RON equivalent of up to EUR 40 million loan in favour of Distributie Energie Electrica Romania SA ("DEER" or the "Company" or the "Borrower"), a corporation registered in Romania, in charge with the electricity distribution in three regions of Romania. The loan will finance part of the company's capital expenditures programme for 2021-2023 aimed at the modernisation and the upgrade of the distribution network operated by DEER.
The project will focus on the upgrade of the network and improving the quality of the service and safety of operations. Investment programme's priorities also include digitalisation of the processes for improving users' experience, investments in the smart grid and a mass roll-out of smart meters in the system.
ETI score: 60
Transition Impact derives from "Resilient" and "Green" qualities. The project will assist the client to move towards international best practice, which other DSOs in the country can also benchmark as best practice. The project will also improve network efficiency and reduce losses through technological modernisation including a planned mass rollout of the smart meters to its customers. The implementation of this CAPEX programme will also result in the estimated CO2 emission reductions of 67,100 tonnes per year through the reduction of network losses.
DISTRIBUTIE ENERGIE ELECTRICA ROMANIA SA
Distributie Energie Electrica Romania SA (DEER).
The borrower is a subsidiary of Societatea Energetica Electrica SA ("Electrica" or the "Guarantor"), the leading distributor and supplier of electricity in Romania. The borrower's core business segments are distribution of electricity to residential and industrial consumers in the geographical area of Northern Muntenia, Northern Transylvania and Southern Transylvania in Romania. Electrica was majority privatised via an IPO on the Bucharest and London Stock Exchanges in 2014, with the Romanian State retaining 49.8% of the shares. The EBRD is also a 5% shareholder in Electrica.
EBRD Finance Summary
Total Project Cost
The Bank's additonality stems from the sources related to financing structure and risk mitigation. The EBRD offers local currency loan at tenors that are not available from the local commercial banks.
Environmental and Social Summary
Categorised B (2019 ESP). The Environmental and Social (E&S) risks and impacts associated with modernising transformer substations and distribution network as part of the 2021-2023 CAPEX Plan are readily identified. The environmental and social due diligence (ESDD) was carried out by an independent consultant in accordance with ESD Covid-19 guidelines; it included the review of an information package and annual reports from the previous transaction, as well site visits (by a local team due to COVID-19 travel restrictions) of selected facilities in the three regions. The results of the ESDD indicated that Electrica operate in line with the Romanian requirements and with relevant international standards; a number of moderate adjustments are required before and during implementation of the CAPEX Plan, as captured in the ESAP. The implementation of the CAPEX Plan will likely not require the development of National EIAs. The ESAP has been prepared and will be agreed with the Client before Board.
Electrica Group has certified integrated management systems within its companies (ISO9001, ISO14001, ISO45001), including the DSOs (Distribution Companies). The new entity DEER, created early 2021 through the merger of the DSOs, will integrate the existing management systems and seek certification as a single Company. Electrica have introduced contractual terms regarding EHS matters for contractors; in addition Construction Environmental Management Plans (CEMPs) will be developed by contractors before they begin works. Approximately 98% of the Group's employees are union members, and the general working conditions are regulated by Collective Labour Agreements. The Client shall develop a Gender-Based Violence and Harassment (GBVH) Policy. It was confirmed during the ESDD that there is currently no planned major programme of retrenchment across Electrica or DEER.
Electrica currently implement a unitary Waste Management Procedural Framework (covering construction and operational waste) which is reported against and is suitable for the upcoming CAPEX Plan. The DSOs are currently in the process of eliminating PCBs from electrical installations in operation, in order to meet the 2028 national deadline. Asbestos-containing materials (ACMs) is likely be present at the proposed substations; the ESAP requires DEER to conduct an ACM survey and develop an Asbestos Management Plan. Impacts from electromagnetic fields from transformer stations and transmission lines are measured for each new project in commissioning procedure. Electrica have now included Covid-19 protection measures within their H&S sections of contracts with contractors. Site security was seen to be maintained during the site visit, however in 2019 there were still 11 incidents involving unauthorised access to electrical installations by third parties, of which 2 led to fatalities. A community guide for H&S around power lines will be developed as soon as possible and distributed as part of the CAPEX Plan implementation, as confirmed in the ESAP. Whilst no physical resettlement is expected to be caused by the project, some people could be affected economically, as demonstrated with the ongoing litigation cases. The ESAP therefore requires Electrica to develop a Land Acquisition Framework to set out the compensation principles and responsibilities.
Currently Electrica has some measures in place to minimise impact on birds (installing electrical insulating sheaths, restricting the number of lines with conductors and replacing them with twisted insulated conductors, building nests on the pillars of the low and medium voltage overhead lines); this should be complemented by developing a bird mortality monitoring system according to the relevant EU legislation, as captured in the ESAP. Although the complete location list of the CAPEX Plan is not yet available, it is expected that no new structures or lines from the CAPEX Plan will be erected in forested areas (primarily urban/brownfield sites). According to Electrica, the CAPEX Plan will not involve improvements in Emerald sites and protected areas; should this happen, Electrica will inform EBRD and obtain an agreement from the natural protected area administrator.
Members of the public can register complaints and recommendations to Electrica through several channels. DEER should also develop a brief Stakeholder Engagement Plan for the 2021-2023 CAPEX Plan, in line with the Stakeholder Engagement Policy. Electrica publishes yearly Sustainability Report since 2016. The Bank will monitor implementation of the ESAP through review of Annual Environmental and Social Reports (AESR) and communications with the company as necessary.
Company Contact Information
Str. Grigore Alexandrescu, nr. 9, Sector 1, Bucuresti, 010621
PSD last updated
08 Apr 2021
Further information regarding the EBRD’s approach to measuring transition impact is available here.
For business opportunities or procurement, contact the client company.
For business opportunities with EBRD (not related to procurement) contact:
Tel: +44 20 7338 7168
Specific enquiries can be made using the EBRD Enquiries form.
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 firstname.lastname@example.org. 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 email@example.com to get guidance and more information on IPAM and how to submit a request.