18:56 30.09.2015

EBRD's loan to Naftogaz to buy gas with limit of $300 mln is revolving facility – EBRD managing director

2 min read
EBRD's loan to Naftogaz to buy gas with limit of $300 mln is revolving facility – EBRD managing director

The European Bank for Reconstruction and Development (EBRD) has approved the provision of a revolving facility with a limit of $300 million to national joint-stock company Naftogaz Ukrainy for three years, Managing Director for Eastern Europe and the Caucasus at the EBRD Francis Malige has said.

"It is also a revolving facility, meaning that after the end of the heating season Naftogaz will need to buyback the amount and once they credit back they can renew this again to purchase gas and that will valid for three years," he told Interfax-Ukraine.

"This is not one auction, what we say with this contract that we lend money to Naftogaz and Naftogaz use this money to purchase gas and they can purchase gas in quantity as they want," Malige said.

"It is not going to be one auction, it is going to be a serious of auctions when Naftogaz decide to use the money," Malige said.

"Every single purchase has to be done according to EBRD procurement tools meaning that there should be transparency and fair competition among market participants on the gas market," he said.

"There are no limits, the limit is the market price, that is the mechanism to ensure that Naftogaz pays a market price, which is fair, transparent and competitive auction," he said.

The EBRD said in a Wednesday press release that both projects are designed to strengthen corporate governance at Naftogaz and introduce greater transparency and efficiency in its purchases of natural gas.

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

The EBRD also said that both projects are designed to stimulate reforms in the Ukrainian gas market that will help move the sector towards the best possible practices in line with market-based principles and liberalization.

Naftogaz Ukrainy is a state holding, which consists of a group of enterprises that extract, transport, store and process oil and gas, and supply fuel.

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

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