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Main Business — The EBRD is lending €60 million for biofuel financing in Ukraine for the first time during the war

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The EBRD is lending €60 million for biofuel financing in Ukraine for the first time during the war

14 Jun, 2024
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The EBRD is lending €60 million for biofuel financing in Ukraine for the first time during the war

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The European Bank for Reconstruction and Development (EBRD) is lending €60 million to the Ukrainian private company LLC "Lan-Oil" for the construction of a new private biofuel plant in Ukraine, marking its first such project since Russia's full-scale invasion over two years ago.

The loan is accompanied by a financial guarantee from the European Union under the investment component of the Ukraine Facility (Pillar II) programme. This EU guarantee is part of the new €150 million Ukraine Investment Framework, which was signed today at the Ukraine Renewal Conference in Berlin. The program aims to support new and existing climate technologies in line with the EU's detailed Plan for Ukraine, particularly in the energy sector.

The need for investments in Ukrainian energy, a priority area for EBRD in Ukraine, has intensified due to recent heightened Russian shelling of Ukrainian energy infrastructure.

The new project, signed at the Ukraine Renewal Conference in Berlin, will contribute to Ukraine's energy security and the decarbonization of the energy sector by establishing a domestic source of bioethanol production, which reduces greenhouse gas emissions by 70% compared to traditional fuels.

The project is implemented by the conglomerate "Galnaftogaz" and the group of companies "OKKO," a leading distributor of automotive fuel in Ukraine and a longstanding client of EBRD. As of December 2023, "Galnaftogaz" operated 396 gas stations under the "OKKO" brand.

The biofuel produced at the new plant will comply with the requirements of the EU Renewable Energy Directive (RED III).

The project will also assist the company in addressing critical human capital challenges that adversely affect its operations, by implementing new initiatives aimed at supporting professional reintegration and access to services for war veterans, as well as new opportunities for training women to fill traditionally male-dominated roles in the logistics department of "OKKO."

Energy security is one of EBRD's five investment priorities in Ukraine, alongside supporting vital infrastructure, food security, trade, and private sector support.

EBRD, the largest institutional investor in Ukraine, has significantly increased its financing volumes for the Ukrainian economy since the start of Russia's full-scale invasion in February 2022. The Bank has already allocated over €4.2 billion to Ukraine since the war began. Recently, EBRD shareholders approved an increase in paid-in capital by €4 billion, enabling the Bank to continue its investments at current levels during the war, with potential for further increases post-recovery phase.

The Odessa Journal

The Odessa Journal

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