At a meeting on August 21, the Ukrainian government supported the Ministry of Finance position on approving a loan from the European Bank for Reconstruction and Development (EBRD) for Ukrgazvydobuvannya (UGV) under state guarantees of €51.85 million to increase gas production, said Finance Minister Oksana Markarova.
“We have two in one: production funds through official lending on favorable terms, which corresponds to our debt management strategy and deficit target”, she commented on this decision on her Facebook page.
Markarova clarified that the loan is provided at a monthly rate of EURIBOR + 1% per annum with a one-time commission of 1% of the amount of tranches, the commission on obligations – 0.5%.
As part of the project, UGV should conclude an agreement with the Ministry of Finance on paying off debts to the state for fulfilling guarantee obligations, which will be secured by a pledge of property right to receive cash proceeds from gas sales in the amount of 170% of the loan amount.
It is assumed that the loan will come in by two tranches – €36.4 million and €15.45 million.
In early October 2018, the EBRD announced the possibility of a loan for Ukrgazvydobuvannya. But the date of consideration was postponed several times due to disagreements between Naftogaz and the government. In June 2019, the EBRD asked the Ukrainian side to intensify the preparation of the project.
Currently, according to information on the bank’s website, the consideration of the project is scheduled for October 15, 2019.