ODESA, NOVEMBER, 23rd, 2009, CONTEXT-PRICHERNOMORIE — Uropean Bank of Reconstruction and Development may suspend financing of the electricity line in Odesa Oblast, Context-Prichernomorie correspondent reports.

The agency was informed about it today 23 November at the press-service of the bank.

This morning in the village of Usatove near Odesa Ukraine's national power company Ukrenergo continued the construction on a EUR 25.8 million project financed by the European Bank for Reconstruction and Development (EBRD), thus ignoring the bank’s at the end of last week “to halt immediately further construction work and to take measures aimed at defusing the tense situation in the area”.

In violation of the project conditions, agreed with EBRD and reflected in the loan agreement ratified by the Ukrainian parliament, state owned Ukrenergo has altered the initially intended route of the high voltage power transmission line. Instead of bypassing the village of Usatove the company has decided to construct the line in very close vicinity to local houses and streets. These revised plans have led to months of resistance by local inhabitants, which came to a head last week as police arrived in the village to free up space for project construction workers.

In a letter to the EBRD's president, CEE Bankwatch Network's member group in Ukraine – the National Ecological Centre of Ukraine – urged the EBRD “to use its influence with the Ukrainian government to find a way to immediately bring an end to the simmering violence in Usatove and to implement the project according to the design agreed with the EBRD”.

As reported before, on Friday 20November, an EBRD press release described a letter from the bank to Ukrenergo that warned: “further tranches of financing for the project cannot be disbursed until the Bank assesses the environmental and social implications associated with the NPC Ukrenergo’s decision to change the original route of the power transmission line and until NPC Ukrenergo takes all steps necessary to address in a satisfactory manner all environmental and social issues relevant to this change.”

Yet the following day Ukrenergo continued construction work in Usatove, while on Sunday Ukrenergo's representative Anatoly Shvedkiy called a meeting with villagers and instead of announcing the long expected break in the conflict he confirmed continuation of works in the village.

Shvedkiy added that he had received no instructions to halt work in the village and “does not understand” the EBRD's press release printed and shown to him by local inhabitants.

Yury Urbansky, of the National Ecological Centre of Ukraine and Bankwatch National coordinator, said: “We welcomed the EBRD's reaction to the ongoing conflict situation around the project. The bank's demands towards the company were wholly appropriate given the agreements that underpin its backing of the project.

“Yet the management of Ukrenrgo and their patrons in the government continue to cynically disregard the basic human rights of local people and fly in the face of the requirements of an international financial institution that has backed the project. Such behaviour undermines Ukraine's international reputation. We call on the EBRD not only to suspend the project financing but also to cancel the loan agreement and demand immediate payback of the loan according to the provisions of the loan agreement. The implementation of another Ukrenergo transmission line project, recently co-financed by EBRD and the European Investment Bank, has to be thoroughly investigated too. We believe that Ukrenergo should be blacklisted from any further EBRD financial assistance.”