US energy assistance for Ukraine stalls as winter bites

By Gram Slattery and Humeyra Pamuk

WASHINGTON, Jan 30 (Reuters) – U.S. and European officials are growing increasingly worried as hundreds of millions of dollars in U.S. energy assistance previously pledged for Ukraine remain unreleased, even as a bone-cold winter pushes the nation’s war‑damaged power grid to the brink, said several sources familiar with the matter.

The funds in question were originally slated to be distributed by the U.S. Agency for International Development to help Ukraine import liquefied natural gas and rebuild energy infrastructure damaged by Russian strikes, said the sources, who include a U.S. official and a Ukrainian official.

But after USAID was effectively shuttered in the opening weeks of the Trump administration, some of the funds fell into what the sources described as bureaucratic limbo.

The administration of former President Joe Biden had pledged significant funding for Ukraine’s energy infrastructure in multiple funding pots. In mid-2024, for instance, the State Department announced $824 million in energy infrastructure assistance to Ukraine.

While Reuters could not determine the precise value of unspent energy funds, a spokesman for the White House’s Office of Management and Budget disputed the characterization of the available monies in general terms. The spokesman said that while there are Ukraine funds available under a program called Assistance for Europe, Eurasia, and Central Asia, or AEECA, the Trump administration had never specifically earmarked them for energy infrastructure.

The administration does, however, intend to spend about $250 million of relevant AEECA funds to develop Ukraine’s critical minerals sector, the spokesman said, a long-standing goal of the Trump administration.

Geoffrey Pyatt, the former assistant secretary of state under Biden responsible for the department’s energy policy, who retired in January, disputed the notion that there were no unspent funds dedicated specifically to aiding Ukraine’s energy sector.

“This was money notified to Congress in the Biden administration for energy sector support – which would have been delivered through USAID and its contractors,” Pyatt said.

“Today, with (Russian President Vladimir) Putin stepping up his effort to weaponize the winter, it’s more important than ever for the United States to use the resources that Congress has appropriated in a way that will deliver rapid delivery of needed repair equipment,” he said.

A HISTORY OF PAUSES

The Trump administration has paused or delayed Ukraine aid several times. For example, the U.S. has temporarily halted military aid shipments on multiple occasions, in some cases to force concessions from Ukraine amid ongoing U.S.-led peace negotiations between Moscow and Kyiv.

This time, the confusion around the energy aid appears to stem from bureaucratic disarray instead of an attempt to exert leverage over Ukraine, two of the sources said.

Still, the failure of some energy aid to reach Kyiv has stirred frustration in recent weeks, as Russian attacks on power plants and pipelines have left millions of Ukrainians exposed to brutal winter cold, according to a Ukrainian official, a U.S. official, a European official and two others with knowledge of the matter.

One source said aides on Capitol Hill were seeking additional information about stalled energy funds.

A Ukrainian official said Kyiv was also aware, but fearful that broaching the topic could provoke diplomatic blowback. U.S. President Donald Trump has at times reacted coolly to Ukrainian requests for assistance.

Halyna Yusypiuk, a spokeswoman for the Ukrainian embassy in Washington, said Ukraine and the U.S. were working closely on energy-related matters.

A separate spokesperson for the White House’s Office of Management and Budget, in an apparent reference to a critical USAID inspector general report, suggested energy assistance funds for Ukraine had been misused in the past.

“The Biden Admin support to Ukraine’s energy sector was a disaster, we have an USAID IG report showcasing how contractors in Ukraine likely lost millions worth of energy products due to no oversight, corruption, theft, etc,” a spokesperson wrote in an email. 

“President Trump has done more than anyone to bring peace to this brutal war.”

UKRAINE UNDER DEEP FREEZE, POWER PLANTS “RUINED”

The sweeping changes to the federal bureaucracy imposed by the Trump administration have complicated U.S. efforts to distribute aid to its allies and generated significant internal confusion.

The de facto elimination of USAID, for instance, has caused uncertainty about how and when to disburse funds, several sources told Reuters.

Additionally, the National Security Council, which in previous administrations would sort out conflicts between intelligence, national security and diplomatic agencies, has been radically downsized.

Some administration officials had argued for the State Department – which oversees what is left of USAID – to disburse energy funds left over from the Biden era, the sources said. Others had instead pushed for a role for the Development Finance Corporation, a previously obscure federal agency expected to play a major role in Ukraine’s reconstruction.

A Development Finance Corporation spokesperson said the agency is “working closely with all interagency partners with the goal of supporting Ukraine’s reconstruction efforts and advancing shared economic security and prosperity for the United States and Ukraine.”

Residents of Ukraine’s major cities, including Kyiv, are currently struggling with power outages that are lasting hours or days, as well as cuts to heating that leave homes as cold as 45 degrees Fahrenheit (7 degrees Celsius). Water supplies have also been disrupted.

The rumble of generators is a near-constant presence on city streets, which are often plunged into widespread darkness in the evenings. Overnight lows in Kyiv are expected to fall to around -12 Fahrenheit next week.

Ukrainian officials told foreign diplomats in Kyiv in recent days that all of the country’s major energy plants had been “damaged or ruined,” according to a presentation seen by Reuters. The presentation identified roughly 675 million euros ($807 million) in unfunded energy needs.

“They’re preparing for the fact that people in the upper (stories) of apartment buildings are going to freeze to death,” Mykola Murskyj, the director of advocacy at Razom, a non-profit group supporting Ukraine, said of next week’s expected cold snap.

“They’re preparing to retrieve the bodies. It’s extremely grim.”

(Reporting by Gram Slattery and Humeyra Pamuk; Editing by Don Durfee and Diane Craft)