$300m loan for Ukraine’s state oil firm

27 Oct 15

Ukraine’s state-owned oil and gas company will receive a $300m loan from the European Bank for Reconstruction and Development (EBRD) in return for implementing a programme of corporate governance reforms, including the introduction of internal audit systems.

The EBRD and Ukrainian prime minister Arseniy Yatsenyuk signed the loan agreement for Naftogaz in the presence of German Chancellor Angela Merkel in Berlin on Friday. The company will use the funds to tender for 1.1bn cubic metres of gas (bcm) for the coming winter,

Natalie Jaresko, Ukraine’s minister of finance, said: “We are thankful for the EBRD for this loan agreement, a true milestone in our shared commitment to Ukraine’s energy sector reform.

“With EBRD’s support, we have taken a significant step forward in ensuring financing for continuous gas supplies for the winter.”

The conditional loan depends upon a programme of corporate restructuring including: the creation of a supervisory board of independent and qualified directors; the introduction of internal audit, compliance, anti-corruption and risk management functions; as well as an ownership and governance structure in line with international best practice.

Naftogaz’s history is mired in corruption, but has been trying to reform and become more transparent, open and efficient.

Andriy Kobolev, chief executive of Naftogaz since last year, said: “We are grateful to the EBRD for developing this action plan and to the government of Ukraine for supporting it.

“When this plan is implemented, it will demonstrate that even the most mismanaged company can turn around with strong commitment to reform.”

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