EU Bank lends €400 million to upgrade municipal infrastructure in Ukraine

The European Investment Bank has provided a loan of 400 million to finance projects devoted to the modernisation of public infrastructure in Ukrainian cities.

European-Investment-BankThe aging infrastructure of many Ukrainian municipalities requires substantial modernisation. “Up to 80% of municipal infrastructure networks are in lousy condition,” says Hennadiy Zubko, vice prime minister and minister of regional development.

The European Investment Bank (EIB) loan is allocated toward some 25-40 projects fostering improvements in the energy efficiency of large and medium-sized municipalities. These improvements include modernisation of district heating, implementation of energy saving measures in public buildings, upgrading of municipal lighting, etc. Overall, the loan is expected to contribute to Ukraine’s energy security, a reduction in water loss, improvements to solid waste management, and the safety and quality of municipal services.

“Modern and reliable municipal infrastructure will contribute to increasing the quality of life of people living in Ukrainian cities,” says László Baranyay, the EIB Vice-President responsible for lending operations in Ukraine. He asserts that the EIB loan, “will help to save energy, provide better and more economical services, and help to protect the environment.”

The EIB loan will finance up to 50% of the total costs of the suite of energy efficiency projects. The remaining costs will be covered by parallel financing from other international financial institutions, investment grants, and out of the pockets of the projects’ final beneficiaries.

Ultimately, the EIB loan money is distributed to central, regional and local authorities, and public and municipal enterprises that provide public services in Ukraine.

It is possible to track the list of Ukrainian projects implemented with the loan money on the official EIB website in the Projects to be Financed section.

In order to prepare and implement projects under the programme, those implementing the projects will benefit from technical assistance funded by the Eastern Partnership Technical Assistance Trust Fund and the Municipal Project Support Facility.

Background

The EIB – the official bank of the European Union – finances projects in Ukraine on the basis of an EU Council and European Parliament mandate for Eastern Neighbourhood countries. The mandate enables the Bank to support projects of significant interest to the EU and its Eastern Neighbours in the areas of local private sector development, social and economic infrastructure, and climate change.

In March 2014, the European Commission announced a comprehensive assistance package amounting to 11 billion for 2014-2016 to support Ukraine under certain conditions. For its part, the EIB is contributing to this package by lending up to €3 billion over the next three years, should political and operational conditions allow. The EU bank will focus on energy and infrastructure investment as well as access to financing for SMEs.

The Eastern Partnership Technical Assistance Trust Fund (EPTATF) is a funding mechanism for technical assistance to ensure more successful project implementation in Eastern Partnership Countries. The EPTATF is conceived as a multi-donor, multi-sector fund whose main objective is to enhance the quality and development impact of the EIB lending operations in the Eastern Partnership countries. It focuses on four priority sectors: energy, environment, transport, and telecommunications, with climate change and urban development as cross-cutting issues.

The Municipal Project Support Facility (MPSF) is a technical assistance facility funded by the Neighbourhood Investment Facility. The facility aims at providing support to municipal projects in the Eastern Partnership countries. It focuses on support to investments projects in all municipal sectors (including district heating, energy efficiency in buildings, municipal lighting improvements, as well as projects related to the water supply, sanitation, and solid waste management).

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