How EU helps to remedy consequences of conflict in Ukraine’s east through Early Recovery Programme

Between 2014 and 2018, the European Union and its Member States have contributed over EUR 677 mln in humanitarian and early recovery aid. The EU addresses the needs of people in the areas directly affected by the conflict, the internally displaced people and refugees who have fled the conflict areas, and the returnees. EU-funded humanitarian projects include assistance with food and water, providing and repairing shelter, protection activities, health assistance, education in tackling emergencies, demining activities and distribution of essential household items.

Being one of the largest humanitarian donors amid the crisis in eastern Ukraine, the European Union has provided over EUR 116 mln in emergency humanitarian assistance; this figure includes EUR 24 mln committed in 2018. About half of the assistance benefits vulnerable people living in the non-government controlled areas. This relief aid targets those most in need, including female-headed households, the elderly, children, and people with disabilities.

Alongside to the grants and humanitarian assistance the EU supports Ukraine by making available credit lines through its financial institutions, namely the European Investment Bank, on beneficial terms otherwise not accessible to Ukraine. These loans are used to recover and improve critical social, municipal and transport infrastructure in the conflict-affected areas.

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What is the EIB’s role in EU support to Ukraine?

The European Investment Bank (EIB) is the lending arm of the European Union. It is the long-term lending institution of the EU and is the only bank owned by and representing the interests of the European Union Member States. Headquartered in Luxembourg, it has a network of local and regional offices in Europe and beyond.

In spring 2014, the European Union announced a comprehensive EUR 11 bln assistance package to support Ukraine including the financing of EUR 3 bln of investments by the EU bank over the period of 2014-2016, effectively doubling the EIB’s engagement in Ukraine. The EIB has fully delivered on its promise. From 2014-2018, the EIB Group and Ukraine have signed 27 transactions totalling more than EUR 3.8 bln and substantial advisory support has been provided.

As of April 2019, the EIB’s signed loan portfolio in Ukraine has reached EUR 5.8 bln since the start of the EIB lending operations in the country in 2007. See the projects which the EIB financed in Ukraine here.

 

What is the Early Recovery Programme?

The conflict in the east remains at the forefront of the EU work in Ukraine. Over five years, 5.2 mln people have been affected by the armed conflict in the eastern Ukraine, 3.5 mln are in need of humanitarian assistance, 3 mln people have been displaced.

Ukraine’s public and private infrastructure, including water and power supply systems, along with its educational and health facilities, already degraded by decades of underinvestment, neglect and inadequate maintenance, have been further damaged in Donetsk and Luhansk oblasts due to the ongoing conflict.

On Ukrainian government demand, the European Investment Bank is providing financing for a first Early Recovery Programme (ERP), a multi-sector framework loan of EUR 200 mln targeting early recovery investments in critical municipal and transport infrastructure and sheltering in order to ensure decent living conditions for the internally displaced people (IDPs) and hosting communities. The financial agreement between Ukraine and the EIB was signed in Kyiv on December 22, 2014.

Unlike other programmes, in which the EIB typically carries out large-scale and long-term infrastructure projects, the ERP is designed for specific, local and small-scale, but extremely urgent tasks that upon its completion will help improve the lives of thousands of local residents.

Among the main activities are the restoration of infrastructure and improvement of the conditions for the supply of public utility services, as well as repair of damaged administrative buildings and social infrastructure: educational institutions, medical facilities, post offices, and other.

Under the programme, the EIB is providing Ukraine with a loan of EUR 200 mln. The Ministry of Regional Development, Construction and Housing and Communal Services of Ukraine is in charge of the execution of the project. The beneficiaries are central state authorities, local state administrations, local self-government bodies, state and municipal enterprises.

The main stages of the projects’ implementation are as follows:

  • The Ministry of Regional Development calls for submissions of suitable sub-projects that meet the programme criteria to all the selected Oblasts.
  • The Ministry screens these submissions together with the EIB provided Technical Assistance (TA) to the programme. These sub-projects are then submitted to EIB for their approval and funding under the programme via allocation requests.
  • Once projects are approved, local tendering via Prozorro can start if below the threshold, over the threshold will entail international tendering.
  • Once tendering is concluded, payments are made direct to Contractors via Ukreximbank subject to their contract conditions being met and external supervision being satisfied by certified independent Engineers and monitoring by UNDP.

The program extends to the Ukrainian government-controlled areas in Donetsk and Luhansk oblasts and adjacent Kharkiv, Dnipropetrovsk and Zaporizhia oblasts and city councils in other oblasts countrywide enabling them to cope with the impacts of a heavy influx of internally displaced people, namely Kyiv oblast (except the city of Kyiv), Odesa and Poltava oblasts, where more than 20,000 IDPs live, and Kherson oblast hosting significant influxes of IDPs from Crimea.

For the Donetsk and Luhansk oblast sub-projects, the repayments of the EIB loan are fully from the state budget. While the sub-projects in other oblasts also include a contribution from local budget in the amount of at least 20% of the total cost of the works.

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What is the UNDP’s role under ERP?

The UNDP is helping to ensure transparency and accountability of the EIB’s EUR 200 mln recovery loan implementation. It is providing support to at all phases of project cycle, including but not limited to planning, pre-design, design engineering, and procurement, as well as oversight and monitoring.

 

What are the current key results of ERP?

The United Nations Development Programme (UNDP) is the development arm of the United Nations. It has been working in Ukraine since 1993.

As of May 2019, out of more than 2000 applications, 293 small-sized projects worth a total of UAH 3.25 bln – hospitals and medical facilities, schools and kindergartens, housing and public buildings – have been selected. The first batch of 89 sub-projects are providing about 240,000 people in 5 oblasts with improved sheltering and living conditions.

Oblast Number of projects Estimated budget, UAH mln
1 Donetsk 148 2013.11
2 Luhansk 61 207.37
3 Dnipropetrovsk 16 397.7
4 Kharkiv 53 444.58
5 Zaporizhia 15 184.91
  Total 293 3247.68

Source

Presently the EIB together with the Ministry of Regional Development are screening next batch of submitted 324 sub-projects.

The biggest part of costs is directed to health and educational facilities. Breakdown of funding allocated so far is 40% health care (hospitals and medical facilities), 40% education facilities (schools and kindergartens) and 20% sheltering and public buildings.

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For additional information, please contact communication manager Olena Ermolenko via oermolenko@ecomm.com.ua or at: 050 312 92 74

 

Source: MEGA