LONDON: The European Bank for Reconstruction and Development on Wednesday approved a $300 million loan for Ukraine to buy gas before the fast-approaching winter.
In exchange for reforms of the energy sector, the EBRD had promised to lend to Ukrainian state-run energy firm Naftogaz to finance the purchase of gas from Europe's network rather than from Russia's.
Ukraine has had to rely solely on its own production and reverse flows from the European Union since July, as it is embroiled in a gas pricing dispute with Moscow amid tensions over Russia's annexation of Crimea and involvement in a separatist conflict.
In April Kiev raised energy tariffs, long kept below the market rate and it has promised to break up Naftogaz into separate businesses managing gas production, sales and supply. "The EBRD is satisfied with the work that has been done so far in the energy sector.
The increase in tariffs is very important," the EBRD's Managing Director for Energy and Natural Resources, Riccardo Puliti, told Reuters.
"The sector is complex, so of course there is still a lot of work to be done. We would like to see the unbundling (of Naftogaz) happen sooner rather than later," he said, adding that overhauling the company's corporate governance was another key target.
Restructuring the energy sector has been one of the government's trickiest tasks in an economy still built on cheap fuel from its days as part of the energy-rich Soviet Union.
The $300 million from the EBRD is a three-year revolving loan facility and will buy about 1.2 billion cubic metres of gas for underground reserves, which currently stand at 15.5 bcm, Puliti said.
Ukraine has said it needs to have stored 19 bcm of gas to safeguard its own supply in winter as well as to ensure there are no disruptions to the transit of Russian gas across the country to Europe.
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