MYKOLAIV, AUGUST 9th, 2010, CONTEXT-PRICHERNOMORIE – Experts of the International Finance Corporation have visited Mykolaiv to get familiar with the investment projects in the energy saving and garbage recycling sector, Context-Prichernomorie correspondent reports.

The agency has been informed about it today 9 August at the press service of Mykolaiv City Executive Committee.

The meeting of IFC representatives, which is a part of the World Bank Group, with the experts in the sphere of housing and communal services, thermal energy and power supply headed by Mayor Volodymyr Chaika was held within the framework of consultative council for power saving at Mykolaiv City Executive Committee.

The task set was to discuss the state and the prospects of reforming the heat supply system in Mykolaiv.

According to the Chief of Mykolaivoblteploenergo Volodymyr Bereznytskyi, physical wear of the heating supply systems in Mykolaiv Oblast has made 70 percent, over 25 percent of the networks have been in exploitation for over 25 years. Moreover, the existing tariffs for heating do not match those economically grounded, and the price for energy resources is constantly going up.

At the same time the city refuses small unprofitable boiler houses, their number decreases. Due to the use of heat insulation the consumption of thermal energy has gone 40 percent down since 2006. However the matter with power saving in Mykolaiv remains unsolved. This is especially obvious with budget organizations – schools, kindergartens, polyclinics.

The citizens are incapable of paying the tariffs growing all the time. The state helps, but post factum. That’s why the indebtedness of the companies of communal service may reach UAH 1 billion. Reforming of the system will require at least USD 150-200 million.

These problems can be resolved with the help of alternative fuels power saving equipment and so forth; to achieve this Mykolaiv needs investments, which the International Finance Corporation could provide.

According to IFC investment expert Mrs Alyona Ponamaryova, IFC can only offer co-financing, some part should be financed by the loan-taker. Moreover, the corporation does not give financing against state security, the loan may only be provided against municipal security.

Firstly, in accordance with Ukrainian legislation, the corporation is not allowed to participate in tenders. Secondly, international banks may only finance cities with population of 800 thousand and more. The quota has now been reduced to 500 thousand, but there is a limit amounting to 10 percent of the city budget. In addition, the loan-taker is to prove their creditworthiness, and communal service companies cannot really do it. All this makes financing in Ukraine quite a bit complicated.

The expert wasn’t able to name the exact rate of interest either, according to her, it is calculated in compliance with a special scheme, but in no case it may lower then 10 percent in foreign currency and have the terms not longer than 10 years.

Potential investors also familiarized with the projects in the garbage recycling sector of Mykolaiv and the project providing repair of heating systems in residential house at Namyv. Private companies are easier to finance for IFC.

However, a final decision as to any of the projects has never been made yet.