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- EBRD lends Moldova’s state-owned energy trader €400 million to boost energy security
- Agreement covers strategic gas and electricity purchases
- €300 million revolving loan, €100 million guarantees, to finance country’s energy needs
The European Bank for Reconstruction and Development (EBRD) is lending €400 million to Moldova’s state-owned energy trader JSC Energocom to boost the country’s energy security by buying gas and electricity reserves on European markets. The loan is a milestone in the small southeastern European state’s successful diversification of energy supply sources.
With no domestic sources of energy and no gas storage, Moldova – now a candidate European Union member – was historically heavily reliant on gas imports from Russia through Ukraine. A landlocked country with no major mineral or energy resource, natural gas accounts for 31 per cent of its energy consumption mix, with 70 per cent of gas consumed by households and district heating utilities.
The onset of Russia’s war on Ukraine raised the prospect of acute energy shortages. But progress in implementing the EU’s third Energy Package, and the commissioning of a gas interconnector between EU member Romania and Moldova in 2021 following the construction of the Ungeni-Chisinau gas pipeline, which was co-financed by the EBRD, gave Moldova the wherewithal to switch to energy supply from EU hubs.
Previous lending from the EBRD – revolving loan funds of €500 million, including a €34 million grant from the Norwegian government, and the extension of the EBRD finance to include electricity purchases in 2025 – supported this change of direction.
That EBRD financing has enabled Moldova to diversify its gas sourcing, raising the EU share of its supply to 20 per cent in the first winter of the war, up from five per cent the previous year. By 2023, Moldova imported all its gas from EU traders.
The new finance package is made up of a €300 million senior working capital loan for energy purchases and €100 million in guarantees to be issued by the EBRD on behalf of Energocom to eligible EU suppliers. These will be guaranteed by the Republic of Moldova and will enable the company to acquire natural gas and electricity ensuring continuing stable energy supply nationwide.
Through this project, the EBRD continues to support reform of the energy sector in Moldova, helping further develop competitive and open gas and electricity markets as well as the renewable energy sector through the implementation of a Contracts for Difference (CfD) support scheme. Adherence to the Moldovan Energy Sector Action Plan, ENERSAP 2.0, will be an integral part of EBRD’s financing agreements.
The EBRD is a leading institutional investor in Moldova and, to date, has invested more than €2.5 billion in the country through 183 projects.