3 Feb 2010 14:34

Ukraine gets $60 mln loan from World Bank for hydropower modernization

KYIV. Feb 3 (Interfax) - Ukraine is receiving a loan of $60 million from the World Bank for the Hydropower Rehabilitation Project.

The government and the World Bank signed the loan agreement in Kyiv on Wednesday, an Interfax correspondent reported from the signing ceremony.

The project provides for improving the reliability and efficiency of UkrHydroEnergo hydraulic structures and equipment.

Specifically, the money will be used to rebuild and upgrade three hydroelectric units each at the Dniprovska-2 and the Kremenchug hydropower plants with the installation of non-polluting turbine runners.

The project will boost capacity on the Dnipro cascade by 400 megawatts, or approximately 500 million kWh a year.

The agreement was signed by Energy Minister Yury Prodan and the World Bank's director for Ukraine, Belarus and Moldova, Martin Raiser.

The loan is for 12 years with a six-year discount period. The loan interest rate is LIBOR+1.75%. The one-time commission for the loan is 0.25% and the Finance Ministry's fee for raising the loan under state guarantee is 2%.

UkrHydroEnergo CEO Semyon Potashnik told journalists later that his company was in talks with the World Bank and the European Bank for Reconstruction and Development (EBRD) concerning financing for construction of the Kakhovskaya-2 hydropower plant. The project would see installation of hydroturbines at the spillways of the existing Kakhovskaya plant. Preparation of the feasibility study is being financed with a grant. The new plant would have 250-300 megawatts of capacity and cost $250 million-$300 million.

UkrHydroEnergo operates all major hydroelectric stations on the Dnipro and Dnister rivers. Installed capacity totals 3,900 megawatts. State-owned Energy Company of Ukraine has 100% of shares.

The Hydropower Rehabilitation Project (2006-2011) involves reconstruction of 46 hydroelectric units and six dams at nine hydropower plants, as well as upgrades to high-voltage equipment and control systems. The project will cost an estimated $362 million. The current loan increases World Bank financing for the project to $166 million from $106 million previously.