Supporting vital infrastructure in Ukrainian city of Ternopil

This article is brought to you in association with EBRD.

• EBRD lends €10 million for energy-efficient trolleybuses in Ternopil with Spanish guarantee
• Through EBRD’s HIPCA climate partnership, Canada provides investment grant of €4 million
• City also receives additional €3 million E5P grant to modernise district heating system

The European Bank for Reconstruction and Development (EBRD) is lending €10 million to Ternopilelectrotrans, a municipal public transport operator in the city of Ternopil, an economic centre in western Ukraine. The loan will enhance the resilience and efficiency of the city’s electric public transport infrastructure, reducing emissions while supporting both citizens and nearly 30,000 displaced people who have moved to Ternopil as a result of Russia’s war on Ukraine.

The loan will be co-financed by a €4 million investment grant from Canada through the EBRD’s High-Impact Partnership on Climate Action (HIPCA)* and backed by a 25 per cent guarantee from Spain. The city will contribute at least €1 million in equity of the borrower.

The funding will help Ternopilelectrotrans replace its outdated fleet with up to 39 new energy-efficient, low-floor vehicles, along with maintenance and diagnostic equipment, and improve the rolling stock’s electricity supply by modernising a substation. The upgrade will cut annual emissions by 7,570 tonnes of carbon dioxide equivalent, 1.2 tonnes of nitrous oxides and 0.12 tonnes of particulate matter.

Russian attacks have repeatedly interrupted municipal services in Ukrainian cities such as Ternopil. The loan addresses the heightened need for safe, accessible public transport, especially for the vulnerable. Ternopil is currently home to thousands of internally displaced people, mostly women with children or elderly relatives. The surveillance cameras installed in all new trolleybuses will enhance the safety of passengers, particularly women and children who are at a higher risk of gender-based violence and harassment.     

Separately, Ternopilmiskteplokomunenergo, a municipal district heating system operator in the city will also receive additional grant financing of €3 million from the Eastern Europe Energy Efficiency and Environment Partnership (E5P) Fund,** a grant fund established by international donors to co-finance investments in Ukraine’s municipal sector. This raises the total E5P grant contribution under the on-going district heating for the project to €8 million.

The E5P grant top-up is to co-finance the modernization of the district heating system and introduction of distributed co-generation based on renewable energy sources.

This change, supported by reallocated EBRD funds, will bolster Ternopil’s district heating system, ensuring sustainable energy provision despite wartime damage to Ukraine’s energy generation infrastructure.

During his visit to Warsaw, Mayor of Ternopil Serhii Nadal met with the EBRD to discuss further developments of the Trolleybus and District Heating projects.

Sue Barrett, EBRD Director for Infrastructure in Europe, the Middle East and Africa said: “We are pleased to support the City of Ternopil during this very difficult period in the history of Ukraine. We are confident that the financing package, which includes large investment grants for the municipal trolleybus and district heating system operators, will improve the safety, quality, and accessibility of municipal public transport as well as reliability of heat and electricity supply for the benefit of Ternopil residents.” 

Serhiy Nadal, the Mayor of Ternopil said: “We are sincerely grateful to the EBRD and the Government of Canada for their support of Ternopil in these challenging times. Thanks to international partners, we can implement important projects. Every day, our trolleybuses transport thousands of Ternopil residents, including elderly people, mothers with strollers, and individuals with disabilities. For them, convenient transport is not just about comfort; it is about the ability to move freely around the city. The energy security of Ukrainian cities begins where dependence on natural gas ends. The transition to renewable energy sources and the construction of a distributed electricity generation system are concrete steps toward independence, sustainable development, and the creation of strong, self-sufficient communities capable of responding to modern challenges”.

Since the Russian invasion in 2022 the EBRD has deployed a total of more than €5.4 billion in Ukraine, including over €1.6 billion this year, focusing on support for energy security, vital infrastructure, food security, trade and the private sector, as well as for policy reforms. In 2023 EBRD shareholders approved a capital increase of €4 billion to support future investment at current levels, with more to come for post-war reconstruction.

*The EBRD’s High-Impact Partnership on Climate Action (HIPCA) is supported by Austria, Canada, Finland, Germany, the Netherlands, South Korea, Spain, Switzerland, the TaiwanICDF, the United Kingdom and the United States of America.

**The Eastern Europe Energy Efficiency and Environment Partnership (E5P) Fund for Ukraine totals €249 million, representing pledges made by the European Union as the largest contributor to the fund and Sweden as the largest bilateral contributor supporting Ukraine. Contributors include Denmark, Estonia, Finland, Germany, Iceland, Ireland, Latvia, Lithuania, Norway, Poland, the Slovak Republic, Switzerland and the United States. Ukraine is also a donor to the E5P with €20 million.