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Cabinet approves raising of $3.6 billion loan from China by Naftogaz Ukrainy aimed at replacing gas by coal

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Aug. 23, 2012, 4:39 p.m. | Business — by Interfax-Ukraine

The Cabinet of Ministers of Ukraine has approved the raising of a loan worth $3.656 billion from China Development Bank to realize projects on the replacement of natural gas by coal extracted in Ukraine, a source in the government has told Interfax-Ukraine.
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The Cabinet of Ministers of Ukraine has approved the raising of a loan worth $3.656 billion from China Development Bank to realize projects on the replacement of natural gas by coal extracted in Ukraine, a source in the government has told Interfax-Ukraine.

"The cabinet on Wednesday approved the raising of over $3.6 billion from the Chinese bank by Naftogaz," he said.

He said that the funds will be raised for projects to switch pumped storage plants from consuming natural gas to coal.

The parameters of the loan were not discussed by the government, the source said.

As reported, the Ukrainian parliament has permitted the granting of state guarantees on a loan from the State Development Bank of China worth Hr 29.5 billion to realize projects on the replacement of natural gas with Ukrainian-extracted coal.

The Energy and Coal Industry Ministry of Ukraine and China Development Bank on July 13, 2012, signed a protocol on cooperation in using coal instead of natural gas as fuel.

The provisions of the protocol foresee the possibility of opening a special credit line of $3.656 billion by the China Development Bank to finance a program of natural gas substitution with Ukrainian coal using Chinese technologies.

It is planned within the program to implement several projects to transfer national thermal energy facilities to using coal-water fuel, and construct plants for the gasification of lignite and coal.

Earlier Deputy Board Chairman of public joint-stock company Odesa pump storage plant Valentyn Ivonin said that the company will draw up a feasibility study for switching to burning an alternative type of fuel. He said that the most likely type of fuel the plant would be switched to was coal-water mixture.

Ivonin said that the plant would be switched to the alternative fuel as a part of its cooperation with China.

He said that along with Odesa pump storage plant, Severodonetsk, Kherson, Mykolaiv pump storage plants and Kharkiv pump storage plant 5 could switch to coal-water mixture under a program financed with Chinese funds.

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