The World Bank’s Board of Executive Directors today approved a loan in the amount of US$ 60 million for Additional Financing to the Hydropower Rehabilitation Project in Ukraine. The original loan for the Hydropower Rehabilitation Project in the amount of US$106 million was approved on June 21, 2005, and became effective on February 3, 2006.

The main objectives of the Hydropower Rehabilitation Project are to improve the reliability, efficiency, and safety of the operation of UkrHydroEnergo hydraulic structures and equipment, and to improve their environmental performance. The latter will be achieved through the reduction in emissions of greenhouse gases, the installation of nonpolluting turbine runners, and the elimination of oil leaks into Dnipro and Dnister Rivers.

“The reform and modernization of the energy sector is a key pillar of Ukraine’s sustainable economic development,” said Martin Raiser, World Bank Country Director for Ukraine, Belarus and Moldova. “We are very pleased to be able to continue to support UkrHydroEnergo in its efforts to increase the efficiency of the unique Dnipro cascade and thereby ensure Ukraine has access to cheap, reliable, and clean power.”

The project will help increase the installed capacity of the Dnipro Hydropower Cascade by about 400 MW and its production by about 500 GWh, which is equivalent to building a major new hydropower plant.   The project also pioneered the concept of Carbon Financing in Ukraine as it was the first Joint Implementation Project under the Kyoto Protocol in the country. The additional financing supports the rehabilitation of three hydroelectric units in the Dniprovska 2 Hydropower Plant (HPP) and three hydroelectric units in the Kremenchug HPP.

The Bank has supported Ukraine in its efforts to reform and restructure its energy sector through policy dialogue, technical assistance, and financing of adjustment and investment projects since the early 1990s.   The 2008-2011 Country Partnership Strategy (CPS) discussed by the Board on December 6, 2007, emphasizes the need for sustainable economic growth and improved competitiveness. The Additional Financing will contribute to the CPS objectives by increasing reliability and reducing the cost of hydropower generation, as well as helping Ukraine better prepare to meet technical requirements of the EU power grid.