Nordic Finance Environment Corporation (NEFCO) and the Delegation of the European Union to Ukraine announced the launch of the NIP Ukraine Water Modernisation Programme – a new financing programme for municipal water utility companies to modernise their facilities, machinery and processes and thus improve the quality of their water supply, wastewater treatment and energy efficiency. The programme is managed by NEFCO and financially supported by the European Union Neighbourhood Investment Platform (NIP) and Sweden.

Under this programme, NEFCO has allocated EUR 12 million for loans to Ukrainian municipalities. The EU contributes with EUR 5 million in grants, while Sweden will provide up to EUR 1.5 million for technical assistance through its international development cooperation agency Sida. The water utility companies are expected to finance part of the projects with their own funds. Several municipalities have already expressed their interest in the programme, and preparatory work is ongoing in nine cities selected for the first phase: Fastiv, Uman, Nikopol, Sumy, Khmelnytskyi, Chernihiv, Lutsk, Horishni Plavni and Berdychiv.

“The EU supports Ukrainian municipalities in carrying out key investments and boosting economic development. Modernising the water treatment and supply system contributes to better water quality, less pollution and decreased costs, and will therefore have a significant positive impact on the people in Ukraine,” Johannes Baur, Head of Section “Economic cooperation, energy, infrastructure and environment” at the EU Delegation to Ukraine, said.

Through the NIP Ukraine Water Modernisation Programme, water utility companies can invest in, for example, the replacement of old and obsolete equipment such as pumps and blowers, installation of flow meters and procurement of modern operation and maintenance equipment and machinery, depending on their needs.

Amund Beitnes, Senior Investment Manager at NEFCO, expects major impact in energy and cost savings as a result of the investments. “The initial estimation shows accumulated savings of electricity up to 24 GWh per annum. This corresponds to avoiding 19,000 tonnes of CO2 emissions annually, equaling the annual electricity consumption of 6,000 average households in the EU countries. In addition, modernisation measures will also lead to the reduction of nutrient discharges and generate a positive impact on the environment.”

The water sector in Ukraine is in need of major investments to modernise the system, as little has been done after the collapse of the Soviet Union in the early 1990s. Tariffs do not cover the costs, and water utility companies, over 80 per cent of them owned by municipalities, have found it hard to cope with the investments required. As a result, the performance of many of the utilities has become inefficient due to deteriorated infrastructure. A large part of the pipeline networks, pumps and water treatment and purification plants are worn out or do not meet the necessary standards.

Background information

The Neighbourhood Investment Platform (NIP) is a mechanism aimed at mobilising additional funding to finance capital-intensive infrastructure projects in EU partner countries covered by the European Neighbourhood Policy (ENP) in sectors such as transport, energy, environment and social development. The NIP also supports the private sector, mainly through investment grants and risk capital operations targeting small and medium-sized enterprises. NIP strives to pool grant resources from the EU budget and the EU Member States and to use them to leverage loans from European Financial Institutions as well as contributions from the ENP partner countries themselves. In this way, the EU backs its neighbours’ priorities and supports them in carrying out key investments and boosting economic development.

NEFCO is an international financial institution established in 1990 by the five Nordic countries: Denmark, Finland, Iceland, Norway and Sweden with the aim to generate positive impact on the climate and environment in a cost-efficient way. Focusing on small and medium-sized projects with tangible results and contributing to the UN Sustainable Development Goals, NEFCO provides high additionality to governments, co-financiers and customers. Over the years, NEFCO has financed more than 1,300 private and public sector projects across different sectors in 80 countries, with a strong focus on Eastern Europe, the Baltic Sea, and the Arctic and Barents Regions. NEFCO’s headquarters is located in Helsinki, Finland, and a representative office in Kyiv, Ukraine.

For further information, please contact
•Amund Beitnes, Senior Investment Manager, NEFCO, amund.beitnes@nefco.fi, +358 10 6180 658
•Trond Moe, Managing Director, NEFCO, trond.moe@nefco.fi, +358 10 618 0662