FT.com BeyondBrics: EBRD’s Naftogaz Loan Is Conditional on Reform and Transparency

A $300m loan to help Ukraine fill its gas storage facilities before winter has today been approved by the EBRD’s board of directors.

The loan will enable Naftogaz, the state-owned oil and gas company, to purchase over 1bn cubic metres of gas (bcm) and so support Ukraine in reaching its target of having 19 bcm of gas in storage. It will also help the country diversify its sources of gas supply by financing purchases from its interconnections with Europe through the so-called reverse flow.

What is more, it is crucial for the wider Europe: a stronger energy security situation in Ukraine, which is still a key transit country, especially for south-eastern Europe, helps to ease a number of European energy security concerns.

But there is another reason for this transaction: the money cannot be used without crucial steps towards transparency and reform. For example, under the terms of the loan, Naftogaz must tender and contract any gas purchased with EBRD funds under procedures in line with best European practice.

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