EBRD invests in Romania’s first private power generation project

By EBRD  Press Office
@ebrd

Investing in the first fully private power generation project in Romania, the EBRD is providing a €200 million loan to Romania’s Petrom to finance the construction of a state-of-the-art gas-fired power plant, which will improve environmental standards and increase competition in the Romanian energy sector.

The EBRD finance will be used to construct an 860 MW combined cycle gas turbine at Brazi, north of Bucharest, using latest technology which will provide effective, reliable and economical energy with a low environmental impact.

The loan will also contribute to financing to build a new 30km gas pipeline to feed the power plant with natural gas and one new 3km transmission line to connect the new unit to the national grid. Once operational, the plant will account for 8-9 percent of the installed power in Romania.

Petrom, Romania’s largest company, is majority owned by OMV, one of the biggest publicly-listed industrial companies in Austria and one of central Europe’s leading oil and gas corporations.

The EBRD became a shareholder in Petrom in 2004 when an existing loan was converted into equity as part of the privatisation of the company which is also active in Bulgaria, Serbia and Moldova with retail operations and in Kazakhstan and Russia with upstream operations.
The total value of the project is around €500 million, with the EBRD and the EIB providing €200 million each under parallel loans and the rest being funded by the company.

Romania is one of the regional leaders in reform and liberalisation of the energy sector, but the current market crisis is reducing the availability of financing for the remaining major investments in this sector. The Bank’s investment is vital for maintaining momentum in investments and ensuring that the achievements to date are not reversed.

The investment is also expected to encourage other private investment and will contribute to the stabilization of the Romanian electricity system.

“With this project the EBRD is providing much needed long-term funding to support private investments in the Romanian power generation sector. By investing in modern solutions, the Bank is helping revamp the electricity sector in Romania, facilitating competition and the further liberalisation of the Romanian energy market,” EBRD’s Director for Power and Energy Utilities Nandita Parshad said.

In March 2009, the Bank provided a €300 million syndicated loan to Petrom for environmental investments, including pollution clean up, the replacement of outdated pipelines and health and safety and energy efficiency measures.

Mariana Gheorghe, CEO Petrom: “The credit granted by EBRD reflects a successful and long term partnership and will contribute to funding one of our major projects, the construction of a greenfield gas power plant at Brazi. The power plant in Brazi is a strategic project not only for the company, but for the Romanian power system as well”.

The EBRD has stepped up its plans for investments in Romania in response to the impact on the economy of the global financial crisis. Earlier this year the Bank announced its participation in the joint international stabilisation efforts for Romania that included a two-year financial support package from the International Monetary Fund. The EBRD expects to invest a total of €1 billion in Romania over the next two years.