The national JSC Naftogaz Ukrainy has signed
with Citi and Deutsche Bank a loan agreement for a euro-denominated credit
facility for gas purchase in the equivalent of $500 million secured by the
World Bank.
The facility is secured by the World Bank's
guarantee, which, in turn, is secured by the sovereign guarantee issued as part
of the formation of the energy fund according to resolution No. 876 of the
Cabinet of Ministers of Ukraine dated November 30 2016 on the provision of the
International Bank for Reconstruction and Development with the sovereign
guarantee under obligations of NJSC Naftogaz Ukrainy, the national gas
company's press service reported.
The guarantee is valid for a term of four years,
with two years available for gas purchase and two years for repayment. The
guarantee of the World Bank and the credit facility are highly cost-effective
compared to other loan agreements of Naftogaz. According to the funding
conditions under the credit facility, Naftogaz will continue buying gas under
existing eligible contracts, switching from pre-payment to post-payment terms.
The payments to suppliers will be secured by
letters of credit issued by Citi and Deutsche Bank, which will convert into
loans when payments are made.
Naftogaz will repay those loans within twelve
months upon the receipt. The World Bank guarantees the repayment of the loans
to the international commercial banks.
Under this credit facility, Naftogaz will be
able to purchase gas from both western and eastern directions. Decisions to do
so will depend on the competitiveness of gas supply proposals.
"These funds will enable Naftogaz to ensure
a stable gas supply to Ukrainian consumers during this winter," the
company's press service quoted Naftogaz CEO Andriy Kobolev as saying.
In 2015, Naftogaz received a $300 million
revolving loan from the European Bank for Reconstruction and Development to
purchase gas from European suppliers, the company said.
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