Electricity tariffs to be reviewed by regulator to reflect real costs
The European Bank for Reconstruction and Development (EBRD) welcomes the new agreement between the Moldovan government and the largest privately owned electricity distributor in the country, a local subsidiary of Spanish energy group Gas Natural Fenosa.
The agreement acknowledges the electricity tariff deficit accumulated until 2015 due to national currency depreciation and sets a recovery period from 1 January 2017 to 31 December 2020.
Dimitri Gvindadze, Head of EBRD Office in Chisinau, said: “I am pleased with the progress in reaching agreement between the government and a major foreign investor in the country. Implementation of this arrangement will represent a welcome sign of what we hope is an effort to improve the business environment in Moldova.”
Gas Natural Fenosa has been operating in Moldova since 2000 and provides electricity to over 860,000 customers in the central and southern regions of the country, including the capital Chișinău.
The EBRD was a shareholder in Gas Natural Fenosa’s Moldovan subsidiary, previously known as RED Union Fenosa, between 2000 and 2011. To date it has supported the company with US$ 42 million in both debt and equity financing. The Bank remains a creditor.
The EBRD is committed to investing in the Moldovan energy sector to help the country enhance its energy security.
In addition to its support to Gas Natural Fenosa’s Moldovan subsidiary, the Bank provided a US$ 20 million loan to Moldelectrica in 2012 to rehabilitate its infrastructure and increase the efficiency and reliability of the transmission network. The EBRD is also looking into ways to support the funding of important cross-border natural gas and high-voltage power transmission infrastructure. The Bank is working closely with the authorities and the regulator to promote reforms in the energy sector.
The EBRD is the largest institutional investor in Moldova with over €1.1 billion of cumulative investment in 114 projects in agribusiness, energy, the financial sector, infrastructure and manufacturing.