Odessa Approves a 35-Million-Euro Loan and Grant for the Modernization of Heating Networks

PHOTO: Odessa City Heating Utility

Odessa plans to secure a 25 million euro loan from the EBRD to modernize its heating infrastructure. However, the final decision on financing and the terms of the loan will be made only after a technical audit and the bank’s approval of the project.

This was reported by the Center for Public Investigations, citing a decision by the Odessa City Council’s Standing Committee on Planning, Budget, and Finance.

As explained by city officials, Odesa plans to secure 35 million euros to modernize its heating infrastructure. Of this amount, the European Commission will provide 10 million euros as a grant, and the city expects to receive another 25 million euros as a loan from the European Bank for Reconstruction and Development. The loan is for 13 years with a three-year grace period; however, interest on the funds will have to be paid from the very beginning.

Officials emphasized that signing a loan agreement is not currently on the table. The city council is only required to approve the preparatory phase, which will allow the EBRD to engage consultants to conduct a technical audit and determine the final list of projects. Preliminary plans include upgrading heating networks, purchasing cogeneration equipment, and other measures to improve the reliability of the heating system.

Once the city council approves the documents, they are scheduled to be submitted to the EBRD’s Board of Directors for review in August. If approved, the bank could disburse the funds in late October or early November. However, due to the start of the heating season, major construction work will not begin until after the season ends.

The chair of the budget committee noted that the project is long-term, so quick results should not be expected. According to him, a significant portion of the loan funds will be utilized as early as 2027–2028, and the final list of works is still to be agreed upon with the EBRD.

Council members also discussed the loan terms. According to city hall, the preliminary interest rate will be approximately 3.5% per annum in euros, indexed to the six-month EURIBOR rate. The final financial terms will be determined after the technical audit is completed and the loan agreement is approved.

During the meeting, the issue of a possible transfer of the heating networks to another operator was also raised. City officials stated that there are currently no such plans, and the company will remain under municipal ownership and continue to provide heat to Odesa.

Separately, officials explained that if the city decides not to proceed with the loan after signing the preliminary agreement, it will have to reimburse the EBRD for the consultants’ fees—approximately 70 thousand euros. If the loan is finalized, these funds will be included in the overall financing package.

In addition, the budget committee supported the issuance of loans in the form of non-revolving credit lines for several municipal utility companies.

Specifically, the municipal enterprise “Odesmiskelektrotrans” plans to receive 136.8 million hryvnias, the housing and utilities company “Chornomorskyi”—46.5 million hryvnias, the “Porto-Frankivskyi” Housing and Utilities Company — 20.2 million hryvnias, and the “Fontanskyi” Housing and Utilities Company — 60.8 million hryvnias. All decisions were supported unanimously by the committee members.

The final decision on securing international financing and arranging loans is to be adopted by the Odesa City Council during a session.

Also in June, a number of issues were discussed in Odesa that could affect the city’s transportation system, parking, and the placement of temporary structures. Key topics included the introduction of electronic tickets, a review of parking fees, and the long-standing debate over new regulations for small architectural forms (MAFs).

Анна Бальчінос

CPR Odesa Odesa region Standing committees credit heat supply