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Ukraine - Electricity Market Development Project (English)

The project outcome is highly unsatisfactory, with an unlikely sustainability. It is arguable whether the introduction of structural reforms in the power sector was appropriate, given the payment crisis Ukraine was undergoing, followed by the obvious reduction in income levels, and the significant decline in demand, which lead to an excess energy capacity. The lessons identify that there is little merit in pursuing comprehensive power sector reform policies, in a country with major economic crisis, thus project objectives should have been only targeted at improving technical, institutional, and financial problems. The Bank should apply strict policies on the financing of working capital, and essentially confine such financing to the prevailing circumstances. While the project intended to benefit the power generation companies, providing working capital, thus dependent on revenue collection, but with no encouragement to improve such collection through legal means, nor incentives to perform, the Bank could have had influence over this critical segment of the sector, had the project addressed distribution as well. When reviewers opinions are critical of an operation, such as in this case, in respect to long-term borrowing for financing fuel, and for the creation of a competitive market given the circumstances, more weight should be given to those opinions in the project approval process.

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Ukraine - Electricity Market Development Project (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/508721468314352546/Ukraine-Electricity-Market-Development-Project