LONDON/KYIV, August 30 ------ The European Bank for Reconstruction and Development expects to sign a number of loan deals with Ukrainian municipalities and companies in the weeks to come, ramping up efforts to shore up the country for the winter, a senior executive told Reuters. The EBRD has already earmarked 300 million euros to support Ukraine's energy sector in coming months, and expects to deploy the funds soon, Arvid Tuerkner, the EBRD's Managing Director for Ukraine and Moldova, said in an interview.
Russia has launched massive strikes on Ukraine's power grid and other critical infrastructure this week, deepening challenges in Ukraine's energy sector and causing widespread power cuts and water supply outages. Kyiv has said the attacks, 2-1/2 years into Russia's full-scale invasion of Ukraine, look like a concerted effort to degrade the system ahead of next winter when people need electricity and heating most. Ukraine has lost about half of its energy generating capacity due to Russian bombardments since March this year, Kyiv officials have said. "A lot of damaged energy assets can be repaired. On the surface, this often looks like the best solution because the ratio between investment needed and megawatt and gigawatt you get out of these repairs looks very favourable," said Tuerkner. "But then there's another dimension, which is the security. These assets have been destroyed because they are vulnerable, and protecting them will be difficult in the future."
More funding would also go to municipalities by way of both investment and liquidity support, Tuerkner said. An agreement with Kharkiv, Ukraine's second city located close to the Russian border, on a 25-million-euro emergency liquidity facility is expected to be signed before year-end. Providing support to regions and cities close to the war's front line such as Kharkiv was dependent, he said, on the European Union and other partners providing guarantees, grants and ways of de-risking investments for the EBRD. "We all have to be very, very focused in terms of donor coordination, which I think is going very well, because there's really no more time for discussion," Tuerkner said. "That's a message we have been given, and I know other donor countries and IFIs have been giving to each other and also to the government of Ukraine - we need to focus to manage the winterisation."
The EBRD has deployed a total of 4.65 billion euros ($5.16 billion) across 107 projects in Ukraine since the start of Russia's invasion in February 2022. Some 855 million euros were deployed so far this year. The Ukrainian economy was bound to feel the impact of Russia's assault on energy infrastructure, Tuerkner said, with the EBRD in the process of revising its economic outlook that is scheduled for release in September. "Mobilisation - labour force management if you want - and energy are two of the key topics" for companies and lenders based in Ukraine, he added.
In May, the EBRD forecast, opens new tab Ukraine's economy would grow 3.0% in 2024, after shrinking by about one third in 2022 and growing by 5.3% in 2023. Asked about Kyiv's push to restructure commercial debt issued by the government and state-owned entities, many of whom have been extended loans by the EBRD, Tuerkner said the bank had not been approached.
Source: reuters.com
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