EBRD and Union Fenosa

By Ina Coretchi

The EBRD and IFC are supporting the modernisation of the power sector in Moldova with two equal loans to RED Union Fenosa Moldova S.A worth a total of $30 million to finance the upgrade of its distribution network with a particular emphasis on boosting energy efficiency.

Majority-owned by the Spanish Gas Natural Group, RED Union Fenosa Moldova is the main electricity distributor in Moldova, covering the central and southern region of Moldova, including the capital Chisinau.

The proceeds of the loans will support Union Fenosa Moldova's investments in upgrading and modernising its electricity network lines and substations, which will enable the company to increase efficiency, cut power losses and improve the safety and security of the network.

With a total cost of $40 million, the project will be co-financed by IFC, EBRD as well as by the company's own funds.

The EBRD is pleased to support Union Fenosa Moldova's further investments in modernising the electricity distribution network in Moldova. This project will help the company improve efficiency and reduce power distribution losses. We hope that the Bank's investment will help improve the investment climate in the country, stimulating further private sector involvement, said Nandita Parshad, Director of the EBRD's Power and Energy team.

Ana Maria Mihaescu, IFC Chief of Mission in Romania and Moldova said: "IFC is pleased to support its existing relationships under difficult market conditions and to contribute to the development and sustainability of Moldova's power sector. Our investment will help Union Fenosa to further improve its services to its customers by improving its distribution network."

The EBRD investment is provided under its Mid-Sized Corporate Support Facility, established in order to support the Bank's existing corporate clients in the current difficult environment.

The EBRD holds a minority stake in RED Union Fenosa Moldova. EBRD and IFC have previously supported the company with loans worth $50 million when the company was privatised.

Since the beginning of its operations in Moldova, the EBRD has committed over €340 million in various sectors of the Moldovan economy.

IFC has played an active role in Moldova since the country became a member of the Corporation in 1995. Since then, IFC has approved financing for investments in telecommunications, agribusiness, and financial services, as well as technical assistance projects in banking, tourism, wineries, food processing, and leather industries.

About IFC
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $14.5 billion in fiscal 2009, helping channel capital into developing countries during the financial crisis. For more information, visit www.ifc.org.

IFC is the only international financial institution focused exclusively on the private sector, the engine of sustainable development in emerging markets. Along with IBRD, it is currently seeking a capital increase to strengthen its ability to create opportunity for the poor in developing countries including by helping finance power sector modernization.