The World Bank is to lend Ukraine US$106mn for its Hydropower Rehabilitation Project and for energy sector reform.
To that end, a credit agreement was signed by fuel and energy minister of Ukraine Ivan Plachkov and the World Bank director for Ukraine, Belarus and Moldova Paul Bermingham in Kyiv recently.
The loan will be allocated for 18.5 years with a six-year grace period, Bermingham said. Interest will be tied to the Libor rate.
The World Bank representative said he hoped the Ukrainian parliament would ratify the agreement so that the project could begin as soon as possible. At this point, there appears to be no major opposition to the supporting legislation needed.
The World Bank’s Board of Executive Directors approved the loan in June 2005.
The national JSC Ukrhydroenergo, which runs most of Ukraine’s hydropower plants, is to manage the loan. The loan will be provided from 2006-12 and the major part (US$76mn) will be furnished from 2007-09.
The total cost of the project is estimated at US$361.8mn and is planned for 2006-11. The project will see the restoration of about 70 hydroelectric units at nine hydropower plants built more than 30 years ago. This will help increase production of hydroelectric energy by 360GWh, increase hydropower capacity by 250MW, and reduce emissions from thermal power plants.
Ukrhydroenergo was established at the beginning of 2004 through the merger of the state-owned companies Dniprohydroenergo and Dnisterhydroenergo. The company operates 99 hydroelectric generators at nine hydropower stations. Some 16 of these were reconstructed during 1996-2002 and another 10 will be reconstructed by the end of 2005.