The Bank is supporting the privatisation of the gas distribution company by providing support to strategic investors. The Bank would partner with Gaz de France, the winner for the recent tender for 51% shares in Distrigaz Sud (DGS) in one of the first gas sector privatisations in Romania. Distrigaz Sud (DGS) is the gas distributor and supplier in the southern part of Romania, including Bucharest (serving approx. 1 million clients).
Bank's participation will support the gas sector liberalisation process in Romania and in the region in line with the EU directive on Gas and with the South East Europe Regional Energy Market. Specifically the Bank will:
- support the first private participation in gas distribution sector and the establishment of competition in the sector;
- support the establishment of transparent and market based tariff methodology;
- provide comfort to Gaz de France seeking to invest in Romania by providing additional assurance with respect to political and regulatory risk;
- facilitate operational and financial efficiencies derived from the entrance of GdF;
- enhance the transparency and credibility of the privatisation process; and
- indirectly catalyse the privatisation of the electricity distribution companies (demonstration effect).
The transaction consists of an indirect equity investment in DGS through purchase of shares from GDF International.
The project was screed C/1 requiring an environmental audit of the distribution company to be privatised.
An environmental audit of the Company has already been undertaken as part of the privatisation process, which confirmed that there are unlikely to be any significant environmental issues associated with the Company’s operations. However, a range of issues were identified including hazardous waste production and disposal; fugitive emissions of greenhouse gasses from pipelines and combustion gas emissions.
The Bank’s environmental due diligence, which included a site visit by the Bank’s Environmental Specialist, will address corporate environmental, health and safety issues and identify any potential liabilities. The due diligence will also establish the current status of compliance with Romanian and EU environmental health, safety requirements and develop an environmental action plan (EAP) to address any deficiencies. There are likely to be considerable environmental opportunities associated with the privatisation process particularly given the presence of experienced and environment-sensitive gas companies. The potential for Greenhouse Gas reduction may also be significant.
Ms Valerie RUIZ-DOMINGO,
Gaz de France
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