Ukrainian National Energy Company Ukrenergo intends to draw on international financial organizations (IFOs) as the source for its investment projects, Ukrenergo chief Vsevolod Kovalchuk said at a presentation in Kiev on Wednesday while briefing on the company’s plans for 2018. “We will complete current large investment projects with the use of funds from tariffs, but we will not start new projects with this scheme. We will provide financing for modernization and reconstruction of separate elements in technical disrepair, but that’s it,” he said.
Kovalchuk said Ukrenergo’s credit portfolio currently exceeds $1.5 billion, with the main creditors being the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), World Bank and KfW. Credit terms on average require remuneration in 19 years with an average one-percent-per-year interest rate. “The use of these funds longterm, even taking into account the weakening of the hryvnia, turns out to me more profitable than using funds from tariffs,” he said.
Kovalchuk said it would be impossible to immediately change the investment strategy of the company, because IFOs do not fund projects that have already begun under tariff funding plans and because IFO funding approvals typically require from one to three years. “Therefore 2017 for us is a transition year, 2018 will be too. The new financing method will start working from 2019, because new projects costing significant amounts have already been initiated with banks,” Kovalchuk said. Ukrenergo operates trunk and interstate power transmission lines and provides centralized oversight of the integrated power grids. It is a state company run by the Energy and Coal Industry Ministry.
