London: War-torn Ukraine is seeking up to $40 billion to fund the first part of a “Green Marshall Plan” to rebuild its economy, a senior Ukrainian government official told Reuters ahead of a summit this week.
Politicians and financiers will discuss the country’s short-term funding issues as well as look at long-term reconstruction efforts at the two-day meeting, starting in London on Wednesday and co-hosted by Ukraine and Britain.
The World Bank estimates Ukraine’s reconstruction will cost $411 billion, three times the country’s gross domestic product. Since Russia’s invasion in February 2022, external backers have poured $59 billion into Ukraine for financing needs.
Giving the figure of $40 billion for an initial phase of reconstruction, Rostyslav Shurma, a deputy head of President Volodymyr Zelenskiy’s office, said the first focus would be the iron and steel industry.
The sector contributed around 10% of the Ukrainian GDP in 2021, a third of export revenues and employed around 600,000 people. It also accounted for 15% of the country’s carbon emissions and Shurma said there was now an opportunity to build an industry driven by renewable energy.
“If you have to rebuild, it is logical to rebuild green in line with new technologies… Our vision is to build a 50 million tonnes green steel industry in Ukraine,” he told Reuters.
Doing so would allow the country to become the world’s cheapest supplier of green steel and a major support to Europe’s efforts to decarbonise, driven by an investment push in new wind, solar, nuclear and hydro power.
Many of the country’s damaged legacy steel plants were built in locations that suited their reliance on coal as a power source, but they were now free to build closer to the iron ore deposits and away from the Donbas region, Shurma said.
To help raise $20-$40 billion in initial funding, Ukraine plans a coalition of industry, public and private sector stakeholders to develop the plan, including doing initial scoping work on projects.
Preparatory work would likely take 1-1/2 years although “to be realistic, actual construction will start only after the war” is over, Shurma said.
British Prime Minister Rishi Sunak will tell global investors and British businesses at the conference to strengthen their support for Ukraine, his office said on Saturday.
“Ukraine’s bravery on the battlefield must be matched by the vision of the private sector to help the country rebuild and recover,” Sunak will say.
Shurma said rebuilding funding would be a blend of finance from export credit agencies in other countries; concessional funding handled through the Ukrainian Development Fund it is setting up with asset manager BlackRock; equity of the operating companies; EU transition funding; and private sector loans.
Matteo Patrone, Managing Director at the European Bank for Reconstruction and Development (EBRD), said it was crucial to put the focus on the need for private sector involvement at the London conference, adding this could not be done by the public sector alone.
U.S. lawmakers from both the Republican and the Democratic parties introduced a bill on Thursday that would make it easier for Ukraine to fund its fight against Russia by using seized and frozen Russian assets.
Though the war-torn economy is more resilient than expected, it “will likely require (a) NATO security guarantee to rebuild with private sector involvement,” JPMorgan economists led by economist Ayomide Mejabi said.