Ukraine provides state guarantee to Naftogaz for EUR 300 mln loan

MOSCOW. July 8 (Interfax) - The Ukrainian government has provided a state guarantee on a loan of 300 million euros from the European Bank for Reconstruction and Development (EBRD) to national oil and gas company Naftogaz for emergency purchases of natural gas.

The relevant resolution, No. 760 of July 7, 2022, was posted on the government's website, Ukrainian media report.

The Finance Minister is authorized to sign documents on the provision of state guarantees. The fee for the guarantee is set at 0.5% of the loan amount drawn or outstanding.

The government at the end of May allowed Naftogaz to borrow up to 300 million euros from the EBRD repayable by March 25, 2024 to buy natural gas in order to fully meet the needs of Ukrainian consumers for energy resources.

The EBRD said in the middle of June that it would allocate 300 million euros to Naftogaz, of which 50 million euros is already available for emergency gas purchases. The EBRD guarantees 66% or 200 million euros of the total loan, which is also backed by the Ukrainian government guarantee. After an initial payment of 50 million euros, donor guarantees will cover the next 100 million euros and 66% of the final 150 million euros.

The EBRD said the financing would allow Naftogaz to buy natural gas using a competitive procurement mechanism from its pre-qualified gas traders in the EU. Gas deliveries under the loan will take place on the basis of standardized European Federation of Energy Traders or EFET contracts.