Ukrainian president signs laws on govt guarantees for $6.7 bln in loans from China
KYIV. Aug 6 (Interfax) - Ukrainian President Viktor Yanukovych has signed laws to provide government guarantees on $6.7 billion in loans from China Development Bank and the Export-Import Bank of China.
The guarantees apply to loans from the China Development Bank totalling UAH29.5 billion ($3.691 billion at the current rate) for projects to replace the use of natural gas with domestic coal, and UAH24.3 billion ($3.04 billion) from the Exim Bank of China for agricultural projects, the president's press service said.
These laws, passed at an extraordinary session of parliament on July 30, provide for increasing the ceiling on government guarantees from UAH15 billion to UAH68.8 billion.
Ukraine's Energy and Coal Industry Ministry and China Development Bank signed a protocol in mid-July concerning cooperation on the replacement of natural gas with coal. The loan will be used to finance five innovation projects that the ministry expects will make it possible to reduce consumption of imported natural gas by more than 3 billion cubic meters and save $1.5 billion annually.
The projects are also expected to resolve the problem of a surplus of thermal coal on the Ukrainian market following the growth in production in the past two years, and ensure stable sales for about 10 million tonnes of domestic coal.
The terms of this loan have not been disclosed.
Exim Bank of China is prepared to extend to the loans for the agricultural projects at a rate equivalent to the six-month LIBOR+4.5% for a period of 15 years with a five-year grace period, according to the Finance Ministry.
These funds will be used to finance projects to build a plant to produce crop protection agents and process organic mineral fertilizers, cultivate land, and purchase crop protection agents, farm machinery and other agricultural equipment.
The official exchange rate for August 6 is UAH7.993/$1.