(MENAFN) The Ukrainian government announced that Naftogaz inked a USD3.656-billion loan agreement with China Development Bank (CDB) to fund a program to replace natural gas with coal, reported RIA.
According to the statement, the project will be financed against the Ukrainian government's guarantees.
The project will introduce coal-water fuel technology to local heat and power plants, and will see the establishment of coal-to-gas conversion facilities enabling the country to substitute nearly 4 billion cubic meters of gas with coal, saving the economy an average of USD1.5 billion annually.
In the first quarter of 2012, Naftogaz, the state national energy firm, bought Russian gas at USD416 per 1,000 cubic meters, whereas it paid about USD425 in the second quarter, USD426 in the third quarter and will pay about USD432 in the final quarter.
Under an agreement inked in 2009 between Kiev and Moscow, the first acquires nearly 2-thirds of the gas it consumes from Russia, however, Ukraine's gas bill has surged, as the deal ties gas price to oil price, which have increased notably since 2009.