The European Bank for Reconstruction and Development (EBRD) is strengthening Moldova’s energy security with the acquisition of a 25 per cent stake in Vestmoldtransgaz, the gas transmission company that is operating the newly built Ungheni-Chisinau gas pipeline.
The EBRD has invested €20 million as part of a capital increase in Vestmoldtransgaz.
Founded in 2014, Vestmoldtransgaz owns and manages a gas pipeline network in western Moldova and provides natural gas transport services. In 2018 it was taken over by Eurotransgaz, a subsidiary of SNTGN Transgaz, the company operating the Romanian natural gas transmission system.
The 120 km Ungheni-Chisinau gas pipeline will soon become operational and complete the connection of the gas transmission systems of Romania and Moldova by linking the capital Chisinau to the Iasi-Ungheni interconnector between the eastern Romanian city of Iasi and Ungheni, a Moldovan town on the Romanian border.
The Ungheni-Chisinau gas pipeline will enable Moldova – a country more than 90 per cent dependent on energy imports – to diversify its energy sources.
Ion Sterian, CEO of SNTGN Transgaz, said: “In March this year, Transgaz and the EBRD signed a Memorandum of Understanding to support investments in the Romanian energy sector.
The transaction between the EBRD and Vestmoldtransgaz, Transgaz’s subsidiary in Moldova, underlines the EBRD's commitment to its partnership with Transgaz and its interest in supporting Transgaz's strategic investment programme to develop the interconnection of natural gas networks in the region, which will lead to better safety and security of supply, as well as diversification of natural gas sources.
The EBRD provided support to Vestmoldtransgaz for the environmental and social component of the Ungheni-Chisinau project, making sure that the highest standards were met.
We are confident that this transaction will contribute to the long-term development of the gas transmission sector in Moldova.”
Alain Pilloux, EBRD Vice President, added: “This connection will enhance Moldova's energy security by diversifying its gas supply sources, a prerequisite for the country's successful development. The project also helps integrate Moldova into future major gas infrastructure projects such as the Trans Adriatic Pipeline and gas sources from central European hubs, and links it with Black Sea gas deposits. Greater integration will deliver economic benefits for consumers.”
The construction of the €90 million pipeline has also been supported by a €38 million loan from the European Investment Bank (EIB) and an equity investment from Eurotransgaz.
In 2016 the EBRD offered to support the project with a loan to the Moldovan government. After Vestmoldtransgaz’s privatisation, the financing was cancelled and funds have now been provided in the form of an equity stake in the company.
The EBRD is the leading institutional investor in Moldova. Since the start of its operations in the country, the Bank has invested over €1.3 billion in 134 projects in Moldova’s financial, agribusiness, energy, infrastructure and manufacturing sectors.