Ukraine seeks $40 billion to rebuild economy

War-torn Ukraine is seeking up to $40 billion to fund the first part of a “Green Marshall Plan“ to rebuild its economy.

Rostyslav Shurma, a deputy head of President Volodymyr Zelenskiy’s office, said 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.

Giving the figure of $40 billion for an initial phase of reconstruction, Shurma said the first focus would be the iron and steel industry.

The sector contributed around 10% of 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,” Shurma said.

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.

Shurma noted that preparatory work would likely take 1-1/2 years although to be realistic, actual construction will start only after the war is over.

He added that 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.

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.