EU expands support for Ukraine with new financing of almost €600 million for energy, transport and business resilience

This article is published in association with European Investment Bank.

• Unveiled by EIB Group and European Commission, package covers hydropower plants, district heating for communities, roads, bridges, border crossings and small companies.
• Ten Member States – Denmark, Finland, France, Germany, Italy, Latvia, Romania, Slovakia, Slovenia, and Spain – joining the InvestEU’s pioneering export credit facility to support trade with Ukraine and sustain its economy
• With the new agreements, EIB Group support to Ukraine reaches €3.6 billion since the start of Russia’s full-scale invasion in 2022.

The European Union is stepping up economic support for Ukraine with almost €600 million in fresh financing for energy systems, transport networks and a range of businesses in the country. The European Investment Bank (EIB) Group and the European Commission announced the new EU funding package at a “Ukraine Recovery Conference” today in Rome. Most of the financing takes the form of EIB loans, which are backed by EU guarantees.

The package includes financing for critical infrastructure. The goal is to restore major hydropower plants, upgrade municipal district-heating systems across Ukraine, repair key Ukrainian roads and bridges and improve border crossings.

Today’s announcements also include a package of financing for Ukrainian small and medium-sized enterprises (SMEs). The support is being delivered through new loans and EU-backed guarantees provided by the EIB Group to Ukrainian banks including Ukrgasbank, Ukreximbank, Bank Lviv, Kredobank and a subsidiary of Greece-based Piraeus Bank. This step will unlock yet more financing for small Ukrainian businesses.

The EIB Group is also advancing its support for exports to Ukraine, with 10 EU Member States joining the InvestEU Ukraine Export Credit Pilot. The guarantee facility is managed by the European Investment Fund (EIF), which is part of the EIB Group. Each participating country’s export credit agency is receiving an EIF-backed guarantee to support national exports by SMEs and small Mid-Caps of goods and services to Ukraine.

To support the Ukrainian government in translating its recovery priorities into real investments, the EIB has launched an Infrastructure Project Facility (Ukraine FIRST – IPF) – a key component of the new Ukraine FIRST project preparation programme, developed in partnership with the European Bank for Reconstruction and Development (EBRD) and the European Commission.

“The agreements announced today reflect the strength of our commitment to Ukraine, and our determination to respond to the country´s most urgent needs – through critical infrastructure, support for businesses in Ukraine and EU companies wanting to trade and export to the country,” said EIB President Nadia Calviño.

“Rebuilding a strong, modern Ukraine. That is exactly what today’s EU-backed finance agreements will achieve. With support for resilient energy systems, transport networks, and businesses. Building hope and opportunity,” said European Commissioner for enlargement Marta Kos.

“Every investment we make is driven by fundamental human needs – the need for safety, warmth and the chance to build a better future. That’s why we help communities rebuild, keep homes warm, and support Ukrainian businesses,” said EIB Vice-President Teresa Czerwińska, who oversees the bank’s operations in Ukraine.

“Communities are at the heart of the Restoration. Our main aim is to support their recovery and development, first and foremost, in the regions that suffered from armed aggression,” said Oleksii Kuleba, Deputy Prime Minister for Restoration of Ukraine – Minister for Development of Communities and Territories of Ukraine. “This starts with providing reliable infrastructure — roads and bridges that reconnect communities and power solutions that secure our energy system. And support for small and medium-sized businesses creates a strong foundation for the economic development of communities. With EIB backing, we’re making critical progress where it’s needed most.”

To deepen support for Ukraine’s private sector, the EIB welcomed the initiative to establish the European Flagship Fund for the Reconstruction of Ukraine – a new EU-backed equity fund being developed with the European Commission and several Member States.

As a result of a substantial grant from the German government through its International Climate Initiative (IKI) Fund, the EIB will be able to enhance support for Ukrainian communities’ green transition. And to ensure speedy grant deployment, the EIB is teaming up with the German Agency for International Cooperation (GIZ) and the United Nations Development Programme (UNDP).

Another part of the package announced in Rome is an EIB Group partnership with Ukraine’s State Audit Service to strengthen oversight of investments.

More information on the projects signed and announced today:

• Improving energy and transport infrastructure

The funding to restore hydropower plants involves a €120 million EIB loan to Ukrhydroenergo, Ukraine’s largest hydropower company.The credit will support the rehabilitation of three strategic hydropower plants – Kaniv, Kremenchuk and Dnipro – and address urgent needs at other sites to help maintain electricity supply amid Russian attacks on Ukraine’s energy system.

The district-heating part of the package includes two EIB loans totalling €100 million. The loans of €50 million each are to Ukrainian banks Ukrgasbank and Oschadbank, which will direct the funding to municipalities. Local authorities will be able to invest in decentralised heat generation, renewable energy and energy efficiency in public buildings.

The ground-transport component takes the form of a €134 million EIB loan to Ukraine’s national Agency for Restoration. Repairs will be done to bridges and roads including the M06 highway connecting Kyiv to the Hungarian border, while the border-infrastructure improvements will bolster EU “Solidarity Lanes” meant to keep trade with Ukraine’s flowing and deepen economic ties. 

·        Supporting Ukraine’s SMEs and private-sector recovery

The SME component of the package includes three new EIB loans: €100 million to Ukreximbank, €70 million to Ukrgasbank and €60 million to Bank Lviv. These three Ukrainian banks will direct the financing to SMEs, with a particular emphasis on green investments.

In addition, the EIB is extending EU-backed guarantees to four Ukrainian lenders: Ukrgasbank, Bank Lviv, Kredobank – a subsidiary of Poland-based PKO Polski Bank – and the Ukrainian unit of Piraeus Bank. This step will unlock yet more financing for small Ukrainian businesses. 

• Backing EU exports to Ukraine

Ten Member States – Denmark, Finland, France, Germany, Italy, Latvia, Romania, Slovakia, Slovenia and Spain – have joined InvestEU’s €300 million Ukraine Export Credit Pilot, a pioneering initiative to support trade with Ukraine. Three more EU countries are expected to join the facility soon.

This guarantee facility, supported by the European Commission flagship programme InvestEU, is managed by the European Investment Fund (EIF), which is part of the EIB Group. Each country’s export credit agency is receiving an EIF-backed guarantee to support national exporters of good and services to Ukraine. InvestEU Advisory will also contribute to the success of the pilot.

The guarantees help reduce financial risks and keep exports flowing – from machinery and building materials to critical technologies – while supporting Ukraine’s deeper integration into the European single market and the country’s longer-term path towards EU membership.

• Driving recovery through project preparation 

To help the Ukrainian government turn its recovery priorities into real investment, the EIB has launched Ukraine FIRST – short for Ukraine Facility for Infrastructure Reconstruction – a new project preparation programme developed together with the EBRD and the European Commission. Backed by €20 million from the EU’s Ukraine Facility, with a further €5 million each from the EIB and EBRD, the €30 million initiative will support feasibility studies, technical assessments and procurement planning – enabling faster, better-prepared infrastructure projects. Further donor contributions are also expected.

• Investing in Ukraine’s private sector through equity

To deepen support for Ukraine’s private sector, the EIB welcomed the establishment of theEuropean Flagship Fund for the Reconstruction of Ukraine – a new EU-backed equity fund being developed with the European Commission and several Member States. The fund aims for a first fund closing of up to €500 million in capital, this to invest in businesses driving Ukraine’s recovery. Partners include the governments of Germany, Italy, France and Poland and those countries’ development banks – KfW, CDP, Proparco and BGK, respectively.

• Strengthening Ukraine’s energy resilience

On the basis of a German government International Climate Initiative (IKI Fund) grant of €20 million, the EIB is teaming up with the GIZ and the UNDP to help integrate under the IKI Fund’s Renewable Energy Solutions (RES) Programme green energy into projects that Ukrainian municipalities have implemented with EIB support. The RES Programme will enable selected Ukrainian cities that have boosted energy efficiency in their public buildings to obtain additional grants to install equipment such as solar panels, batteries and heat pumps. The GIZ and UNDP will assist local authorities with implementation, making it easier and faster to deliver these improvements, especially in smaller cities and communities with limited capacity.

Furthermore, through an additional contribution of €19.6 million by the German government to the IKI Fund, the EIB and Germany agreed to support Ukrainian coal-dependent regionsthrough the IKI Fund’s Just Transition and Just Resilience for Ukraine (JTR-U) Programme. The JTR-U Programme aims to facilitate investment projects addressing the socio-economic impacts of the gradual phasing-out of coal mining and creating economic opportunities in Ukrainian coal communities, contributing to Ukraine’s broader recovery and reconstruction.

·        Strengthening safeguards to protect recovery funds

The EIB and the State Audit Service of Ukraine have signed a new agreement to boost efforts against fraud and corruption in EU-financed projects. The partnership will enhance coordination on prevention, detection and early-risk identification, helping ensure recovery funds are properly used through stronger oversight. It builds on the EIB’s wider cooperation with Ukrainian law enforcement and anti-corruption agencies – including the National Anti-Corruption Bureau of Ukraine (NABU), the Prosecutor General’s Office, the Economic Security Bureau and the State Bureau of Investigation – to strengthen transparency, trust and good governance.

Background information: 

EIB in Ukraine 

Present in Ukraine since 2007, the EIB has stepped up its financial support for the country’s resilience and modernisation since Russia’s full-scale invasion of Ukraine in 2022. Since then, the EIB has provided €3.6 billion in financing, with almost two-thirds already disbursed. Through its EU for Ukraine (EU4U) Initiative, coupled with its key role in implementing a dedicated window under Pillar 2 of the Ukraine Facility, the EIB is strongly committed to stepping up and accelerating its activities in line with the mandate given by EU leaders and in close cooperation with the European Commission, the European Parliament, Member States and international partners.