US $378.4 million new loan for transmission system upgrades and electricity market reforms
WASHINGTON, December 22, 2014 – The World Bank’s Board of Executive Directors today approved a US$378.425 million loan for the Second Power Transmission Project to improve the reliability of the power transmission system and support the implementation of the Wholesale Electricity Market in Ukraine. With this new project, the Bank is stepping up its support for the country’s energy sector reforms.
“We are delighted to deepen our support for Ukraine’s large power sector, which has strategic importance for the country,” said Qimiao Fan, World Bank Country Director for Belarus, Moldova, and Ukraine. “This investment will help rehabilitate the national power transmission network to improve Ukraine’s energy security and mitigate the impact of climate change.”
The new investment will support efforts to develop plans for renewable power integration, applying smart grid solutions at power transmission. It will also support the implementation of the Wholesale Electricity Market and Balancing Market mechanisms and enhance electricity market competitiveness by aligning the Ukrainian network with the European Network of Transmission System Operators for Electricity. This will help to strengthen not only national, but also regional energy security.
The new project will help the national energy company Ukrenergo to design and implement high-priority transmission system rehabilitation measures and upgrades, increasing the system’s reliability. It aims to make substations more efficient through reducing the number of outages, while strengthening electricity market performance. This will be done across the Central and Northern power systems, the country’s two major regional networks, covering almost one-third of Ukrainians who will get more stable electricity supplies.
The project includes a US$48.425 million loan provided by the Clean Technology Fund (CTF), which will be used to assist Ukrenergo in the design and installation of the next generation of modern communications, grid management, and control systems, which will enable large-scale integration of wind and solar energy resources and improve management and operation of the transmission network.
In addition, the project provides US$2.5 million of institutional support to Ukraine’s Ministry of Energy and Coal Industry for the implementation of energy sector reforms in line with its commitments within the Energy Community and the EU Association Agreement.
This new project is part of the World Bank Group’s overall assistance to Ukraine announced in March this year. The Bank Group has pledged up to US$3.5 billion of new lending for Ukraine in 2014, of which over US$2.5 billion has already been provided.
The World Bank is a major development partner of Ukraine. With this new investment, the World Bank’s active lending portfolio will amount to about US$4.6 billion, through 14 operations in the country. Since Ukraine joined the World Bank in 1992, the Bank’s commitments to the country have totaled over US$9 billion for 45 projects and programs.
Background Note
Ukraine, with the support of the World Bank, has been implementing energy sector reforms since 2004. The main objectives of these reforms are to: provide investments for energy infrastructure; improve the safety and reliability of the power supply; contribute to the uninterrupted operation of the Ukrainian energy market; and support Ukraine in its legislative, institutional, and technical harmonization of the energy sector with the European Union’s (EU) Internal Energy Market. The Second Power Transmission Project, or PTP2, contributes to providing a strategic framework for the development of Ukraine’s power sector in a sustainable manner.
