The European Bank for Reconstruction and Development will provide state-owned Ukrgasbank a 25 million euro loan to help smaller businesses to grow in Ukraine, the international financial institution announced on June 17.
The hryvnia equivalent of the loan will be given to Ukrgasbank, a key local lender that focuses on financing projects that promotes resource efficiency and reduces CO2 emissions using renewable energy.
The allocated loan will be used as loans for micro, small and medium-sized enterprises in Ukraine that are modernizing their production facility.
Ukrgasbank will help these businesses improve the technology and equipment needed to meet the European Union standards in terms of quality, health, safety and environment. At least 70% of the new funds will be used to finance projects in green technologies, according to the press release.
Borrowers implementing successful investment projects are also eligible for a 15% reimbursement of the loan and technical assistance.
The support will be provided by the EU under an initiative called EU4Business, which was established to support small and medium-sized businesses and boost economic growth in the six Eastern Partnership countries including Ukraine.
Together with EBRD, it works as a joint financial instrument to help local businesses improve competitiveness and export more products. The program is designed to encourage businesses to invest more in high-quality products so that they will be equipped to compete better in both local and international markets.
Earlier this year, Ukrgasbank has also signed a loan agreement of 30 million euros with the International Finance Corporation (IFC). The loan is taken for a period of five years to finance energy efficiency and renewable energy projects while opening up a possibility for IFC to become a shareholder of Ukrgasbank in the future.
While signing the tripartite agreement signed between the Finance Ministry, IFC and Ukrgasbank back in January, Finance Minister Serhiy Marchenko said that the government is still trying to reduce the state’s share of the banking sector to 25% by 2025.
As of January, the state owns 94.94% of Ukrgasbank’s shares.
The official also reminded that the implementation of the agreement fulfills one of Ukraine’s obligations in cooperation with the International Monetary Fund.
Ukrgasbank is a universal bank in Ukraine that has a country-wide network with over 4,500 employees. There are nearly 270 branches throughout the country and is the fourth-largest bank in the country by assets with a 7% market share.
The state-owned bank currently leads the financing of clean energy facilities in Ukraine, funding green projects that altogether reduced carbon emissions by more than 1.4 million tons a year.
