Naftogaz inks USD 3.7 bln loan deal with China

Naftogaz of Ukraine (NAFTO) signed a credit line agreement for a total amount of USD 3.7 bln with the China Development Corporation Bank, Vice PM Yuriy Boyko said on Dec. 26. The loan, which was secured under a government guaranty, is going to be spent for four projects aimed to decrease Ukraine’s natural gas imports, including the development of domestic gas fields and switching power plants from gas to coal. The agreement is for 19 years, with the first four years reserved for the projects’ design and feasibility study.

Alexander Paraschiy: The deal looks neutral for Naftogaz and Ukraine, as it will have no effect on debt inflow into the country for the next four years. Most likely the bulk of the money granted by the Chinese financial institution will come back immediately to China as purchases from its corporations. The projects have yet to be designed and economic effects calculated.