Norwegian funding to secure energy supplies in Ukraine

‘The Ukrainian authorities need our help to secure electricity and heating for houses and homes, businesses and public institutions as a new winter approaches,’ said Prime Minister Jonas Gahr Støre.

The Norwegian funding will be channelled through the European Bank for Reconstruction and Development (EBRD). It will be used to repair and maintain critical electricity infrastructure and provide emergency power in areas affected by Russian attacks (NOK 865 million) and to replenish natural gas stocks (NOK 635 million). The support is part of the multi-year Nansen Support Programme for Ukraine.

‘More than 60 % of Ukraine’s power production capacity has been damaged or destroyed by Russia’s military aggression, and we still lack an overview of the full impacts after the Kakhovka dam was bombed in June. The Ukrainians are making a heroic effort to restore electricity supplies through makeshift repairs, but they need international support. Norway is doing what it can to help,’ said Mr Støre.

Norway provided funding of NOK 2 billion to enable Ukraine to purchase natural gas in 2022. This covered about one third of Ukraine’s import needs last year.

‘We do not yet know how much gas Ukraine will need to import this year, but Norway’s contribution will put Ukraine in a better position to tackle a cold winter and further attacks by Russia,’ said Mr Støre.

The Norwegian funding will go to two state-owned Ukrainian energy companies, Ukrenergo (electricity) and Naftogaz (natural gas), and will be channelled through the EBRD. This is in order to reduce risk, including the risk of corruption and irregularities. The EBRD has been working with Ukrenergo and Naftogaz for some years, and has been instrumental in introducing reforms and measures to reduce the risk of corruption, with support from Norway and other countries.

In 2022, Norway provided about NOK 10.7 billion in civilian and military support to Ukraine. About NOK 18.5 billion has been allocated for 2023. You can read more about Norwegian support to Ukraine and neighbouring countries here.

 

Facts

The NOK 865 million for the electricity sector will be included in a funding package to improve Ukrenergo’s liquidity, which is in a precarious situation as a result of the war. This working capital will be used to improve:

• Ukrenergo’s capacity to repair and maintain critical electrical infrastructure;
• Ukrenergo’s ability to pay for emergency power supplies in areas directly affected by hostilities;
• Ukrenergo’s ability to comply with its obligations towards producers of renewable energy.

The NOK 635 million in funding for gas purchases will be used to boost the strategic gas reserves held by Naftogaz at the beginning of a new winter. Damage to electrical infrastructure and limitations on domestic gas production as a result of the war are influencing the need for gas imports. The EBRD is also providing Naftogaz with assistance with procurement processes and the revision of the company’s strategy for achieving net zero emissions in line with the Paris Agreement in the longer term.