IFC SUPPORTS UKRAINE’S GALNAFTOGAZ TO MODERNIZE
ITS INFRASTRUCTURE AND TO BENEFIT FARMERS
Galnaftogaz is a member of the
U.S.-Ukraine Business Council (USUBC)
Fri, Aug 7, 2020, Wash, D.C.
International Finance Corporation, Kyiv, Ukraine....IFC, a member of the World Bank Group, finances Galnaftogaz, Ukraine’s leading retail distributor of transportation fuels. The funds enable the company to supply underserved farmers with fertilizers and fuels and to improve its logistics infrastructure, boosting economic development and creating jobs.
IFC is providing a $35 million loan to Galnaftogaz to support modernizing its distribution network and increasing farmers’ access to finance. The total cost of the project is $135 million.
Galnaftogaz is the first fuel distributor in Ukraine that is providing farmers with fuels and fertilizers during the sowing season, using a financial instrument called Crop Receipts. Crop Receipts were developed by IFC, in partnership with the Swiss Secretariat of Economic Affairs SECO, to allow farmers to access financing using future harvest as collateral. Many small and medium-sized farmers, otherwise, would lack sufficient assets to access bank financing. The loan to Galnaftogaz will further support Ukraine’s farmers.
“Our continuous investment into infrastructure development and new initiatives aim to meet the needs of our customers, while also making sure fuels and fertilizers are accessible for small enterprises engaged in agriculture, ,” said Vitaly Antonov, Galnaftogaz’s president. “With this new financing from IFC, we will continue supporting farmers who will in turn contribute to Ukraine’s economic growth.”
One of Ukraine’s key priorities is to reduce its reliance on imported coal and natural gas and move to cleaner alternatives. The project will support these efforts by helping Galnaftogaz upgrade its existing network of storage terminals and filling stations operating under the “OKKO” brand. It will also promote electric vehicle uptake by investing in fast-charging stations. The project will enable the company to avoid annual greenhouse gas emissions of around 4,990 tons of carbon dioxide.
“We support our longstanding partner Galnaftogaz, together creating efficient fuel and fertilizer logistics infrastructure in Ukraine, including leadership in the country’s fast-charging station business. This is all the more critical in the context of the current economic slowdown in Ukraine caused by the pandemic,” said Jason Pellmar, IFC Regional Manager for Ukraine, Belarus, and Moldova. “The agri component of the project will also help the company expand a new market for the benefit of Ukrainian small farmers and encourage broader adoption of IFC’s Crop Receipts initiative by many more Ukrainian suppliers.”
IFC’s partnership with Galnaftogaz is part of its wider efforts to help ease access to credit, particularly for small farmers, and support private investments in the country.
IFC has been working with Galnaftogaz since 2004, expanding access to high-quality fuel services across the country. The company operates a network of 400 fueling stations with up to 10,000 employees. When IFC extended its first loan to the company, GNG employed only around 2,000 people.
ABOUT IFC -----
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2019, we invested more than $19 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
USUBC NOTE: Galnaftogaz is a long-time member of U.S.-Ukraine Business Council (USUBC) www.USUBC.org.