Cabinet allows Ukrenergo to adjust terms of existing contracts to rules of IFIs

The Cabinet of Ministers of Ukraine permitted NPC Ukrenergo to adjust the terms of existing contracts according to the regulations of international financial organizations (IFOs) if more than 75% of the contracts' value is financed by grants, loans, or credits from these organizations, the Ministry of Economy, Environment and Agriculture reported.

It was noted that, on September 25, the government adopted amendments to Clause 19 of the Peculiarities of Public Procurement during the period of martial law and within 90 days of its conclusion.

The ministry explained that Ukrenergo previously applied international procurement rules to projects initially financed by IFIs. However, if the contract was concluded under Ukrainian legislation and co-financing from the World Bank or EBRD was secured later, it was impossible to apply international procedures to the contract.

"Since IFIs require that all purchases financed with their funds be carried out according to their procedures, an additional mechanism was necessary. The new government decision allows the extension of international rules to contracts already concluded, provided that more than 75% of their cost is covered by international partner funds," the ministry said in a statement on Monday.

They indicated that this particularly concerns the financing of protective structures for autotransformers within the Re-PoWER project framework, which will increase power system stability and reduce consumer tariff burdens.

According to Deputy Minister of Economy, Environment and Agriculture Andriy Teliupa, adapting existing agreements to the rules of international organizations is a key condition for attracting grants and loans from the World Bank, EBRD and other institutions.

"Thanks to this mechanism, Ukraine will be able to complete the construction of protective structures at substations, promptly restore equipment in case of destruction and strengthen the power system resilience in conditions of military threats," Teliupa said.

As reported, Ukrenergo declared a technical default, temporarily suspending payments on debt obligations under $825 million of green sustainable development bonds issued in 2021 from November 9, 2024.

Then the company stated that this technical solution would be in effect until the planned debt restructuring is completed in the coming months.