Washington, D.C., July 22 2005
— The International Finance Corporation, the private sector arm of the World Bank Group, signed today an agreement to provide $25 million in loans to support an expansion and efficiency project at a leading petroleum retailer in western and central Ukraine. This is IFC’s first investment in Ukraine’s oil sector.
Gas station operator Galnaftogaz will use IFC’s financing to expand its network of service stations and improve the quality of its products and services. IFC has advised the company on implementing one of the country’s first corporate governance codes, which positions Galnaftogaz as a national leader in conducting business in a transparent and responsible way.
“The company’s work with IFC in corporate governance, environmental, and social issues, combined with its success in attracting international financing, could have a demonstration effect on other domestic firms,” said Edward Nassim, IFC’s Director for Central and Eastern Europe.
Ukraine’s drivers will profit from the expansion, as Galnaftogaz will modernize the domestic petroleum retail sector, which has a legacy of old, uneconomic gas stations. The firm will more than double the number of service stations operating under the “OKKO” brand, from 103 today to more than 260 by 2008. The new stations will be providing high-quality fuels using modern equipment and will offer such complementary services as convenience stores, car washes, and cafeterias.
Rashad Kaldany, IFC’s Director for Oil, Gas, Mining, and Chemicals, said, “We believe the expansion will help Galnaftogaz gain economies of scale, improve operating efficiencies, raise quality standards, and ultimately increase competition in the petroleum retail market. IFC is delighted to provide the necessary long-term financing to support a local company with good growth prospects.”
Yuriy Kuchabskiy, General Director of Galnaftogaz, said, “We operate one of Ukraine’s new and fastest-growing networks of service stations, and IFC’s investment will enable us to expand into other regions of the country. This will significantly increase our sales and profitability. In addition to financing, we appreciate IFC’s assistance in corporate governance and in environmental and social issues. We look forward to continued support from IFC in the future.”
The mission of IFC (
www.ifc.org)
is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
Ukraine became a shareholder of IFC in 1993. As of June 30, 2005, IFC has invested $355 million across 18 projects in the country. IFC significantly expanded its investment program in Ukraine in FY04, committing $87 million, and again in FY05, committing $255 million in the agribusiness, financial, and general manufacturing sectors. IFC has also been conducting an extensive advisory program in Ukraine since 1992. Current donor-funded programs offer advice on corporate governance to companies and banks, seek to improve the business environment, and promote leasing, development of the agribusiness sector, and the growth of small and medium enterprises.
