tuesday.

"I think that we will start in February. We plan to use it in full amount in February and March. It depends on weather and consumption, but we plan to do this in these terms," he said.

Vitrenko said that a tender to select suppliers of gas using these funds will be announced, as it was done with the loan from the European Bank for Reconstruction and Development (EBRD).

As reported, on December 30, 2016, Naftogaz Ukrainy signed a loan agreement for a euro-denominated credit facility for gas purchase in the equivalent of $500 million secured by the World Bank with Citi and Deutsche Bank.

The facility is secured by the World Bank's guarantee, which, in turn, is secured by the sovereign guarantee issued as part of the formation of the energy fund according to resolution No. 876 of the Cabinet of Ministers of Ukraine dated November 30, 2016.

The guarantee is valid for a term of four years, with two years available for gas purchase and two years for repayment. The guarantee of the World Bank and the credit facility are highly cost-effective compared to other loan agreements of Naftogaz. According to the funding conditions under the credit facility, Naftogaz will continue buying gas under existing eligible contracts, switching from pre-payment to post-payment terms.

The payments to suppliers will be secured by letters of credit issued by Citi and Deutsche Bank, which will convert into loans when payments are made. Naftogaz will repay those loans within twelve months upon the receipt. The World Bank guarantees the repayment of the loans to the international commercial banks.

Under this credit facility, Naftogaz will be able to purchase gas from both western and eastern directions. Decisions to do so will depend on the competitiveness of gas supply proposals.

In 2015, Naftogaz received a $300 million revolving loan from the European Bank for Reconstruction and Development to purchase gas from European suppliers.