Ukraine may lose its energy sector financing from China in the amount of $ 3.65 billion because of inconsistencies in the ministries and in the state-owned company Naftogaz of Ukraine, as well as because of the expiration of the specific program for such financing. This is reported by Reuters.
Back in 2012, Ukraine signed a loan agreement with the Chinese Development Bank and in June this year should provide proposals for investment projects in order to receive the announced funding.
The timing is clearly tight. Naftogaz of Ukraine and the relevant government agencies have not yet signed a single coal or gas project that could be financed by a loan from China.
The Ukrainian government claims that at least one of the projects will be ready in time. It is not yet clear whether the Chinese Development Bank will allow Ukraine to gain access to part of the financing, if the proposals are not fully ready.
Failure to formulate all investment objectives can deprive Ukraine of the necessary funds to modernize its energy infrastructure. There is a risk of giving a bad signal about inefficiency and opacity for other foreign investors, whose funds would be important for economic recovery after the conflict in the Crimea and the East.
One way or another, the need for foreign investment in Ukraine is acute. According to the Ministry of Economy, Ukraine should attract at least $ 7 billion from abroad per year to stimulate economic growth.