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- EBRD extends lending for Moldova gas purchases with new €199 million finance package
- Package includes €165 million EBRD loan and €34 million grant from Norway
- After €300 million in 2022, total EBRD Moldova gas purchase finance rises to almost €500 million
- Aim is to strengthen Moldova’s energy security despite Russia’s war on Ukraine
The European Bank for Reconstruction and Development (EBRD) is extending its finance for Moldova to acquire strategic gas reserves with a new €199 million package, which includes a €165 million loan and a €34 million grant from Norway. This brings to almost €500 million the total of EBRD-led finance to the country for gas purchases since the start of Russia’s war on neighbouring Ukraine, safeguarding Moldova’s energy security.
The EBRD shares risk on its investments in wartime Ukraine and neighbouring countries with shareholders and donors.
The loan and grant to Moldova are for on-lending to the state-owned energy trader JSC Energocom to procure gas on European Union hubs. The loan element was signed today by Mark Bowman, EBRD’s Vice President for Policy and Partnerships, who is visiting Moldova for the fourth Moldova Support Platform, and Victor Parlicov, Moldova’s Minister of Energy.
An initial €300 million revolving facility in 2022 allowed Moldova to diversify its gas supply, meeting around 20 per cent of demand last winter with supplies from the European Union - up from less than five per cent in 2021. Moldova’s gas imports have traditionally come from the Russian company Gazprom, with which it has a contract that expires in 2026, but which are vulnerable to potential interruption as a result of the war on Ukraine.
Increasing EBRD financing now will facilitate bringing the share of natural gas from Europe up to at least 75 per cent of purchases next winter.
Natural gas makes up just under a third of Moldova’s energy consumption mix, and 70 per cent of the country’s gas is used in district heating for the country’s 2.7 million citizens and around 100,000 Ukrainian refugees who have taken up permanent residence there since the Russian invasion of Ukraine in February 2022. The aim is to ensure uninterrupted gas supply in Moldova and safeguard the basic needs and economic livelihoods of inhabitants.
Gas prices reached record highs last winter, prompting an energy crisis exacerbated by the war. The original loan, made under the Bank’s €2 billion Resilience and Livelihoods Framework supporting Ukraine and neighbouring affected countries, has not only supported gas purchases but also the creation of a strategic gas reserve stored in Romania or Ukraine to avoid seasonal price spikes and improve energy security.
Recent progress in implementing the EU’s third Energy Package, and the commissioning of a gas interconnector between EU member Romania and Moldova in 2021, which was financed by the EBRD, means Moldova now has the technical wherewithal to substitute provision from EU hubs in case of supply disruption.
The Moldovan government has authorised Energocom to procure gas from alternative sources on the spot market by running tenders mainly on the EU and Ukrainian borders.
This enables the EBRD to disburse the loan directly to pre-qualified EU suppliers selected by Energocom and agreed by the EBRD in line with EBRD procurement rules. The transaction is structured to ensure full transparency and traceability of loan proceeds.
The EBRD is a leading institutional investor in Moldova and has invested more than €2 billion in the country through 168 projects. It has also provided advisory services to more than 1,000 Moldovan firms to help them improve performance and grow.
Its focus in Moldova is on creating an environment that supports private sector activity, promoting European standards across sectors and regional integration to bring domestic producers closer to their markets, as well as developing efficient and sustainable public utilities which have a direct impact on people’s lives.