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Newsletter #12 Reconstruction Ukraine - april 2024

Dear readers,

April has proven to be a promising month for Ukraine's defense and resilience, as we witnessed the approval of the $61 billion US financial aid package by both the House of Representatives and the Senate, signed by the President of the United States. Additionally, there has been progress in the Ukraine Facility mechanism, with the disclosure of additional details. However, April also marked a month of intensified shelling on Ukraine’s energy infrastructure across the country.

In this April edition of our newsletter, you will discover macroeconomic data with forecasts for the coming years recently published by the World Bank Group. We will also provide insights into energy infrastructure losses, along with examples of current projects in the energy sector. Furthermore, we will delve into Ukraine’s investment insurance mechanism by ECA, American financing of the Ukrainian Railways fleet renewal, the announcement of a digital infrastructure project by French Infranum, and updates from the private sector, including OKKO Group's energy storage initiatives, Intellias' international expansion in the IT sector, and ArcelorMittal's engagement in reconstruction efforts in Ukraine.

Enjoy your reading!

Ukraine Reconstruction: Key Figures


The stabilization of Ukraine’s economic situation in 2023 was remarkable and highly appreciated by international partners. The country's challenge now is to continue following this positive trajectory. On April 11, the World Bank Group released its latest report titled 'Europe and Central Asia Economic Update.' This analysis delves into recent economic developments in the region and provides forecasts for future changes, particularly in light of Russia's war against Ukraine. A dedicated section of the report focuses on Ukraine’s economic indicators. You can download the full report via the link.

Key macro figures

  • $177.3 billion GDP in 2023.
  • 4.8% estimated yearly growth for 2023 with the potential to upside (5.3% by the State Statistic Service)
  • 4.7 % inflation rate in January 2024 compared to a 26.6 % rate at the end of 2022.
  • $9.6 billion deficit in 2023 in Ukraine’s current account.
  • $37.1 billion in reserves thanks to external assistance ($43.8 billion of reserves according to NBU data)


  • 3.2% GDP growth (3.6% by the Ministry of Economy of Ukraine) in 2024 and 6.5% acceleration in 2025 if the export growth resumes and reconstruction investment supports the demand side.
  • 7.8 % of the GDP deficit in 2024 if a reduction in grants outweighs a gradually decreasing trade deficit from 2025 onwards.
  • 20.4 % of GDP fiscal deficit in 2024 decreasing to 6.6% by 2026.

Table: Ukrainian macroeconomic indicators. Notes: e- estimated, f - forecast








Real GDP growth, at constant market prices







      Private consumption







      Government consumption







      Gross fixed capital investment







      Exports, goods, and services







      Imports, goods, and services







Real GDP growth, at constant factor prices




























Inflation (consumer price index)      







Current account balance (% of GDP)







Net foreign direct investment inflow (% of GDP)







Fiscal balance (% of GDP)







Revenues (% of GDP)







Debt (% of GDP)







Primary balance (% of GDP)







GHG emission growth (mtCO2e)







Energy related GHG emissions








Source: World Bank Group

Energy sector

Since the beginning of the full-scale invasion, energy facilities have become targets of attacks aimed at disrupting the functioning of the state in Ukraine. This spring, the shelling has continued and intensified, resulting in significant losses in the energy sector. Below, you will find recent estimates of energy losses in Ukraine published by the think tank Centre for Economic Strategy

  • €5.2 billion euros are needed to compensate for the capacities lost due to missile strikes in thermal and hydrogeneration. It is estimated that hydrogeneration capacities will be restored within 1.5-3 years, and thermal generation capacities will be replaced by decentralised gas piston and gas turbine generation.
  • 23% is the total loss of generating capacities of the United Energy System of Ukraine (of those operating in the power system at the time of the attack).
  • 47% of loss in thermal generation of those operating in the power system at the time of the attack.
  • 34% of loss in hydrogeneration of those operating in the power system at the time of the attack.

Source: Centre for economic strategy


Key developments for Ukraine’s Reconstruction

  • The EU approved the Ukrainian Plan under the Ukraine Facility.

The approval of the Ukrainian plan by the Cabinet of Ministers of Ukraine sparked an active discussion regarding the financial instruments and allocation of funds. On 15 April, the Ukraine Plan under the Ukraine Facility was finally approved by the EU. The next step is the adoption of the Council Implementing Decision put forward by the Commission by the member states.

The assessment of the Commission concludes that the Plan completely corresponds to the objectives of the Ukraine Facility, and due to the reforms and investments facilitates Ukraine’s accession to EU and responds to the need of Ukraine’s recovery.

With a total budget of EUR 50 billion, the Ukraine Facility will distribute one-third of the budget as grants and two-thirds as concessional loans. Of the entire budget, 77% will be channelled into Pilar I, totalling EUR 38.27 billion for budget assistance. Pilar II, also known as the Ukraine Investment Framework, will receive EUR 6.97 billion, while EUR 4.76 billion will be allocated to Pilar III.

The main objective of the Pillar II is to attract foreign investments and mobilise them to ensure Ukrainian macroeconomic development. It will combine blending, grants, and technical assistance worth EUR 1.5 billion, along with guarantees with EUR 7.8 billion of guaranteed capacity (with 70% provisioning).  The fund will be available for both private and public sectors.

The mechanism for accessing funding entails a series of steps. All the financial operations will be provided through International Financial Institutions (IFIs), called pillar-assessed entities, such as EBRD, EIB, KfW, AFD and others. IFIs and DFIs will collect business projects, which subsequently undergo review by the European Commission. Selected projects then receive guarantees from Ukrainian banks. The Ukrainian banks will be able to cover between 50-80% of the companies’ loans with all the transactions conducted in a local currency.

During the meeting with the French business, Volodymyr Kuzio, the Deputy Minister of the Economy of Ukraine, emphasised that the Ukraine Facility is a demand-driven instrument, so Ministry of Economy of Ukraine, IFIs and DFIs, as well as the Directorate-General for Neighbourhood and Enlargement Negotiations (DG NEAR) of European Commission are open to the dialogue to develop an effective mechanism of financial support.

Source: European Commission, Ministry of economy of Ukraine

  • Ukraine’s Government approved the list of risks for investment insurance by Ukraine’s ECA.

On April 9, the Government of Ukraine approved the list of military and political risks and the terms and conditions of risk insurance for the Export Credit Agency (ECA). The approved resolution will improve the legal regulation of the list of risks, conditions, and procedures for insurance or reinsurance of risks in the ECA’s operation. Therefore, the agency will be able to insure and reinsure investment loans from Ukrainian banks for Ukrainian exporters and direct investments. This will make it possible to eliminate the gaps that limit the ability to insure domestic investments by the ECA.

According to the resolution, military risks include:

  • military conflict, including war or armed conflict, armed aggression, hostilities, mass      disturbances
  • violent change, overthrow of the constitutional order, or seizure of state power
  • terrorist acts and/or sabotage
  • occupation, annexation

Political risks include:

  • forced alienation or seizure of property by the state authorities of Ukraine (deprivation of property rights);
  • unjustified (illegal) revocation of a license by the market regulator or forced cessation (suspension) of activities of an entity by state authorities,
  • non-performance or refusal to fulfil obligations by the state
  • imposition by the state of restrictions (payment embargo, moratorium) on settlements
  • inability of currency conversion or currency transfer abroad, except as provided by law.

According to the Chairman of the ECA Board Ruslan Hashev, the Government's decision enables their entry into the market with insurance products for Ukrainian and foreign investors who will invest in export-oriented enterprises or in export support infrastructure. ECA is finalizing its proposals and, together with the updated Statute, will be able to start this type of insurance.                        

Source. Export Credit Agency, Ministry of Economy of Ukraine


International Benchmark

  • An American bank provides a $156M loan for new UZ locomotives.

On 10 April, Reta Jo Lewis, the Export-Import Bank of the United States (EXIM) President and Chair of the Board of Directors, announced that EXIM approved a direct long-term credit program to Ukrainian Railways. It will allow the purchase of 40 diesel locomotives and play a significant role in the modernisation of Ukrainian Railways. The overall budget of the program is $156,6 million, with an expected duration of 15 years.

This is the first project fully financed by a United States government agency in Ukraine since Russia’s invasion in 2022. Moreover, Yevhen Lyashchenko notes that Ukrzaliznytsia is the first Ukrainian state-owned company to receive financing from EXIM.

Ukrzaliznytsia already has a successful experience in the operation of Wabtec diesel locomotives, so the investment in locomotive procurement is expected to enhance the operational capacity and efficiency of Ukrainian Railways.

Ambassador Bridget Brink emphasised that their goal is to develop the export-import activity. Ukrainian-American cooperation is getting stronger, and Ukraine is the place where investments should be. This agreement is a symbol that recovery processes in Ukraine is starting, despite the war, and it will be a win-win for both countries because Ukraine will receive critically needed equipment, and at the same time, this project provides an driver for the private sector to become increasingly involved in Ukraine’s reconstruction.

Source: Ukrzaliznytsia, Export-import Bank of the United States

  • The launch of power units construction at the Khmelnytskyi NPP using American Westinghouse technology.

On April 11, Westinghouse announced the start of AP1000 activities at Khmelnytskyi NPP Unit 5 in Ukraine using American Westinghouse technology. This is the first time that American AR1000 technology was used to build a power unit in Ukraine.

The construction was officially opened during the ceremony when the first cube of concrete of the Unit 5 was laid, attended by Minister of Energy of Ukraine German Galushchenko, Ambassador of the United States of America to Ukraine Bridget A. Brink, CEO of JSC NNEGC “Energoatom” Petro Kotin and CEO and President of Westinghouse Electric Company Patrick Fragman. This was the first step towards fulfilling the commitment outlined in the Memorandum of Understanding signed in 2022 for the deployment of nine AP1000 reactors in Ukraine.

This is a very important step as the manoeuvrability of this technology is crucial in the face of Russian attacks and the destruction of the balancing capacities of the Ukrainian energy sector. With the construction of the Khmelnytsky NPP Units 5 and 6, after the commissioning of two new Units 3 and 4 at the Khmelnytsky NPP, it will be able to surpass the capacity of the Zaporizhzhia NPP and become the biggest nuclear power plant in Europe.

German Galushchenko, the Minister of Energy of Ukraine, emphasised that the cooperation between Westinghouse and Ukrainian experts to manufacture a new type of nuclear fuel has broken the Russian monopoly in the market at record speed and in the future, it will pave the way towards pushing Russians out of the European nuclear energy market.

This technology enhances Ukraine’s energy independence and strengthens power facilities, as in Ukraine more than 50% of electricity in Ukraine is generated by the nuclear power industry.

Source: Westinghouse, Energoatom

  • EBRD extends guarantee to Ukraine’s Oschadbank to enable €200 million of new lending.

On 9 April, the European Bank for Reconstruction and Development (EBRD) signed an agreement in Kyiv during the conference on the reintegration of war veterans into civilian life, which allows the provision of a €50 million unfunded portfolio risk-sharing facility to Oschadbank. The facility is aimed to unlock €200 million of new financing for Ukraine’s private sector despite the ongoing war in the country.

The EBRD's plan will be able to cover around 50 % of Oschadbank's risks on new loans worth €200 million for private businesses in Ukraine. Since the start of the war, the EBRD has already provided funding with a total cost of EUR 900 million by the end of 2023, using similar financial instruments.

This initiative gives Oschadbank an opportunity to provide much-needed financing to Ukrainian private companies operating in critical industries such as agriculture, construction, transportation, and pharmaceuticals.

In accordance with the EU requirements, up to 20% of loans with risk sharing will contribute to long-term investments of private micro, small and medium-sized businesses (MSMEs) in environmental technologies, improving the competitiveness of Ukrainian MSMEs in domestic and foreign markets.

Sources: Oschadbank, European Bank for Reconstruction and Development

  • French Infranum starts digital infrastructure project in Ukraine with the French Government’s Funding

The President of French digital infrastructure federation InfraNum, French digital infrastructure federation, Philippe Le Grand and Mykhailo Fedorov, Vice Prime Minister of Ukraine in charge of innovation, technologies and digital transformation, signed, on April 10, an agreement for the reconstruction and modernization of Ukraine's high-speed digital infrastructure.

For this initiative, InfraNum received a €756K grant from the French Government under the FASEP instrument, approved end of February by the French interministerial committee. The French industry aims to prepare the reconstruction of Ukrainian digital infrastructure through preliminary studies and a pilot project, as far as research of advanced expertise and necessary financing, fostering public-private partnerships.

Damages to Ukrainian digital infrastructure being estimated at $2.3 billion (destruction or deterioration of Internet networks of fixed-line operators, radio networks of mobile operators, and other related structures and equipment, including about 3,200 telecommunication stations, some of which have been restored, and over 60,000 km of fiber optic cables), the Ukrainian government seeks to restore and modernize its telecommunications to support economic and social development.

Obtaining the FASEP grant will allow for two decisive operational stages:  

  • a preliminary study to assess the technical, legal, and institutional landscape to determine current constraints and opportunities, quantify investment needs, and anticipate the success conditions, financing scenarios, and economic models underlying network operation. It is expected to begin by the end of April, and
  • a pilot project, lasting a maximum of 8 months, will provide high-speed network coverage to a relevant selected locality, demonstrating the feasibility of deploying digital infrastructure in Ukraine within the framework of the partnership established between French and Ukrainian actors. It will be led by a consortium of companies led by Grolleau (telecom cabinets and equipment) and also including Stelogy (THD connectivity & networks, IT services), Netceed (telecom equipment distribution), PCE Services (network design and construction), Tactis (digital territorial planning studies and consulting), Sofrecom (telecom consulting and engineering), and BG2V (business law firm).

The project hopes to establish a model for future investments, potentially similar to French programs for developing high-speed broadband (France Très Haut Débit and New Deal Mobile), projecting up to €10 billion in total investment.

Source: Ministry of Digital Transformation of Ukraine, Infranum


Focus on private sector

  • OKKO Group invests in energy storage in Ukraine.

Ukraine’s OKKO Group Founder Vitalii Antonov announced that OKKO invested 20-22 million euros in its first energy storage with a capacity of 20 MW.

The group plans to construct an energy storage facility with a total capacity of 40 MW. According to Mr Antonov, they intend to deploy another energy storage project with the same capacity as the first project - 20 MW, the second phase will depend on the operational results and the speed of licensing for the first phase.

OKKO Group comprises more than 10 diversified businesses in the fields of manufacturing, trade, construction, insurance, service, and other sectors. The flagship company of the group is the conglomerate "Galnaftogaz," which operates one of the largest gas station networks in Ukraine under the brand "OKKO," consisting of about 400 gas stations.

At the same time, OKKO continues to equip its gas stations with solar power plants, which are installed on the roof of the operator's building and above the fuel dispensers. This allows them to partially meet the energy needs of the gas stations, saving on purchasing electricity from the energy market. Roof-mounted solar power plants are already operational at 140 OKKO gas stations, with 14 of them being commissioned in January-February 2024. In 2024, OKKO plans to install solar power plants at 50-70 gas stations more.

The majority shareholder of the company is Vitaliy Antonov. Among the minority shareholders is the European Bank for Reconstruction and Development (EBRD).

Source: InVenture, OKKO

  • Ukrainian IT company acquires C2 Solution to strengthen its presence in the United States

On 4 April, Intellias announced an acquisition of the American firm C2 Solution, which focuses on services in development & integration, information architecture & data insights, and firmware & software engineering.  Intellias is a global software engineering and digital consulting company with Ukrainian roots, which was established in Lviv in 2010. Intellias operates in 25 countries in North America, Europe, Middle East, and Asia.

The co-founder of this company, Vitaliy Sedler emphasises that this purchase will help to strengthen Intellias’s presence in North America and enhance its capabilities in Digital Health and Medical Devices. By uniting C2’s expertise in this sphere and Intellias’s extensive technological offering, the company aims to improve the quality of its service.

This is the second strategic acquisition made by Intellias, following a purchase of Digitally Inspired, a UK-based IT services provider specialising in retail and eCommerce product engineering, in September 2022.

Source: Intellias

  • ArcelorMittal Construction is implementing a large investment project worth EUR 40 million in Ukraine

On 16 April, ArcelorMittal announced its EUR 40 million investment plan in reconstruction of Ukraine through its subsidiary ArcelorMittal Construction Germany. The company signed a Memorandum of Understanding in Kyiv with Ukraine Invest, where ArcelorMittal stated its commitment to contribute to Ukraine’s reconstruction.

The company aims to establish a state-of-the-art production facility in Kyiv dedicated to manufacturing advanced profiles and insulated panels using sustainable materials. This EUR 40 million investment will be used to address a growing need for construction materials in Ukraine and assure resilient communities in Ukraine. The planned investment involves setting up a modern manufacturing plan focused on producing building envelope solutions like profiles and insulated sandwich panels using sustainable XCarb® recycled and renewable steel, catering to a wide range of facade and roofing requirements across industrial, commercial, logistics, and agri-food sectors.

ArcelorMittal plans to inject €40 million over the coming years into the new facility, fostering economic growth and job creation in the Kyiv region, with over 100 employment opportunities.

Source: ArcelorMittal, Ukraine Invest

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