The European Investment Bank’s (EIB) President Werner Hoyer and Vice-President Laszlo Baranyay met with President Petro Poroshenko and with Prime Minister Arseniy Yatsenuk in Kiev today, reaffirming the EU Bank’s support for the Ukrainian economy. They discussed current challenges and priorities for the country, as well as further loans to be provided under the EU support package.
EIB President Werner Hoyer said: “The EIB is committed to supporting priority projects in Ukraine so it can better face its recent challenges. The EU bank stands ready to sign more than EUR 1 billion in total loans for this year, as part of the EUR 3 billion package targeted for 2014-2016.” With a stock of EUR 2.1 billion signed loans, Ukraine is already the biggest recipient of EIB lending among the EU’s Eastern Partner Countries.
During the visit, two loans were signed:
A EUR 150 million loan to upgrade the gas transmission infrastructure along the Urengoy-Pomary-Uzhgorod pipeline; and
A EUR 85 million loan to upgrade the storage and food-processing infrastructure of the MHP group, modernising its production capacity
The Urengoy-Pomary-Uzhgorod gas pipeline transports natural gas from Russia to Ukraine and the EU and also, through reverse flows, from the EU to Ukraine. The EIB loan contributes to improving the gas transmission infrastructure by financing the replacement of two compressor units and of around 119 km corroded pipeline sections. This will reduce fuel consumption and extend the operational lifetime of the pipeline. The project will be co-financed by the European Bank for Reconstruction and Development (EBRD) and PJSC Ukrtransgaz. The upgrade is fully secured by the EU comprehensive guarantee under the 2014-2020 External Lending Mandate.
The EUR 85 million loan to MHP, a leading Ukrainian agri-food producer, will help enhance the country’s food supply and improve environmental sustainability, feed and food quality, and storage capacity. The project will also increase the resilience of Ukrainian agricultural production in relation to adverse climate events and climate change. It will generate additional employment in Ukraine’s rural communities, promoting the country’s economic development and its integration within international markets. Risk associated with the loan to MHP will be secured by the EU political risk guarantee.
Ukraine is currently in a very difficult situation. The territorial integrity of the country is challenged, many Ukrainian citizens are being displaced from their home regions, and the Ukrainian economy is facing straining times. The economy suffers from both recent developments and legacy weaknesses.
The EU Bank signed a EUR400m loan agreement with the Ukraine to finance projects to be implemented by SMEs and Mid-caps in the agri-food sector, in order to help the country benefit from the opportunities offered by the Deep and Comprehensive Free Trade Area (“DCFTA”) established by the Association Agreement with the European Union.
The European Investment Bank’s (EIB) agreed to provide two loans under the Bank’s 2014-2016 EUR 3 billion lending plan to Ukraine: EUR 200 million to finance early recovery of small-scale damaged infrastructure in order to cope with the consequences of the conflict ravaging parts of East Ukraine; EUR 400 million in support of projects promoted by SMEs and midcaps.