Moldova Romania Power Interconnection Phase I

Location:

Moldova

Project number:

47087

Business sector:

Energy

Notice type:

Public

Environmental category:

A

Target board date:

29 Nov 2017

Status:

Signed

PSD disclosed:

27 Jul 2017

Translated version of this PSD: Romanian

Project Description

Provision of an up to EUR 80 million senior loan to the Republic of Moldova ("RoM") to be onlent to Moldelectrica IS ("Moldelectrica" or the "Company"), the 100% state-owned single power transmission system operator in Moldova for the construction, equipment and placing into operation of: (i) a back-to-back High Voltage DC (HVDC) converter substation in Vulcanesti to allow the connection between the electricity systems of Romania and Moldova, namely the European Network of Transmission System Operators of Electricity (ENTSO-E) and the Integrated Power System/United Power System (IPS/UPS); (ii) a 400kV transmission line between Vulcanesti and Chisinau (to be financed by WB); iii) the extension of the substation in Chisinau in Moldova and (iv) the extension of the Vulcanesti 400kV substation (together, the "Project"). The transaction is part of an up to EUR 270 million financing package to be provided jointly with the European Investment Bank, the World Bank and the European Commission Neighbourhood Investment Facility.

Project Objectives

Moldova imports ca 80% of its electricity needs. The project aims at assisting Moldova to diversify its supply of electricity and strengthen the domestic transmission network, in particular in order to allow for integration with the ENTSO-E network in the long run.

Transition Impact

Moderate Good

The project's transition impact is expected to stem from the following 2 main transition qualities:

1. Integrated: The project will enable Moldova to import additional energy from the ENTSOE network. This will considerably enhance stability and reliability of power supply that are prerequisites for private sector development. This will in turn contribute to the long-term sustainability and security of the Moldovan power sector. The project will also enable Moldova to enhance its cooperation with Romania and ENTSO-E countries, allowing more regional integration;

2. Resilient: Support for institutions, laws and policies that promote market functioning and efficiency through the establishment of inter-governmental regulations between Moldova and Romania in order to set the rules of utilisation of the interconnection. This will also serve as a starting point for Moldova to prepare for the ENTSO-E integration in terms of regulatory practices. EBRD is working with other international financial institutions to introduce a reform in the sector that will assist in the liberalisation the market and strengthen the independence of regulation.

Client Information

MOLDOVA SOVEREIGN

The Borrower of record will be the Republic of Moldova, represented by the Ministry of Finance, which will on-lend the funds to Moldelectrica as Project Executing Agency ("PEA") and beneficiary of the loan.

Moldelectrica is the state-owned transmission operator in Moldova. It was created as a result of the unbundling of the generation, distribution and transmission assets of the state-owned company "Moldenergo" into three separate companies in 1997 and from the reorganisation of unbundled company "Moldtranselectro" in 2000. The Company's key function is the transmission of electric energy and the operation of the transmission network in Moldova. It is registered as a State
Enterprise.

EBRD Finance Summary

EUR 80,000,000.00

EUR 80,000,000.00

Total Project Cost

EUR 270,000,000.00

EUR 270,000,000.00

Environmental and Social Summary

Category A (ESP 2014). The 158km long 400kV overhead transmission line (OHL) between Chiiiniu and Vulcanesii and associated infrastructure will be constructed in Moldova by the state enterprise Moldelectrica. The construction of a high-voltage transmission lines falls under Appendix 2 of the Bank's Environmental and Social Policy, requiring an Environmental and Social Impact Assessment (ESIA) and public consultations prior to the Bank's Board consideration of the project.

An independent consultant has been retained by the Bank to undertake an ESIA of the Project in line with the best international practice and relevant EBRD Performance Requirements (PRs). A fit for purpose ESIA disclosure package, including the ESIA report, Environmental and Social Management and Monitoring Plan (ESMMP), Non-Technical Summary (NTS), Stakeholder Engagement Plan (SEP) and Land Acquisition and Compensation Framework (LACF), and has been disclosed by Moldelectrica, Ministry of Environment of the Republic of Moldova and EBRD on 28 July 2017.

During the 120 days disclosure period the comments to the ESIA are received in writing and public consultations are carried out in the locations identified in the SEP.

Overall the ESIA confirmed that the Project's environmental and social impacts will be site-specific and can be mitigated through the implementation of the Environmental and Social Management and Monitoring Plan (ESMMP) and corporate Environmental and Social Action Plan (ESAP).

The ESIA assessed three alternative OHL routes based on technical (length of line, number of towers, soil conditions, etc.), environmental (crossings of protected areas, rivers, forests, soil type, etc.), socio-economic (location of villages, land use, etc.), and cultural (archaeological sites, monuments, etc.) factors among others. The final route was selected as the one that minimised impacts on land use and disturbance to local populations as well as reduced impact on protected areas. As much as possible, the route will run alongside other existing linear features such as roads, other public infrastructure sites, and the borders of agricultural fields. It should be noted that at the detailed design stage, the tower locations can be adjusted taking into account standard design level surveys and land acquisition plan implementation.

In summary, the project's potential environmental and social impacts are the following:

  • Dust from construction activities and air emissions from engines;
  • Noise and vibration from construction and traffic, and possibly a humming noise from the operating transmission line in wet weather conditions;
  • Exposure of people to electromagnetic fields (EMF);
  • Contamination of surface water and/or groundwater;
  • Erosion and sedimentation (loss of topsoil, water pollution, etc.);
  • Risks to workers from hazardous work conditions;
  • Risks to local people and communities from site hazards and traffic;
  • Disruption of local communities due to in-migration of workers;
  • Physical and/or economic displacement of people;
  • Damage to protected areas and/or biodiversity;
  • Risk of injury or death for migrating and resident birds.

These potential impacts can be avoided, controlled, or otherwise reduced to acceptable levels by the implementation of specific mitigation measures that are detailed in the ESIA and ESMMP. The construction contractor will be required to implement all the relevant measures outlined in the ESIA.

The Bank will monitor the implementation of the Project.

There is an Environmental and Social Impact Assessment available for this project.

Technical Cooperation

Feasibility Study, consisting of full financial, technical and environmental due diligence of the Project.

Cost of the TC assignment is EUR 1,179,000, financed by the Bank's Shareholder Special Fund (SSF).

Company Contact Information

Octavian Ciobirca
octavian.ciobirca@moldelectrica.md
+373 22 253 548
Moldelectrica, 78, V. Alecsandri Str., Chisinau, Republic of Moldova

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