Ukraine Natural Gas Gets Loan from EBRD Investment Bank

http://www.upi.com/Energy_Resources/2009/08/03/Global-funds-set-to-aid-Ukraines-gas-debt/UPI-23171249320108/

KIEV, Ukraine, Aug. 3 (UPI) -- Ukraine will receive $1.7 billion in international loans to help finance reforms for its national gas sector while covering natural gas purchases from Russia.

The European Commission reached an agreement on Friday with Kiev to move forward with an economic rescue package to help the country cover its natural gas debt in exchange for a variety of reforms.

The European Bank for Reconstruction and Development, the European Investment Bank and the World Bank agreed to disburse the loans, with at least $300 million set aside for natural gas payments to Russia, RIA Novosti reports.

Last week, the executive board of the International Monetary Fund approved the immediate release of more than $3 billion in response to a financial crisis in Ukraine, hit particularly hard by the global economic recession.

As much as 80 percent of all Russian gas bound for Europe travels through Soviet-era pipelines in Ukraine, prompting Europe to push Kiev to modernize its national infrastructure.

A January row between Kiev and Moscow over gas debts and contracts prompted Russian energy giant Gazprom to cut supplies to Ukraine, leaving European customers in the cold for weeks.

The contract settling that dispute obligates Ukraine to a set volume of gas purchases and payment of gas debts to Russia by the seventh of each month.

Ukraine has struggled with its monthly gas payments nearly every month since January, putting Europe on edge.