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The European Union commits EUR2.3bn to accelerate Ukraine’s energy reconstruction

The European Commission is launching a special fund of EUR2.3bn ($2.5bn) to boost Ukraine’s reconstruction and attract private capital to the energy and infrastructure sectors.

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The European Commission has announced a financial commitment of EUR2.3bn ($2.5bn) to support the reconstruction of Ukraine. This package includes loan guarantee agreements worth EUR1.8bn ($1.95bn) and more than EUR500mn ($543mn) in direct grants, according to the statement published by the Commission.

A flagship fund to attract private investment

A new mechanism called the “European Flagship Fund for Ukraine’s Reconstruction” will be allocated an initial amount of EUR220mn ($239mn). This instrument aims to mobilise private investment, with a stated target of generating up to EUR500mn ($543mn) by next year to support strategic sectors such as energy and transport infrastructure.

The initiative was presented at a conference in Rome dedicated to Ukraine’s reconstruction. Ursula von der Leyen, President of the European Commission, specified that this fund represents “the world’s largest private equity fund” dedicated to Kyiv, according to the speech cited by the Commission.

Major support for energy stability

The European Commission stated that the financing will be used to restore power grids, secure energy supplies and revive local businesses. The objective is also to rebuild critical infrastructure, such as hospitals and housing, by mobilising both public and private resources.

The European Union remains Ukraine’s main donor, with nearly EUR165bn ($179.6bn) in aid already disbursed since the beginning of the conflict in February 2022, according to the official statements of the Commission. The new fund is expected to strengthen the leverage effect on international investment and consolidate the country’s economic resilience.

“With EUR2.3bn in agreements signed, we aim to unlock up to EUR10bn in investment,” Ursula von der Leyen said in a statement relayed by the European Commission.

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