Moldelectrica Transmission Rehabilitation Loan

Translated version of this PSD: Moldovian

Project Description

The EBRD is considering providing a senior loan of up to US$ 21.5 million to Moldelectrica (the “Company”), to finance the rehabilitation of the company’s transmission network. The project includes the design and modernisation of a number of substations and transmission lines.

The rehabilitation will improve the energy efficiency of Moldelectrica’s network, will strengthen the stability of power supply and improve the Company’s overall operation, a necessary prerequisite for Moldova’s integration into the European transmission network ENTSO-E.

Transition Impact

The Project will achieve transition impact through the following:

Transfer and dispersion of skills – as part of the Project an international consultant will be put in place to assist the Company’s Project Implementation Unit. The consultant will provide assistance with procurement, disbursement, and compliance with the Bank’s performance standards. The involvement of the consultant will give the Company access to best practices on technical, procurement, and environmental standards.

Market expansion – the Project is part of Moldova’s plan of regional integration of electricity network. Along with the Ukrainian Transmission System Operator, the Company has applied for ENTSO-E membership and synchronisation with the grid. The rehabilitation programme will increase security and efficiency of the transmission network in preparation for ENTSO-E integration.

The Client

The Borrower will be Moldelectrica (the “Company”), a Moldovan state-owned transmission company. Moldelectrica is a state enterprise under the supervision of the Ministry of Economy and Trade (MoE).

EBRD Finance

The EBRD is considering providing a senior loan of up to US$ 21.5 million. It is envisaged that the Project will be co-financed by the EIB, which is also expected to provide up to US$ 21.5 million loan and the European Commission Neighbourhood Investment Facility (NIF) grant financing in the amount of US$ 9 million.

Project Cost

US$ 52 million.

Environmental Impact

The project has been categorised B under the Bank’s 2008 Environmental and Social Policy. Environmental and social due diligence undertaken by an independent consultant showed that adverse future environmental and social impacts associated with the proposed rehabilitation of existing substations and transmission lines will be site-specific and limited, and can be mitigated by adhering to appropriate construction and operation controls. The impacts are mainly construction-related and will be confined to the immediate vicinity of the sites where the transmission line and substation rehabilitation work will take place. Primary impacts will include typical temporary disturbances related to construction works, including erosion, dust, noise, and traffic.

Preventive and mitigation measures have been agreed under the Environmental and Social Action Plan (ESAP) and the implementation of these measures will reduce and control the potential impacts. One transmission line will be extended along an unused corridor and any acquisition of private land or economic displacement of land owners or users will be compensated at full replacement value in accordance with Moldovan law and EBRD requirements. In addition to the measures that guide the Company to carry out the project in accordance with the Bank’s Performance Requirements, the ESAP includes measures to strengthen the Company’s capacity to manage environmental, health and safety and social issues, improve its stakeholder engagement as well as promote electricity safety.

Technical Cooperation

Technical Cooperation of €1.4 million financed through the European Commission Neighbourhood Investment Facility for the project implementation support to the Project Implementation Unit (PIU) to be established within the Company.

 

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