EBRD lends €180 million to support Ukraine energy production

The European Bank for Reconstruction and Development (EBRD) is lending €180 million to Ukrainian Railways (Ukrzaliznytsia, or UZ) to install small-scale generators at sites around the country, aiming to mitigate the widespread electricity shortages Ukraine expects this winter as a result of devastating Russian attacks this year on its power generation system.

The loan will finance the supply and installation of up to 270 MW of decentralised small-scale gas-fired power generation capacity at selected existing UZ sites across Ukraine, helping to address the electricity deficit and to ensure an uninterrupted supply of energy to Ukrainian people and businesses. The project, which will cost a total of €248 million, will make the national energy system more resilient.

The EBRD loan will be co-financed by a parallel investment grant of up to £10 million (€12 million) from the United Kingdom and an investment grant of up to €56 million from a multilateral or bilateral international donor.

"In the current emergency, the EBRD is pleased to finance new players such as Ukrainian Railways entering the energy generation market and is making plans for more lending in this area," said Arvid Tuerkner, EBRD Managing Director for Ukraine and Moldova. UZ announced plans in June to build dozens of gas-fired generating plants.

"The war has only increased the importance of Ukrainian Railways, a long-standing EBRD client, and we pleased to support the company's latest endeavour to improve the country's resilience. UZ is also one of the largest employers in Ukraine, with around 200,000 full-time employees, and will benefit from the EBRD's Human Capital Investment Incentive Grant programme as part of this project," said Sue Barrett, EBRD Head of Infrastructure for Europe, the Middle East and Africa.

As a leading provider of climate finance, the EBRD is working with Ukraine over the longer term to move to a renewable energy-led future as soon as conditions allow. The small gas engines to be installed under this project and others like it can later be repurposed to balance the intermittent energy to be provided by solar and wind power.

JSC Ukrainian Railways is a vertically integrated national railway operator owned by the government of Ukraine. A monopoly provider of rail transport in Ukraine, it operates a railway network of around 20,000 km and related infrastructure and is one of the largest contributors to Ukraine's Gross Domestic Product (GDP), with revenue representing 2.34 per cent of Ukraine's pre-war GDP. The war has put millions of people on the move and prompting changes in the way goods are moved around the country, adding to the company's strategic importance.

The EBRD, which has worked in Ukraine for more than three decades, has made more than €5 billion available to the country since Russia invaded in 2022. It invests to support energy security, vital infrastructure, food security, trade and the private sector.