The European Bank for Reconstruction and Development (EBRD) has announced an €80 million loan to Ukrnafta, Ukraine’s state-owned oil and gas company. The loan will help fund the installation of small-scale gas-fired distributed power and co-generation units across Ukraine. This project is critical in boosting the resilience of the country’s power sector amid ongoing Russian attacks.
Funding Details and Co-Financing Support
The EBRD loan is sovereign-guaranteed and will be co-financed with parallel investment grants. These grants amount to €9.5 million from the Netherlands and €12.5 million from the United States. The funding will be channeled through the EBRD’s Crisis Response Special Fund. This initiative supports Ukraine’s efforts to improve energy resilience during this challenging period.
Decentralizing Ukraine’s Energy System
Ukraine’s energy system has faced significant challenges due to the war. The country is currently operating at just one-third of its pre-war generating capacity. As a result, many Ukrainians face rolling blackouts, severely disrupting daily life. Decentralizing the energy system is a key priority for Ukraine to address these challenges.
Project Scope and Impact
The project will install small gas-fired generation units of up to 10 MW each in select locations. These areas, primarily in Western and Central Ukraine, face significant energy and heat shortages. Ukrnafta, as the largest oil and gas producer in Ukraine, will power the generators using its own gas. This will help alleviate pressure on the national grid, providing more stable energy supply.
Long-Term Benefits for Ukraine’s Energy Transition
In the short term, these gas-fired engines will supplement the national grid. Over time, the equipment can be used to support Ukraine’s energy transition. As Ukraine increases its share of renewable energy, these gas engines will balance intermittent renewable energy input. This shift will help stabilize the energy mix and ensure a reliable power supply.
Additional Support and Workforce Development
The project also includes workforce management and leadership training programs. These initiatives aim to support Ukraine’s rebuilding efforts, with a focus on workforce development. Additionally, a veteran rehabilitation program will support demobilised staff members and their families. This program aligns with the EBRD’s Gender SMART approach to inclusion and sustainability.
EBRD’s Ongoing Support for Ukraine
The EBRD has been a key partner for Ukraine for over 30 years. Since Russia’s invasion in 2022, the bank has made over €5.3 billion available to Ukraine. This includes more than €1.5 billion in 2024 alone.
The EBRD continues to support Ukraine’s energy security, infrastructure, food security, and private sector growth.
