The EBRD is providing a sovereign loan of EUR 76.5 million to the Government of Moldova, on-lent to Calea Ferata din Moldova (CFM, the national railway operator) to finance (i) the acquisition of new multi-purpose locomotives to offer a higher level of service quality, safety and energy efficiency benefits and (ii) the rehabilitation of priority rail infrastructure investments and related supervision services. Out of the total EUR 76.5 million EUR 52.5 million was signed on 14 November 2014 and EUR 24 million is pending approval and signature.
The objectives of the proposed Project are to upgrade CFM's rolling stock, rehabilitate priority rail infrastructure and support the railway restructuring reform process that will be achieved through:
(a) acquisition of new locomotives to offer a higher level of service quality, safety and energy efficiency benefits;
(b) priority investments in rail infrastructure and related design and supervision services;
(c) providing support to institutional reform to improve transparency and accountability, as well as financial sustainability;
(d) providing support for the initial planning and implementation stages of a phased retrenchment programme; and
(e) providing sustainability support by improving environmental and health and safety aspects, and applying energy efficient technologies and standards and encouraging lower emission modes to reduce energy consumption.
ETI score: 80
Transition impact would stem from support by the EBRD of the Government of Moldova and CFM's efforts to reform the railway sector, through:
- formalising CFM's restructuring plan to improve the financial performance and sustainability of the railway;
- the separation of the freight, passenger, and infrastructure businesses, and improving cost recovery; and
- reduction of energy consumption/costs following a dedicated energy efficiency audit of CFM. CFM is one of the largest energy consumers in Moldova so energy efficiency measures will have a considerable demonstration effect among the main energy users in the country.
The loan will be made to the Government of Moldova with CFM as the end beneficiary.
EBRD Finance Summary
Sovereign loan, tranched
Total Project Cost
The project also benefits from an investment grant provided by the Neighbourhood Investment Facility of the European Commission for the acquisition of locomotives in the amount of EUR 5 million.
The project is co-financed with the European Investment Bank.
Project additionality derives from financing structure and policy / regulatory changes linked to TI objectives. EBRD provides access to financing that is not available in the market from commercial sources on reasonable terms and conditions, with a longer tenor the n available to the client and large amounts. Through the Project the Bank will promote the railway sector reform by supporting the Government to restructure the CFM through its corporatisation and separation of the freight, passenger, and infrastructure businesses, introduction of Public Service Obligation to improve the financial performance and sustainability as well as corporate governance of the railway. Following the energy audit provided by the Bank CFM is implementing an Energy Efficiency Action Plan, which includes new procedures for energy monitoring and modern Energy Management Information System.
Environmental and Social Summary
Categorised B. Environmental and social due diligence comprised a corporate environmental, health and safety (EHS) audit of CFM and an audit of CFM's Human Resources (HR) capacity, systems and current retrenchment planning. As part of the restructuring programme, the Bank provided technical cooperation support for the development of a corporate EHS system based on ISO 14001 and OHSAS 18001 standards. The introduction of new locomotives is expected to result in improved fuel efficiency, reduced pollution and better safety compared with the existing fleet. The infrastructure rehabilitation will involve the replacement of track and ballast within the existing corridor. The associated environmental and social impacts can be addressed through appropriate contractor management and stakeholder engagement. An Environmental and Social Action Plan has been agreed with CFM for each investment component in line with EBRD requirements. It requires CFM, amongst other things to carry out the refurbishment of the Diesel Multiple Units in line with EU EHS standards, develop and implement an Environmental Management System and develop a stakeholder grievance mechanism.
Technical Cooperation and Grant Financing
The EBRD supports the preparation of railway reform strategies by mobilising technical cooperation funding for consulting services, as follows:
- Restructuring Support - EUR 650,000 (EBRD Shareholder Special Fund);
- Assistance in preparation and implementation of tender - EUR 250,000 (Central European Initiative);
- Capacity Building on Energy Efficiency Management - EUR 220,000 (the Czech Official Development Assistance Fund);
- Environmental, Health and Safety Management Support and Capacity Building - EUR 73,000 (Central European Initiative);
- Retrenchment Planning - EUR 65,000 (EBRD Shareholder Special Fund).
An implementation of an energy management information system is co-funded through the EBRD Shareholder Special Fund.
Company Contact Information
48, Vlaicu Pircalab str., Chisinau, Republic of Moldova, MD-2012
PSD last updated
13 Nov 2020
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