NEFCO and the Swedish International Development Cooperation Agency, Sida, have signed a guarantee agreement aimed at sharing the financial risks related to NEFCO’s municipal energy efficiency projects in Ukraine.
According to the terms of the agreement, Sida will cover 50% of the economic and project-related risks when NEFCO lends capital from its Investment Fund to Ukrainian municipalities to promote energy efficiency initiatives. The purpose of the guarantee agreement is to cushion NEFCO’s exposure to the macroeconomic risks and thereby enable NEFCO to expand its lending operations in Ukraine by an additional EUR 25 million.
Environment, including energy efficiency, is one of the two principal pillars of Swedish development co-operation with Ukraine. For the last five years, NEFCO, together with Sida and the Eastern Europe Energy Efficiency and Environment Partnership (E5P) have co-financed a number of energy efficiency projects in Ukraine.
“Sweden is keen to extend its political and financial support to the Ukrainian government to help the country reduce its energy consumption and upgrade the current heating systems in a range of different municipalities. The newly signed agreement with NEFCO will help us to achieve these objectives”, says Sida’s Programme Manager Magdalena Svensson.
NEFCO’s Ukrainian loan portfolio has over 120 projects, with many of them related to municipal energy initiatives. The most recent loan agreement was signed with the city of Ivano-Frankivsk to finance the renovation of the municipality’s street lighting system.
“We are grateful for the support provided by Sida because it will help us to maintain our presence in the municipal sector in Ukraine”, says NEFCO’s Senior Adviser, Johan Willert.
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