"Merkel's credit" begins working in Donbas

Author : Natalia Pysanska

Source :

The received funds will facilitate the implementation of Cabinet of Ministers' regulation on reconstruction of state operating company of the Ukraine’s united energy system
22:30, 12 October 2016

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German state development KfW bank, 80% owned by the government of Germany, and another 20% by the federal states of Germany, continues cooperation with Ukraine, launched about two years ago. Then was signed a memorandum on joint intention of the Governments of Ukraine and Germany on unrelated financial loan of 500 million euros, and the framework agreement between Development Bank and the Cabinet of Ministers of Ukraine to provide individual loans. Now sides signed an agreement on granting tranche, which the government will aim to restore the power of Donbas.

Millions of euros to restore East

The received funds will facilitate the implementation of Cabinet of Ministers' regulation on reconstruction of four substations of state operating company of the Ukraine’s united energy system. The current German tranche – is the share of so-called "Merkel loan" of 500 million euros, announced last year.

German experts, who together with Ukrainian colleagues worked on these projects made great preparations. It marked Eva Witt, director of the German state development bank in Central Asia, the Caucasus and Eastern Europe, who in an interview to Radio Liberty said that the current implementation of these projects – is just the beginning.

During the signing ceremony about providing a credit Secretary of State of the Federal Ministry of Economy and Energy of Germany Matthias Mahnig said that it will help to improve efficiency of the  energy system of Ukraine. After all, he says, power - is a "key issue, without it there can be no successful economy." He also stressed that the agreement of the German Development Bank and the Government of Ukraine – is an important component to achieve the modernization of Ukraine's energy structure and greater efficiency.

Experts in the energy sector agree that the activities of Ukrainian-German High Level Group are the basis of strategic partnership between Ukraine and Germany, including the introduction of reforms in energy efficiency, decentralization, cooperation in the transport sector. In fact, according to experts of "Ukrenergo" the energy non-payment in occupied areas of Donbas, suboptimal distribution of energy flows, the loss of two large power plants and many of the main power lines that remained separatist-controlled territories of Ukraine, led to a decrease in the stability of the power system in the region. And Ukraine lacks funds for the recovery.

However, the German banker Eva Witt, who studied this problem, sees ways of its solution: through attracting significant investment that has not yet come to Ukraine, as well as the fact that it takes time.

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"There's still a lot of work, especially in providing power equipment. But keep in mind that for a long time both the former Soviet Union and now independent Ukraine lacked the funds to restore the infrastructure. So there was a huge hole where now we have to invest. Now we see the unbelievably high need for modernization, as it is the fact that it takes time. Ukrainian government needs time to step by step upgrade the infrastructure, "- said Eva Witt in an interview with Radio Liberty.

New impulses for partnership

Meanwhile the German governments, which investments in Ukraine are more than 5.4 billion dollars, which is the biggest trade partner of Ukraine in Europe and third in the world, also provides  financial assistance for almost two years. In particular, on the development of infrastructure in the energy sector in the east.

And from today bilateral cooperation receives new impulses. In Kyiv within the framework of the business forum has opened German Chamber of Commerce, which replaced the Office of the Delegate of German economy, which is still working. It will represent the interests of business and contribute in attracting investment to support Ukrainian enterprises in their efforts to enter the European market, the development of regional structures, and creation of competitive conditions for business.

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As said at the opening of the Chamber the State Secretary of the Federal Ministry of Economy and Energy Matthias Mahnig, Germany expects from Ukraine the creation of a land market to finance projects and attracting investments. He urged Ukrainian partners to use the German Chamber of Commerce, which has the necessary knowledge, contacts, partners with whom you can collaborate in Ukraine and worldwide.

German business forum participants noted that the potential for cooperation with Ukraine is extremely high in various fields. There are - infrastructure, agriculture, energy, manufacturing of high technology products, vocational and technical education, training managers - which in turn will provide the effect of development in local infrastructure, local budgets, creating new jobs.

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