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NEFCO and EU financing programme to improve water services quality in Ukraine

  • NEFCO and EU financing programme to improve water services quality in Ukraine

About the entity

NEFCO
NEFCO finances exclusively environmental and climate-related projects. We focus on small and medium-sized projects with demonstration value and scale-up possibilities to make them bankable. The positive environmental impact is what drives us forward.
Analytical Technology (ATi)

The Nordic Finance Environment Corporation (NEFCO) and the Delegation of the European Union to Ukraine have 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.

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