Naftogaz to start buying gas using letters of credit from Citi, Deutsche Bank in March
National joint-stock company Naftogaz Ukrainy has received first 15 letters of credit under the loan agreement with Citi and Deutsche Bank secured by the World Bank, the press service of the holding has reported.
"The letters of credit totaling more than EUR 220 million will be used this March to purchase natural gas from the European suppliers selected through the World Bank’s biddings. It is planned to buy up to 1.1 bcm of gas. The suppliers will be receiving cash under the letters of credit during April upon completion of the relevant gas deliveries to Ukraine," the press service said.
Naftogaz shall repay the loan within 12 months following the lending. The loan facility secured by the World Bank totals the equivalent of $500 million.
"The rest of the loan facility will be used for gas purchases based on the current market conditions," Naftogaz said.
As reported, on December 30, 2016 Naftogaz Ukrainy signed with Citi and Deutsche Bank a loan agreement for a euro-denominated credit facility for gas purchase in the equivalent of $500 million secured by the World Bank. The facility is secured by the World Bank's guarantee, which, in turn, is secured by the sovereign guarantee issued as part of the formation of the energy fund according to resolution No. 876 of the Cabinet of Ministers of Ukraine dated November 30, 2016 on the provision of the International Bank for Reconstruction and Development with the sovereign guarantee under obligations of Naftogaz Ukrainy.
