By Vanora Bennett
The European Bank for Reconstruction and Development (EBRD) is extending a €60 million(US$64.4million) loan to Ukrainian limited liability company Lan-Oil LLC, in its first financing for the construction of a greenfield and privately owned biofuels project in Ukraine since Russia began its full-scale war on the country more than two years ago.
The funding will be backed by a financial guarantee from the European Union provided under Pillar II of the new Ukraine facility, the Ukraine Investment Framework.
This forms part of the new €150mn Ukraine Investment Framework Hi-Bar guarantee programme, signed at the Ukraine Recovery Conference (URC) today in Berlin. This programme supports both new and existing climate mitigation technologies, in particular in the energy sector, in line with the EU’s detailed Ukraine Plan.
A recent upsurge in systematic Russian attacks on electricity infrastructure has sharpened the need for investment in the country’s energy sector, one of the EBRD’s priorities for the country.
This project, signed at the Ukraine Recovery Conference (URC) in Berlin today, will contribute both to Ukraine’s energy security and the decarbonisation of the sector by building a domestic source of fuel supply, bioethanol, with 70 per cent lower greenhouse gas emissions than traditional fuel.
The sponsor is JSC Concern Galnaftogaz and OKKO Group, a leading distributor of transportation fuels in Ukraine. As of December 2023, JSC Concern Galnaftogaz owned and operated 396 OKKO-branded filling stations. It is a long-standing client of the EBRD.
The biofuel produced is expected to be compliant with the EU Renewable Energy Directive (RED III).
It will also support the company in addressing critical human capital challenges affecting its operations through new initiatives promoting professional reintegration and access to services for war veterans, alongside new training opportunities for women workers entering traditionally male-dominated roles within OKKO Group’s logistics operations.
Energy security is one of the EBRD’s five investment priorities for Ukraine, along with support for vital infrastructure, food security, trade and the private sector.
The EBRD, Ukraine’s largest institutional investor, has significantly increased its finance to Ukraine since Russia launched its full-scale war there in 2022. The Bank has made over €4.2 billion available to Ukraine since the start of the war. EBRD shareholders have recently agreed to provide a €4 billion paid-in capital increase to enable the Bank to continue investing at current levels in wartime, with the potential for more investments when reconstruction starts.
