Kyiv, February 3, 2010 - A Loan Agreement between the Government of Ukraine and the World Bank for Additional Financing to the Hydropower Rehabilitation Project in the amount of US$ 60 million was signed today by Martin Raiser, World Bank Director for Ukraine, Belarus and Moldova, and Yuri Prodan, Minister of Fuel and Energy of Ukraine.
The original loan for the Hydropower Rehabilitation Project in the amount of US$106 million was approved on June 21, 2005 and became effective on February 3, 2006. The main objectives of the Hydropower Rehabilitation Project are to improve the reliability, efficiency and safety of the operation of UkrHydroEnergo hydraulic structures and equipment and to improve their environmental performance. The latter will be achieved through the reduction in emissions of greenhouse gases, the installation of nonpolluting turbine runners, and the elimination of oil leaks into Dnipro and Dnister Rivers. The project will help increase the installed capacity of the Dnipro Hydropower Cascade by about 400 MW and its production by about 500 GWh which is equivalent to building a major new hydropower plant. The project also pioneered the concept of Carbon Financing in Ukraine as it was the first Joint Implementation Project under the Kyoto Protocol in the country. The additional financing supports the rehabilitation of three hydroelectric units in the Dniprovska 2 Hydropower Plant (HPP) and three hydroelectric units in the Kremenchug HPP.
“The reform and modernization of the energy sector is a key pillar of Ukraine’s sustainable economic development,” said Martin Raiser, World Bank Country Director for Ukraine, Belarus and Moldova. “We are very pleased to be able to continue supporting UkrHydroEnergo in its efforts to increase the efficiency of the unique Dnipro cascade and thereby ensure Ukraine has access to cheap, reliable and clean power. At the same time, the Project’s implementation will create demand for local jobs, thus helping reduce the negative impact of the current crisis on people’s livelihoods.”
The Bank has supported Ukraine in its efforts to reform and restructure its energy sector through policy dialogue, technical assistance and financing of adjustment and investment projects since the early 1990s. The 2008-2011 Country Partnership Strategy (CPS) endorsed by the Board on December 6, 2007, emphasizes the need for sustainable economic growth and improved competitiveness through (i) increasing reliability of energy supply; (ii) reducing cost of energy supply; (iii) growing integration of the energy sector with the EU energy market; and (iv) creating the conditions for increased private investments in the energy sector. The Additional Financing will contribute to the CPS objectives through increasing reliability and reducing the cost of hydropower generation, as well as helping Ukraine better prepare to meet technical requirements of the EU power grid.