BRUSSELS, August 3 (RIA Novosti) - International financial institutions are to release a $1.7 bln loan to Ukraine to reform its gas sector and facilitate payments for natural gas purchases, a European diplomatic source said on Monday.
The European Commission announced on Friday that it had reached agreement with Ukraine on the reformation of its gas sector and the readiness of international financial institutions to grant the ex-Soviet republic a gas loan.
The loan will be disbursed by the European Bank for Reconstruction and Development (EBRD), the European Investment Bank and the World Bank, with $300 million designed for the purchase of Russian natural gas and the remainder for the reformation of the Ukrainian gas sector, the source said.
Ukraine had sought a loan of over $4 billion from the EU to pump natural gas into its underground gas storage facilities to avoid interruptions with gas transit to Europe.
Russia, which supplies around one quarter of Europe's gas, briefly shut down supplies via Ukraine's pipeline system at the start of the year during a dispute with Kiev over gas supply debt.
The conflict was resolved in January, when Russian Prime Minister Vladimir Putin and his Ukrainian counterpart, Yulia Tymoshenko, agreed deals on deliveries to and gas transit through Ukraine for 2009.
The ex-Soviet state transits around 80% of Russia's Europe-bound gas.
