Project Description
Provision of a three-year revolving loan of up to EUR 300 million to the Republic of Moldova under the Resilience and Livelihoods Framework to be on-lent to Energocom to finance emergency gas supply and strategic reserve build up in order to facilitate diversification of gas supply.
The Facility includes two tranches: (i) up to EUR 200 million Emergency Tranche, which will be used in case of gas supply disruption, and (ii) up to EUR 100 million Diversification and Storage Tranche, which will be used to accumulate and store Moldova's strategic gas reserve in Romania or Ukraine, which will also allow to avoid seasonal price spikes and diversify supply routes and sources.
An up to EUR 200 million increase was approved in July 2023, which will be utilised for additional accumulation of strategic gas reserve and emergency gas supplies. The loan increase is outside of the scope of the Resilience and Livelihoods Framework.
Project Objectives
The Project's main objective is to strengthen Moldova's energy security by providing both an emergency and long-term financing mechanisms to mitigate the risk of disruption and maintain access to vital energy services, accumulate strategic gas reserve and support diversification of natural gas suppliers and delivery routes. This is essential to safeguard basic needs and economic livelihoods of the local population as well as refugees from Ukraine.
Transition Impact
ETI score: 70
The Project will support the Resilient and Inclusive TI qualities:
Resilient Transition Quality by providing financing to improve energy security, creating strategic gas reserve while at the same time diversifying gas supply routes and sources; and continuing sector reforms as part of the Energy Sector Reform Action Plan developed in parallel to the facility which includes the corporate governance improvement programme for Energocom, which inter alia includes increasing transparency and standardisation of procurement practices.
Inclusive Transition Quality by providing an emergency facility to prevent gas supply disruptions and maintain a reliable supply of vital energy services in advance of the main heating season for both the Moldovan population and Ukrainian refugees, predominantly women, children and elderly. In addition, the Project will support human capital development by providing training to local workers to build a selected gas procurement team at Energocom.
Client Information
MOLDOVA SOVEREIGN
Energocom is a 100% state-owned enterprise established by the Government of Moldova in 2005 as an electricity importer and domestic electricity supplier. In October 2021, the government appointed Energocom to act as an alternative gas supplier helping reduce Moldova's reliance on one supplier (Gazprom) by procuring gas on EU hubs.
EBRD Finance Summary
EUR 300,000,000.00
Total Project Cost
EUR 500,000,000.00
Additionality
Sources of additionality under the Project are (i) Financing Structure, which effectively bridges a financing gap due to adverse market conditions; (ii) Policy, sector, institutional and regulatory change aimed to enhance the practices at the sector and country level; and (iii) Standard-setting aimed to improve Energocom's procurement standards and corporate governance.
Environmental and Social Summary
Categorised C (ESP 2019).
The proposed transaction involves a loan to the Government of Moldova, which will be on-lent to Energocom, who will buy gas from EU suppliers and sell it to off-taker. Energocom owns no gas storage or transportation assets, while key environmental risks on this transaction are associated with the physical infrastructure owned by others in Moldova and Romania. Therefore, given the structure of the transaction (gas purchase), there will be limited leverage over the gas infrastructure that will be utilized for supply of gas to and within Moldova. However, the Bank has an existing relation with VestMoldTransgaz, the company that owns and operates the Moldova-Romania Interconnector that could be used to transport gas to Moldova. The VestMoldTransgaz has an obligation to comply with and implement EBRD's Performance Requirements. Compliance with the EBRD Performance Requirements has been monitored under the existing loan and results of the monitoring show good performance. This monitoring will be continued in 2022. In terms of Paris Alignment, the Project is considered aligned in terms of mitigation. Further assessment in terms of adaptation is not feasible given that no data on location of final physical gas transportation infrastructure, owned and operated by third parties, can be obtained. However, it can be safely assumed that robust surveys aimed at confirming physical risks such as landslides, flood-prone areas and other natural hazards were conducted prior to construction of the gas transport infrastructure, in order to safeguard its mechanical integrity.
Technical Cooperation and Grant Financing
None.
Company Contact Information
Victor Bunzari, Acting General Director
office@energocom.md
+373( 22) 214133, +373 (22) 223 868
https://energocom.md
Alexandr Puskin street 26
Chisinau, Republic of Moldova, MD-2012
PSD last updated
20 Jul 2023
Understanding Transition
Further information regarding the EBRD’s approach to measuring transition impact is available here.
Business opportunities
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Environmental and Social Policy (ESP)
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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 compliance@ebrd.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 ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.
