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Ukraine: World Bank Suspends Electricity Loan

  • Robert Lyle



Washington, 1 August 1997 (RFE/RL) - The World Bank says it has suspended disbursements of a $317 million loan to Ukraine because Kyiv has not raised electric rates as it promised.

The bank says the parliament's indefinite postponement of the higher rates "has jeopardized the financial viability of the thermal generation companies" which are getting the loan disbursements.

The loan, approved last October, was to build up fuel stocks and spare parts, install metering and other modern equipment over three years to get Ukraine's electric utility industry up to standards, especially because of the loss of the Chornobyl nuclear plant.

The bank says that without an increase in wholesale and retail prices, the power companies will continue to deteriorate.

The bank says it will still support power industry reforms with technical assistance, but will only reopen the loan when electric rates are adjusted. It said the action will not automatically affect other loans to Ukraine - they will be assessed on a case-by-case basis.

The action comes just days after Ukraine reached agreement in principle with the International Monetary Fund (IMF) on a one-year stand-by loan of around $750 million. But that program was in lieu of a larger, three-year loan that was put on hold by the IMF due to Ukraine's failure to implement adequate structural reforms.
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