Romgaz (f. Project Lotus)



Project number:


Business sector:

Natural resources

Notice type:


Environmental category:


Approval date:

29 Oct 2013



PSD disclosed:

05 Nov 2013

Translated version of this PSD: Romanian

Project Description

The EBRD Board of Directors has approved an equity investment in Romania’s partial sell-off of its shares in Societatea Națională de Gaze Naturale Romgaz S.A. (“Romgaz”) through an IPO. In the IPO the Ministry of Economy reduced its holding by 15 per cent, from 85 per cent to 70 per cent. The shares are dual listed on the Bucharest Stock Exchange (BSE) and on the London Stock Exchange through GDRs.

Through the IPO the Ministry of Economy is reducing its holding by 15 per cent, from 85 per cent to 70 per cent. The EBRD will acquire a 1.9 per cent stake. Romgaz shares are dual listed on the Bucharest Stock Exchange (BSE) and on the London Stock Exchange through GDRs.

The purpose of the project is to assist Romgaz in its efforts to improve its corporate governance, internal control systems and environmental management practices. Additionally, the floating of Romgaz through the largest IPO on the Romanian capital market to-date is a test case for future listings envisaged by the Government of Romania for 2014 as part of its programme of partial sell-off of state-owned companies.

Through this investment, the EBRD is also supporting the development of the local capital market.

Transition Impact

The transaction will support increased private sector participation in Romania’s energy sector and has the potential to improve corporate governance standards and contribute to the development of Romania’s capital market.

A Corporate Governance Action Plan, prepared jointly by the Bank and the company, has been included in the prospectus and details the company’s commitments in terms of improved transparency and corporate governance in order to reach standards that are going beyond local listing requirements and beyond the corporate governance code for local state owned enterprises.

The Client

Romgaz, a state controlled joint stock company, is Romania’s largest gas producer.

Romgaz is active in: the exploration, development and production of natural gas, underground gas storage, gas trade and power generation.

Romgaz is headquartered in Medias, Romania.

EBRD Finance

Equity investment in the company for the RON equivalent of EUR 50 million post allocation at initial public offering stage.

Project Cost

The total value of the shares offered for subscription under the IPO is RON equivalent of EUR 383 million, representing 15% of Romgaz

Environmental Impact

Categorised B. The operation of natural gas production, storage and transportation facilities and infrastructure as well as the operation of a gas fired power plant may be associated with a wide range of potential environmental and social impacts. The Bank’s due diligence has confirmed that these impacts are generally site specific, readily identified and addressed through appropriate mitigation and management measures. Although not defined at this stage, further gas exploration activities and the development of new fields would require further assessment and analysis to identify and mitigate potential impacts. Due diligence has been conducted by the Bank’s environmental specialists and included a review of an independent Environmental, Health and Safety and Social (EHSS) due diligence commissioned for the transaction by the Company as well as a visit to the Company's corporate offices.

Due diligence confirmed that the Company has in place adequate EHSS management systems, procedures and capacities, including an ISO 14001 environmental management system. An OHSAS 18001 aligned Occupational Health and Safety management system is currently being developed. Implementation of these systems and procedures, however, is not always consistent and various improvements are required to achieve good international EHSS practice for the industry and to meet the EBRD's Performance Requirements (PRs). The Company is committed to ensuring that appropriate Environmental and Social Impact Assessments (ESIA), in line with good international ESIA practice, are conducted for potential future major power generation and gas field developments.

The Company currently has a plan in place to bring its recently acquired gas fired power plant into compliance with the NOx limits (100 mg/Nm3) specified in the EU Industrial Emissions Directive and the Large Combustion Plant Directive by 2020. Due to the nature of the Company’s operations there is the potential for soil and groundwater contamination. The Company has initiated clean-up activities at an old compressor station where soil contamination has been confirmed. In addition, a number of potentially contaminated sites have been identified through the EHSS Due Diligence Assessment, although the extent of contamination is not deemed to be materially significant.

The Company has in place a framework Stakeholder Engagement Plan to support its social responsibility strategy but needs to increase the level of engagement and the disclosure of information to communities near its facilities. This needs to be complemented with an appropriate grievance mechanism.

While the nature of the transaction prevented the EBRD from agreeing an Environmental and Social Action Plan with the Company, the Company has agreed to include in the prospectus a summary of the key areas for improvement to achieve international and industry EHSS good practice. Further, the Company has committed to implementing the necessary improvements, which would further align the Company’s operations with the EBRD PRs. EBRD will seek to work with the Company on these improvements and the Company’s overall risk management strategy to ensure compliance with the PRs.

Technical Cooperation



Business opportunities

For business opportunities or procurement, contact the client company.

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