EU bank and EBRD support gas interconnection between Moldova and Romania

By Olga Rosca, Dušan Ondrejička and Victoria Onofreiciuc


(l-r) Dimitri Gvindadze, Head of the EBRD’s office in Chisinau, and Octavian Calmic, Moldovan Deputy Prime Minister and Economy Minister, at the signing of the loan agreement for the construction of Ungheni-Chisinau gas pipeline.

€92 million package to help enhance Moldova’s energy security

In a joint effort to strengthen Moldova’s energy security, the European Union (EU), the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) are providing a €92 million financing package for the construction of a natural gas pipeline from Romania to Chisinau.

The EIB and the EBRD are each lending €41 million and the EU is providing a €10 million grant. The funds will be extended to Î.S. Vestmoldtransgaz, a state-owned company which will build and operate the gas pipeline and the Romania-Moldova interconnector.

The project will complete the connection of the gas transmission systems of Romania and Moldova by linking Chisinau, a major area of gas consumption in the country, to the interconnector between the eastern Romanian city of Iasi and Ungheni, a Moldovan town on the Romanian border. It was built in 2014 to enable Moldova – a country which is more than 90 per cent dependent on energy imports – to diversify its energy sources. The EU provided a €7 million grant for the interconnector.

As part of the new financing package, the Moldovan government has agreed to implement a comprehensive reform package to promote the liberalisation of the energy market and strengthen competition in the sector.

Octavian Calmic, Moldovan Deputy Prime Minister and Economy Minister, said: “The decision of our partners at the EBRD, the EIB and the EU to support the Moldovan government in the construction of the Ungheni-Chisinau gas pipeline is very important to our country as it is a vital step towards ensuring the country’s energy security and overcoming the situation where we are dependent on one source to supply the population with energy. Furthermore, the implementation of this project will allow us to connect to the EU energy system which will ensure energy stability for a long period of time and promote free competition on the market.”

EU Ambassador to Moldova, Pirkka Tapiola, said: "I am delighted that the EU, together with its bank and our EBRD partners are contributing to the construction of the Ungheni-Chisinau pipeline. The EU fully supports this project which is of strategic interest to Moldova. It will reinforce the energy security of the country and contribute to increasing the competitiveness of the Moldovan energy market to the benefit of all citizens."

EIB Vice-President Jan Vapaavuori commented: “I welcome very much that the EIB contributes to the diversification of the energy resources for Moldova, a country dependent on energy imports. This will help to increase the energy security and support both the liberalisation of the gas market in the country as well as its integration in the European energy system. At the same time this project is a good example of successful cooperation between the EIB, our partner financing institution the EBRD, and the European Union that are co-financing this strategic undertaking.”

Dimitri Gvindadze, head of the EBRD’s office in Chisinau, added: “The pipeline will enable Moldova to buy gas from EU markets and will promote measures that will help foreign gas suppliers enter the Moldovan market. This will allow the country to diversify its energy supplies and will strengthen competition in the sector.”

Additional support comes from the Swedish International Development Cooperation Agency (Sida) which has provided nearly €600,000 for a comprehensive feasibility study conducted by the engineering consultancy Fichtner GmbH to assess technical, market, regulatory, economic and environmental and social aspects of the project.

The EBRD is also providing €1 million grant financing from its own funds to support the implementation of the project, including legal and regulatory assistance.

Background information

The EIB – the European Union’s bank – finances projects in Moldova on the basis of an EU mandate for the countries of the Eastern Neighbourhood, the so-called External Lending Mandate (ELM). The 2014-2020 ELM provides for a total amount of bank financing in the Eastern Neighbourhood of €4.8 billion to support projects of significant interest to both the EU and its Eastern Neighbours in the areas of local private sector development, social and economic infrastructure and climate action. In addition, the bank has set up a €3 billion own-risk Neighbourhood Finance Facility to enhance its support for the Neighbourhood countries.

The loan signed today comes under the ELM and is covered by the EU Comprehensive Guarantee.

The EIB is committed to supporting Moldova following the June 2014 signature of the EU-Moldova Association Agreement, which includes a Deep and Comprehensive Free Trade Agreement (AA/DCFTA). This agreement will lead to much closer political and economic ties with the EU within the framework of the Eastern Partnership.

Moldova is one of the countries that most benefited from EIB loans per capita in the Eastern Partnership Region. The EIB lending portfolio, being well balanced and covering all important sectors of the country’s economy, has reached almost €700 million since signing the first EIB loan in the country in 2007. The gas interconnection project is one more successful example of cooperation in Moldova between the EU, the EIB and the EBRD which together have been supporting numerous projects such as the Moldovan Road Rehabilitation Programme, Chișinău trolleybuses, and rehabilitation of water utilities.

The EBRD is the largest institutional investor in the Moldova, with over €1.1 billion of cumulative investment in more than 110 projects in agribusiness, energy, the financial sector, infrastructure and manufacturing.

The EBRD is a multilateral bank committed to the development of market-oriented economies and the promotion of private and entrepreneurial initiative in more than 30 countries from Morocco to Mongolia and from Estonia to Egypt. The Bank is owned by 65 countries, the EU and the EIB.