Public eco-vehicles renovation: buying 50 new trolleys for European Bank Reconstruction and Development loan, updating the cable-contact network for grant (non-reversible, non-interest-bearing funds).
Goal
Updating Kherson city urban transport infrastructure.
Phases
1. December 2018 – January 2019
Signing of Agreement on the Preparation of Credit Financing between European Bank Reconstruction and Development, the Kherson City Council and the Municipal Enterprise “Khersonoelectrotrans”, agreement ratification by the Kherson City Council.
The fact that the Kherson city council acts as guarantor for Municipal Enterprise “Khersonoelectrotrans” ensures that there is no additional cost for providing guarantees. In Ukraine, take place precedents when the Ministry of Finance of Ukraine acts guarantor of credit obligations and takes extra fee as interest for guarantee used. The interest rate for such guarantees from the Ministry of Finance fluctuate from 0.1% to 2%.
(Example is the World Bank loan for the CMU “Mykolaivvodokanal”).
2. February 2019
Determination consultants for preparation of Project for improving the public transport infrastructure of Kherson. Realizing by EBRD.
3. February 27, 2019
Visit of EBRD representatives and selected expert consultants to Kherson.
4. March – July 2019
Preparation grant application form (2 000 000 euro) to updating trolleys cable-contact network within the framework of the Project implementation.
- Generalizing offers on outspread of trolleys cable-contact network in different parts of the city, from:
- – Inhabitants (list of proposals with authors name identification);
- – Executives bodies, utility companies, etc.;
- – other steakholders;
2. Discussion of proposals.
3. Preparing strategy for updating trolleys cable-contact network (highlighting priority tasks).
4. Preparation of application form for grant.
5. March – August 2019
Development the Project for improving Kherson urban transport infrastructure.
Elaborate selected EBRD consultants.
Payment for project development – 30 000 EUR (960 000 UAH). Because of negotiations the initiative group with Bank, agreed that the consultant’s fees will not be pay from the city budget and Bank will attract the grant funds (in result, city budget save 960 000 UAH).
6. September 2019
Project approval: EBRD credit committee, executive committee of city council, Kherson city council.
Next – Credit Agreement signing. After, Municipal Enterprise “Khersonelectrotrans” pays one-time commission.
After the project approval (final agree of interest rate), will be prepared and published information (infographic) regarding project costs (total funds amount to return, interest for all time loan using, payment schedules, etc.).
7. September – November 2019
Approval of the Project by Antimonopoly Committee of Ukraine and Ministry of Finance of Ukraine.
8. September – November 2019
Preparation of tender requirements for procurements specifying in the Project (preparation of tender documentation).
9. August – October 2019
Negotiations with potential suppliers. Special attention paid to possibility of stock reserves to minimize the cost of loan reservation.
10. November – December 2019
Tender procedure for purchase of 50 trolleys.
Terms of the loan. Project implementation costs
Loan amount – 10 000 000 EUR;
Loan term – up to 12 years;
Deferred payout for a loan body – 2 years (interest is paid entire loan period)
Interest rate – 5-7%
In practice, interest rate for similar loans around 6%. On interest rate, have impact city’s credit rating, market conditions and Project risks. A positive factor in this process is the returning of US EXIM Bank to Ukrainian market.
Final terms on loan providing by EBRD will determined after an appropriate assessment, as part of Kherson Project for improving the public transport infrastructure (executing by selected EBRD consultants).
COMMISSION FOR FUNDS RESERVE – 0.6 %/YEAR
Accruing on undrawn loan part in accordance with the actual number of days of the reservation. It starts to accrue from the date of entry into force of Loan Agreement. In order to reduce the amount of the commission, the relevant executive bodies of the city council are prepared in advance to relevant tender procedures.
ONE-TIME COMMISSION PAYMENT – 1.2% OF LOAN AMMOUNT (UP TO 120 000 EUR).
Paid under the Loan Agreement. In addition, the fee includes a fee for project evaluation (30 000 EUR). In fact, necessary to pay 90 000 EUR. Accrues from the date then Loan Agreement is entry into force;
PROJECT EVALUATION COMMISSION – 30 000 EUR
This amount is accounting in one-time commission fee specified above (paid after 30 days from approval the Project by EBRD credit committee). This fee is reimbursed by EBRD in case if Bank stopping work on Project or if EBRD Board of Directors does not approve the financing;
EBRD ongoing expenses
Recompense of expenses for third-party legal advisers, related to preparation of financing for Enterprise (preparation, analysis, consideration of financial agreement, etc.). Current costs make up to 40 000 EUR. For reducing the amount of reimbursement, it is necessary to provide the information as quickly as possible, to make the relevant decisions and prepare the documents.