Project Description
A senior loan of RON 240 million (equivalent to EUR 49 million) in favour of Distributie Energie Electrica Romania SA ("DEER", or the "Company"). The loan will be guaranteed by Societatea Energetica Electrica SA ("Electrica"), who owns 100% of the shares of the Company.
The transaction is presented under the EBRD's Resilience and Livelihoods Framework, one of the focus areas of which is energy security in Ukraine and neighboring countries.
This project was approved in the context of the Bank's response to the Russian-led invasion of Ukrainian territory in February 2022. To avoid delays to the delivery of this project, the Bank's President granted a deviation from the ordinary timelines for PSD disclosure, as contemplated by Section V of the Directive on Access to Information. Details of this deviation, and the Bank's response to this situation, can be found on our website
Project Objectives
The loan will finance the Company's liquidity needs to cover the increased cost of electricity purchases required for network losses. This will enable the Company to continue the distribution of electricity to Romanian consumers without interruptions and allow the Company to continue investments in the electricity grid in order to cope with integration of additional renewables generation.
Transition Impact
ETI score: 65
Resilient: The Bank's loan will support the Company to maintain its financial stability in the midst of an energy crisis exacerbated by the war in Ukraine.
Inclusive: The operation will prevent electricity supply disruptions and safeguard access to vital energy services for both the Romanian population and Ukrainians refugees predominantly women, children and elderly.
Client Information
DISTRIBUTIE ENERGIE ELECTRICA ROMANIA SA
The Company is a Romanian electricity distribution network operator fully-owned by Electrica, the leading energy utility in Romania. The Company'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.
EBRD Finance Summary
RON 240,000,000.00
Total Project Cost
RON 240,000,000.00
Additionality
EBRD financing effectively bridges a financing gap due to adverse market conditions. EBRD also provides comfort and complements financing provided by commercial lenders that are maximising their exposure in the Romanian energy sector.
Environmental and Social Summary
Categorised B (ESP 2019). The proposed transaction involves a loan to Distributie Energie Electrica Romania SA to support the company's liquidity management and financial resilience on the back of electricity price increases following on the war in Ukraine. Therefore, given the structure of the transaction (energy purchase), there will be limited (at best) leverage over the electrical infrastructure that will be utilized for electricity supply, while key environmental risks on this transaction are associated with the physical infrastructure owned by DEER. The Bank is one of the major investors in Electrica, with a 5.1% stake in the company's share capital, and an ESAP has been agreed (opID 52212) for the client to comply with and implement EBRD's Performance Requirements. This is currently monitored under the existing agreements and results of the monitoring show good performance.
ESDD was conducted by ESD and included a review of annual E&S reporting by the Company, progress update on ESAP agreed previously and follow up questions as well as a meeting held with the Company to assess compliance with EBRD's 2019 E&S Policy. The Company operates certified management systems to manage environmental and health and safety risks. Social policies and labour provisions are in general aligned with PR2. However, further stakeholder engagement, grievance management, contractor control and supply chain management, and workers accommodation are needed and additional actions were advised into revised ESAP to be agreed before approval. Currently, no land acquisition is planned for the Project and new investments mostly prioritize using public land to avoid impacts on communities as much as possible. However, preparation of a land acquisition framework is included in ESAP for any future needs of land acquisition.
Technical Cooperation and Grant Financing
none
Company Contact Information
Lucian Penes, Chief Financial Officer
lucian.penes@distributie-energie.ro
+40 730 006 666
www.distributie-energie.ro
Str. Ilie Macelaru, nr. 28A, Cluj-Napoca, Jud. Cluj
Implementation summary
PSD last updated
16 Jan 2023
Understanding Transition
Further information regarding the EBRD’s approach to measuring transition impact is available here.
Business opportunities
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Tel: +44 20 7338 7168
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General enquiries
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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 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.
