MOLDOVA ELECTRICITY MODERNISATION

Promoter – Financial Intermediary

ICS PREMIER ENERGY DISTRIBUTION SA

Location

• Moldova

Description

The project will finance the regulated investment programme of a private electricity distribution company in Moldova. It will be implemented in the period 2022-2025.

Additionality and Impact

The 4-year investment programme to modernise the electricity distribution network is needed to meet the regulatory requirements and to replace ageing assets that have exceeded their economic lifetime and no longer meet required standards. The Programme will ensure the continuity of service, improve the quality and reliability of electricity distribution. Metering and telecommunication devices will increase digitisation. The quality of the Programme is reinforced by its contribution to the economic activity in a lower-middle income country. On this basis, it is deemed to deliver very good economic benefits and good social benefits. The outcomes expected from the project are aligned with EU and EIB policy priorities as well as the country's updated National Energy Strategy 2030. 

The Promoter is an experienced operator of electricity distribution networks with a sound project management structure.

EIB financing will have significant impact in terms of steering and accelerating investment to productive use. Limited access to (affordable) finance remains an obstacle to large-scale investments in Moldova, where local and foreign banks remain restricted in their long-term foreign currency lending capabilities and other sources of long-term financing remain expensive. In addition, the Bank, together with EBRD, has provided technical and environmental expertise enhanced by external consultants for the project, which establishes technical, environmental and social requirements in line with international best practices and EU standards.

Objectives

The Programme aims to improve the quality and reliability of electricity distribution, ensure the continuity of service, cater for new system users and improve the overall efficiency of the distribution system operator. Additionally, the new meters will increase digitalisation.

Comments

The European Bank for Reconstruction and Development ("EBRD") will co-finance the Project by a parallel loan from for an equal amount of USD 30 million.

Sector(s)

• Energy - Electricity, gas, steam and air conditioning supply

Proposed EIB finance (Approximate amount)

USD 30 million (EUR 29 million)

Total cost (Approximate amount)

USD 60 million (EUR 58 million)

Environmental aspects

The Project concerns electricity distribution schemes, including power lines with voltage levels up to 110 kV. Some lines would usually fall under Annex II of the Environmental Impact Assessment Directive (EIA) 2014/52/EU, amending the EIA Directive 2011/92/EU, which requires the competent national authority to determine the need for an EIA. According to the national regulations, only the new transmission lines with a voltage over 220 kV (maximum voltage level of the installations owned by the Promoter is 110 kV) and a minimum length of 15 km are subject to an EIA. Based on the information provided by the promoter, most of the components of the company's capex programme are related to the modernisation and digitalisation of the electricity distribution grid. Due to their characteristics and size and according to the relevant national legislation, the projects are not likely to have significant effects on environment and therefore, will not be subject to EIA. As the investment scope is reviewed and approved every year by the regulator, some of the components might change and might be subject to EIA. In such cases, the company will require and verify the EIA decisions to be made public according to the relevant national legislation on environment, which also establishes the process of communication, consultation and public debate.

Procurement

The promoter has to ensure that the project is implemented in line with the EIB's Guide to Procurement.

Status

Signed - 3/03/2023