Provision of a four-year senior revolving loan of up to EUR 125.4 million to Bulgartransgaz EAD under the Resilience and Livelihoods Framework for 1) refinancing of the bridge loan received from the Government of Bulgaria; and 2) for acquisition of natural gas for the accumulation and/or replenishing of the national gas reserve. The loan will be guaranteed by the Republic of Bulgaria.
This project was approved in the context of the Bank's response to the Russian-led invasion of Ukraine 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.
The strategic importance of the transaction is driven by the energy security objective to ensure continued and uninterrupted gas supply in Bulgaria during the 2022 winter season and the following years. This is essential to safeguard basic needs and economic livelihoods of the local population. The financing will enable procurement of gas from the Balkan Gas Hub to build and maintain the country's national strategic gas reserve and compensate for the discontinuation of deliveries under the pipeline gas contract with Gazprom.
ETI score: 65
The Project will support the Resilient and Green TI qualities:
Resilient: The operation will support the accumulation of strategic gas reserve to meet the country's minimum 80% gas storage level obligation for the coming winter in order to ensure continuity and safety of supply and price affordability for domestic market, while helping to achieve the EU's requirement for its Member States to ensure that their underground storages are filled up to at least 80% of capacity by 1 November 2022, rising to 90% for the following 5 years. Currently storage capacity is bellow the required level and among the lowest levels within the EU states.
Green: EBRD will provide technical support to Bulgaria to draft the amendments to the licensing and permitting procedures to simplify and expedite the process for a new Renewable Energy Sources Policy (RES) in Bulgaria, thus reducing the administrative burden for new investments from renewable sources. The policy engagement is part of a broader technical assistance, to be provided by EBRD under the Recovery and Resilient Plan, and the outcome of the assignment will be tendering and installation of 1,425 MW of RES and 350MW of co-located storage within the next 4 years.
Bulgartransgaz EAD is an independent natural gas transmission and storage system operator of Bulgaria, 100% owned by Bulgarian Energy Holding EAD, a state owned energy holding company 100% owned by the Ministry of Energy of Bulgaria. The client owns and operates 3,276 km of gas transmission network and 550 mcm of underground gas storage.
EBRD Finance Summary
Total Project Cost
Sources of additionality under the Project are (i) Financing Structure, which effectively bridges a financing gap due to adverse market conditions with a longer than available tenor on the market; (ii) Policy, sector, institutional and regulatory change aimed to enhance the practices at the sector and country level by providing technical support to the Bulgarian state to draft the amendments to the licensing and permitting procedures to simplify and expedite the process for new RES in Bulgaria; (iii) Standard-setting aimed to support the client to develop and adopt CCG Plan and climate reporting standards; and (iv) Risk mitigation helping Bulgaria to mitigate energy security risks and provide predictability of funding and stable pricing.
Environmental and Social Summary
Categorised B (ESP 2019). The independent environmental and social due diligence, consisting of the review of the EIA documents for key storage and transmission facilities and a site visit to selected facilities, that are crucial for the transportation and storage of the purchased gas, is ongoing. Key issues, identified to date, are associated with the excessive CO2 equivalent emissions (above permitted levels in some instances) most probably from the Chiren gas storage and outdated compressor stations. Chiren underground storage is the only available gas storage facility and is subject to the ongoing modernisation funded by the EU. Key issues associated with the Chiren UGS include landtake and compensation of affected people; compliance with SEVESO, IED and ATEX Directives. Some of the gas transmission facilities seem to traverse or be adjacent to protected areas and the Bank will review the Company's approach to managing biodiversity issues. The ESAP for identified risks and impacts will be agreed as a Condition Precedent to Disbursement.
Technical Cooperation and Grant Financing
Company Contact Information
66 P. Vladigerov Blvd. 1336 Sofia, PO Box 3
PSD last updated
21 Sep 2022
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