Financed ProjectsUkrgasbank -Energy efficiency financing

Identification Code:

OP/20/0004

Total Operation Cost:

30.000.000

Maturity:

60 months

Operation Status:

Description and Purpose of the Operation:

Provision of EUR 30 million Loan for SME, Renewable Energy, Energy Efficiency and Environmental Protection Financing. The proceeds of the Loan shall be used by the Borrower for the purpose of financing renewable energy, energy efficiency and environmental protection sub-loans to eligible end beneficiaries. As a response to the COVID-19 crisis the Borrower will have the flexibility to use the first tranche to support small and medium-sized enterprises (SMEs) by addressing their financing needs and help weather the current economic downturn. The use of proceeds will be in accordance with the eligibility criteria agreed with the Bank.

Countries of Operation:

Ukraine (100,00 %)

Financial Product:

SME's

Sector:

Financial Institutions

Domain:

Private

Borrower/Client:

Ukrgasbank is a leading green bank of Ukraine, focused on sustainability. It is at TOP-5 Ukrainian banks by assets. Since 2009, the majority shareholder (94.94%) is the State of Ukraine represented by the Ministry of Finance of Ukraine. As of end-2019, the share of green loans in the Bank's loan portfolio is about 30%. The Bank is rated at B/Stable by Fitch.

Co-Financiers/Participants:

n/a

Guarantors/Sponsors:

n/a

Developmental and Regional Cooperation Impact:

The operation involves a loan for renewable energy, energy efficiency and environmental protection financing, and given the worsening situation due to COVID 19, SME sub-loans in support of SMEs as most affected by the pandemic. The operation is expected to have modest but favorable economic benefits for the Ukrainian economy, particularly during the current distressed environment. The most relevant of these is the additional tax revenue gains from increased economic activity resulting from the financing provided. In addition, the financing can help contribute to employment, export potential, less imports, competitiveness among others. Last but not the least, the operation has the potential to contribute to improved environment in Ukraine and add to BSTDB’s "green" portfolio. The regional cooperation element is likely to be modest. Other BSTDB countries are important trade partners for Ukraine, so to the extent the benefiting enterprises engage in export/imports activities, there will be regional cooperation benefits. The proposed Facility is consistent with the Bank’s operational priorities as outlined in the Medium-Term Strategy and Business Plan 2019-2022 (MTSBP) and Country Strategy for Ukraine 2019-2022.

Environmental Classification and Impact (summary):

The Borrower is a majority state-own Bank with a portfolio dominated by corporate loans with significant exposure to state-owned enterprises. The key sectors of exposure include: electricity generation and distribution, oil extraction and transportation, agriculture, trade, services, manufacturing, real estate, construction, metallurgic engineering, and transportation. The current corporate portfolio includes substantial financial exposure to business activities with potential significant adverse environmental or social risks or impacts. At the same time the Borrower has a large exposure to renewable sector, energy efficiency and environmental protection sectors, and over the last 5 years it has gained substantial experience in collaborating with development banks such as IFC, EBRD, EIB, NEFCO in managing environmental and social risks and impacts associated with its portfolio. Ukrgasbank has built adequate capacity and systems in place to manage its operations in accordance with applicable requirements of IFIs, including Exclusion Lists, and national laws and regulations. Considering the nature of the loan the current operation qualifies as climate mitigation loan that will also lead to off-setting BSTDB’s exposure to coal sectors, promote de-carbonization of its portfolio, and increase the share of the Bank’s sustainability finance.

Operation Leader:

Financial Institutions II

E-mail:

fi2@bstdb.org