Foreign investors and international banks who look to invest in Ukraine should put their money in green economy and sustainability, according to European Bank for Reconstruction and Development (EBRD) local representative Lesya Kuzmenko.
The EBRD committed nearly 340 million euros to local green initiatives in 2020, Kuzmenko, the deputy head of EBRD Ukraine, said during a Feb. 5 webinar titled Outlook for Increased International Investments in Ukraine in 2021.
This includes investments in corporate initiatives with a significant eco-friendly component. For example, steel and mining company ArcelorMittal got financing from the EBRD to improve energy efficiency at its giant steel plant in Kryvyi Rih, a city 400 kilometers south of Kyiv.
Of the EBRD’s 812 million euros invested in 34 enterprises in Ukraine in 2020, almost half was dedicated to projects that promote more rational use of energy. The bank had invested 1.1 billion in the country in 2019.
Read more: EBRD invests 812 million euros in Ukraine’s businesses, infrastructure amid pandemic
Ukraine was the third top recipient of the EBRD’s funds in 2020, after Turkey and Egypt. “EBRD has a mission to turn Ukraine into a better place for living and doing business through such investments,” said Kuzmenko during the webinar.
According to the EBRD’s plans announced by Kuzmenko, the green agenda remains a high priority. The bank wants to ensure that, by 2025, 50% of the money it invests goes into green energy and corporate sustainability initiatives.
Enterprises that incorporate “greenergy” technologies move to the front of the eligibility list, she said, adding that, despite the country having a high level of corruption, experts see strong potential in this field in Ukraine.
Although overall foreign investment in Ukraine’s renewables added up to 1.2 billion euros in 2020, last year is considered to be one of the worst for the industry, according to the State Agency on Energy Efficiency.
The state is obliged to buy all green electricity from renewable power plants at fixed tariffs, which it could not afford in 2020. Today, the government owes $1 billion to the producers of renewable energy, some of whom threatened international arbitration if they don’t get their money.
Over the year, the EBRD repeatedly urged the authorities to find a “balanced and consensual” way to restructure the debts.
In 2019, green developers put three times more money in building renewable power plants in Ukraine than in 2020 — a whopping 3.7 billion euros.
Apart from investing in sustainability projects, the EBRD put money into Ukraine’s aviation, infrastructure and small and medium-sized businesses.
State assets up for privatization are also good investment targets, according to the experts speaking during the webinar. The Ukrainian government is looking to sell up to 1,440 state enterprises with a combined value of at least $6.9 billion.
Read more: State Property Fund head Sennychenko: Investment menu for privatization is ready in Ukraine
Experts believe privatization can be a win-win for investors and the state. And yet, while privatization and cultivating investments are big priorities for the current administration, experts insist that the state should first eliminate corruption to attract more foreign money.
Ruslan Zinurov, CEO at investment firm Allrise Capital, urged reducing communication between businesspeople and state-owned companies as much as possible.
“For any private investor, the less necessity to cooperate with any government, the better,” Zinurov said. “They just want to do their job.”
“The process of change takes years,” he went on, “but investors are excited… and (are ready) to wait for Ukraine to overcome these obstacles.”
