The EBRD stands ready to issue, on-demand, a one-year letter of credit (LC) in favour of Naftogaz of Ukraine as a payment guarantee of obligations of Moldovan natural gas supplier Energocom JSC under an agency agreement with Naftogaz for back up natural gas procurement for the Republic of Moldova.
The purpose of the transaction is to allow Moldova to procure one month of natural gas to back up potential supply disruption during winter 2019-2020.
ETI score: 64
The transition impact of the project will stem from the following transition impact qualities:
(i) Resilient Transition Quality by financing a mechanism to mitigate the risk of disruption in the Moldovan gas sector in 2019/2020 winter and supporting diversification of natural gas suppliers and delivery routes; and
(ii) Well-Governed Transition Quality by initiating the work on improving corporate governance of Energocom, and increasing transparency and standardisation of procurement practices.
The project will also entail a policy dialogue with the Government of Moldova to support the institutional reform process for the gas sector.
The project will be implemented by Energocom, a 100 per cent state-owned enterprise established by the Moldovan government in 2005 as an electricity importer and domestic electricity supplier. Energocom has a licence to supply natural gas.
EBRD Finance Summary
USD 50 million LC in favour of Naftogaz. The LC will benefit from a sovereign guarantee by Moldova.
Total Project Cost
Financing structure (closing funding gap, crisis response); Risk mitigation (comfort to other investors); Policy (gas market reform, capacity building of Energocom).
Environmental and Social Summary
Categorised C (ESP 2014). The proposed transaction involves a Letter of Credit in favour of Naftogaz to guarantee a payment for supply of gas to our client Energocom, when it needs to buy gas from Naftogaz and sell it on to Moldovagaz. The State of Moldova is the guarantor and will provide a sovereign guarantee in case of non-payment for gas supply by Energocom, the off-taker of gas. Energocom owns no gas storage or transportation assets, while key environmental risks on this transaction are associated with the physical infrastructure owned by Naftogaz in Ukraine and Moldovagaz (the final buyer of gas) in Moldova. Therefore, given the structure of the transaction (gas purchase), there will be limited (at best) leverage over the gas infrastructure that will be utilized for supply of gas to and within Moldova. However the Bank does have an existing relation with Naftogaz through a Naftogas bond subscription, where there is an obligation to comply with and implement the EBRD's Performance Requirements. This will be further followed up separately outside of this proposed transaction.
Technical Cooperation and Grant Financing
Technical assistance supporting the implementation of this project, including capacity building to strengthen Energocom's transparency, corporate governance and procurement function are under consideration.
Company Contact Information
78, Vasile Alecsandri Street Chisinau Moldova
PSD last updated
20 Feb 2020
Further information regarding the EBRD’s approach to measuring transition impact is available here.
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Environmental and Social Policy (ESP)
The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”. The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.
More information on the EBRD’s practices in this regard is set out in the ESP.
Integrity and Compliance
The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.
OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to email@example.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.
Access to Information Policy (AIP)
The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.
Specific requests for information can be made using the EBRD Enquiries form.
Independent Project Accountability Mechanism (IPAM)
If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).
IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.
Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM via email firstname.lastname@example.org to get guidance and more information on IPAM and how to submit a request.