European Banks to Allocate USD 310 Million for Modernization of Ukrainian Gas Transit System

KYIV, Ukraine, November 30, 2011 /PRNewswire/ --

European Bank for Reconstruction and Development together with European Investment Bank are ready to commit USD 310 million for modernization of Ukrainian Gas Transport System (GTS), said EBRD director in Ukraine André Küüsvek during his interview with the newspaper Day.

Initially, the European Bank for Reconstruction and Development, the World Bank and European Investment Bank planned to invest one billion dollars in the Ukrainian GTS, explained André Küüsvek. Later on, the plans changed - EBRD and EIB will now invest USD 300-310 million. Such decision was made based on the latest technical feasibility study from Mott MacDonald company. The money will be used for the implementation of the pilot project of the modernization of the "Urengoy - Pomary - Uzhgorod" pipeline.

According to Küüsvek, there have been several setbacks in the process of allocating the funds, including the absence of the strategy of the reforming of Ukraine's gas market and the plan to restructure Naftogaz. At the same time, Küüsvek noted: "Today there is a political will to reform the energy sector... In my opinion, it is better not to rush the restructuring [of Naftogaz]." He also said it would be better to prepare the relevant documents first and provide a thorough planning of the process.

André Küüsvek hopes that the overhaul of the "Urengoy - Pomary - Uzhgorod" part will start in 2012. "If Ukraine comes up with the gas market reform strategy and restructuring plan for Naftogaz in December 2011, then the agreement on financing the project will be signed in the first half of next year," stressed the EBRD director in Ukraine.

Earlier this year EBRD released information that if the project moved to the implementation stage, the credit would be issued under governmental guarantee. Gas tariffs remained to be an issue, but the bank was not going to push for increase - it wanted to see Naftogaz's deficit erased with or without the bank's assistance.

National Joint Stock Company Naftogaz is the leading fuel and energy enterprise of Ukraine that engages in gas and oil fields exploration and development, supplies gas to the consumers in Ukraine and transits Russian gas to Europe.

SOURCE Worldwide News Ukraine