Ukraine and the Japan International Cooperation Agency sign a Loan Agreement for the 'Bortnychi Sewage Treatment Plant Modernization Project'

The Government of Ukraine and the Japan International Cooperation Agency (JICA) have signed a Loan Agreement worth ¥108.193 billion yen (approximately $870 million at current exchange rates) for the ‘Bortnychi Sewage Treatment Plant Modernization Project’. Minister of Finance Natalie Jaresko signed the agreement on behalf of the Government of Ukraine; with Mr. Masakazu Ichikawa, Vice-President of JICA, signing on behalf of the Government of Japan.

Through the development and modernization of the facilities at the Bortnychi Sewage Treatment Plant, the project will improve sewage treatment in Kyiv city and contribute to the improvement of public health and living conditions of its citizens. The modernization is urgently required to improve treatment capacity, as well as environmental conditions in surrounding areas. The loan will be allocated for the construction and renovation of wastewater treatment facilities, sludge treatment facilities, sludge incinerators, as well as expert consultant services.

“Today’s loan agreement on the ‘Bortnytchi Sewage Treatment Plant Modernization Project’ will improve the lives of some 3 million people in Ukraine. We will use Japanese finance, technology and equipment to rebuild and modernize the plant’s aging facilities, and develop new aeration systems. In doing so, this project will help us face the urgent environmental challenges, and improve energy efficiency,” Natalie Jaresko stated.

“I hope the project will contribute to improving the living environment of Ukrainian people and enhance stronger ties between Ukraine and Japan,” Mr Ichikawa said.

The Bortnychi Project loan is just one pillar of Japanese financial support for Ukraine, which totals as much as $1.5 billion. Since the Revolution of Dignity Japan has continuously supported Ukraine. In 2014, Japan provided $100 mln of fiscal support and in 2015 this support was increased by additional $300 mln tied to the World Bank’s 'Development Policy Loan (DPL)'. Minister Jaresko: “This money will help Ukraine meet its urgent budget needs, stabilize the economy of the country, and tackle current challenges through the introduction of reform policies”. In addition, Japan has provided Ukraine with humanitarian, technical, and expert support.

The agreement comes in the wake of a series of recent positive developments, reflecting the growing international support and acknowledgment of Ukraine’s efforts to return to economic growth in 2016. On May 18, the governments of Ukraine and the United States signed a $1 billion Loan Guarantee Agreement. On May 22, Ukraine and the European Union signed the Memorandum of Understanding and the Loan Agreement related to the third Macro-Financial Assistance (MFA) package from the EU totaling €1.8 billion. This financial support will help Ukraine to replace its external debt with less expensive, and more long term support, helping decrease the debt burden on the Ukrainian budget over the coming years, stabilize its economy and return to the economic growth beginning with 2016.

Key facts about the Loan Agreement and Bortnychi Sewage Treatment Plant Modernization Project:

- Bortnychi Sewage Treatment Plant was constructed between the 1960’s – 1980’s, and treats all of the sewage for Kyiv city. Treatment functions have suffered in recent years due to the plant’s increasingly aging facilities. 

- the terms of the Loan: 

Rate of interest: 0.1% per annum

Payment period: 40 years, including a 10-year-grace period