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The Ukrainian government has endorsed the prolongation of the use of a US$3.656 billion loan extended by China Development Bank Corporation to Ukraine's oil and gas giant Naftogaz of Ukraine until December 25, 2017, according to a Cabinet resolution dated December 28, 2016, posted on the Cabinet's website.
"[This is] to support the proposal put forth by the Economic Development and Trade Ministry and NJSC Naftogaz of Ukraine to amend the General Loan Agreement dated December 25, 2012, on $3.656 billion between NJSC Naftogaz of Ukraine and China Development Bank Corporation by extending the deadline for drawdowns on the loan until December 25, 2017," the document says.
Read also Naftogaz warns of provocations by Gazprom amid low temperaturesThe Cabinet authorized the finance minister to sign documents related to the confirmation of state guarantees provided in 2012 to back up Naftogaz's liabilities under the loan agreement.
As UNIAN reported earlier, Naftogaz in late 2012 agreed on a $3.6 billion loan from China Development Bank Corporation for 19 years under a program for replacement of natural gas by coal.
At the end of 2015, Naftogaz warned against possible unavailability of the Chinese loan due to the slow approval of loan projects in Ukraine. The company plans to spend about 40% of the borrowed funds on the large-scale replacement of boilers for a reduction in gas consumption by Ukrainian households.
In 2015, Naftogaz also submitted four investment projects to the Economic Development and Trade Ministry under this loan program. Among them were modernization of individual heating systems in low-income consumers' private houses, construction of thermal power plants in the city of Kyiv and Lviv region, as well as the purchase of drilling and auxiliary equipment to boost gas production by Naftogaz's subsidiary, Ukrgazvydobuvannya.
In June 2016, Naftogaz asked the Chinese bank to prolong the availability of the loan.
In late August 2016, China Development Bank Corporation extended Naftogaz's deadline for drawdowns on the loan until December 25, 2017.