“Turning Subsidies into Investments – Climate Financing in Ukraine”

The economy of Ukraine is characterized as very energy intensive. Furthermore, the district heating infrastructure and residential building sector consumes great amounts of natural gas for heating purposes due to a significant lack of energy efficiency standards. The resulting high level of energy consumption results in economic and social problems. Natural gas primarily has to be imported and is currently highly subsidized by the Ukrainian government.

However, the Ukrainian government has recognized this challenge and has included a reform program for improving energy efficiency in the municipal sector into its reform agenda.

The tendered consulting services focus on increasing the capacities of the Ukrainian government in the energy efficiency sector, which has significant potential for contributing to reduce greenhouse gas emissions of the country as a whole. As described above, promoting energy efficiency and reducing the demand for gas imports has become a key priority of the government of Ukraine.

The overall objectives of the assignment are to

a) support the BMUB in fulfilling its advisory role to the government of Ukraine and

b) to provide support to the Ministry of Regional Development.

The Firm of Consultants is responsible for the developing of an implementation structure for the S2I Fund as part of the overall reform program “Turning Subsidies into Investments”.

Following results and indicators for the developing implementation structure are defined between BMUB and Partners:

1. S2I Fund as revolving financing mechanism – including the national and the multi-donor fund - is elaborated and discussed with the Ukrainian government,

2. 10 to 15 strategic project types to be supported by “S2I Fund ” are elaborated and presented to the Ukrainian government,

3. A mid- and long-term structural reform strategy for energy efficiency in the gas/heating sector is elaborated. This strategy shall include reforms in the energy-related social subsidy system, which allow tackling structural disincentives for investments in energy efficiency, mid- to long-term public budget relief, as well as scaling up of energy efficiency (investment) activities,

4. Process management methodology, main processes and instruments for an Action Plan to implement S2I and the mid/long-term reform strategy are elaborated,

5. Administrative advisory support and coordination with the relevant stakeholders is managed efficiently,

6. A communication strategy for the S2I program is set up and discussed with major stakeholders