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Investment to help diversify Republic of Moldova’s electricity supply
In a joint effort to strengthen the Republic of Moldova’s (Moldova) energy security, the European Union (EU), the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and the World Bank are providing a EUR 270m package to finance a permanent interconnection between the electrical networks of Moldova and Romania.
This interconnection is of critical importance for the diversification of Moldova’s electricity resources. At the moment, the country depends on a single plant fuelled by natural gas, oil and coal and electricity imports from Ukraine for up to 80% of its supplies. The link to the Romanian electrical network will considerably enhance the stability and reliability of its power supply - a prerequisite for the country’s economic development.
Diversification of electricity resources will open up Moldova’s electricity market to increased competition, with the enhanced access to the European market generating economic benefits for both companies and citizens. The project will ultimately pave the way towards Moldova’s integration into the European electricity grid, ENTSO-E.
The package includes EIB and EBRD loans of EUR 80m each, a EUR 70m loan from the World Bank and a EUR 40m investment grant from EU funds.
The investment covers the construction of a new 400 kV high-voltage overhead line between Vulcanesti, in the south of Moldova, and the capital Chisinau, the upgrading and expansion of the substations in Chisinau and Vulcanesti and the construction of a 600 MW back-to-back converter substation in Vulcanesti.
The interconnections will be built by Moldova’s public electricity utility Moldelectrica over three years, between 2019 and 2022.
Deputy Prime Minister of Moldova Octavian Calmic said: "The implementation of investment projects to develop the electricity interconnection between Moldova and Romania is a strategic objective aimed at achieving a more efficient and competitive energy system that will ensure the country’s energy security, the modernisation of existing energy infrastructure and integration into the EU energy market. Not only will this project provide a higher level of energy security, it will also contribute to competitive prices on the domestic electricity market, permanent access to the regional electricity market and, as a result, an energy price that is less burdensome for consumers."
EU Ambassador to the Republic of Moldova Peter Michalko stated during the event: “The partnership between the EU, the EBRD, the EIB and the World Bank in support of this project will increase competitiveness on the energy market for the benefit of the citizens of the Republic of Moldova."
EIB Vice-President Alexander Stubb commented: “This project shows how the EU bank is helping to open borders and build bridges between the Eastern Neighbourhood and the EU market. Safe and diverse energy supplies are key factors enabling the Moldovan economy to develop further.”
EBRD Director for Power and Energy Harry Boyd-Carpenter added: “The project is a game changer for Moldova's energy security. It will introduce genuine competition for the existing sources of electricity by allowing Moldova to access supplies from Romania and, through Romania, the wider region. The project is a first step in the process of integrating Moldova into the European electricity market. Greater regional interconnection is also critical in allowing for the absorption of ever-greater quantities of intermittent renewable energy.”
World Bank Country Manager for Moldova Anna Akhalkatsi said: “The Word Bank Group welcomes the launch of this crucially important project which will contribute to the strengthening and diversification of Moldova’s critical infrastructure, but above all will ensure that the citizens of Moldova will have a stable and secure energy supply.”
EU assistance to the Republic of Moldova supports the objectives of the Association Agreement. It is linked to the country's reform commitments under the Association Agreement and aims at improving the quality of life of ordinary Moldovans in a tangible and visible manner, strengthening the rule of law, as well as improving the business climate, with a view to reaping the benefits of the DCFTA, and supporting greater connectivity between the Republic of Moldova and the EU in the areas of energy and transport.
The European Investment Bank (EIB) is the European Union's bank. It is the long-term lending institution of the EU and is the only bank owned by and representing the interests of the European Union Member States. It makes long-term finance available for sound investments in order to contribute towards EU policy goals. The EIB works closely with other EU institutions to implement EU policy.
As the largest multilateral borrower and lender by volume, the EIB provides finance and expertise for sound and sustainable investment projects which contribute to furthering EU policy objectives. More than 90% of EIB activity is focused on Europe but it also supports the EU's external and development policies.
The EIB finances projects in Moldova on the basis of the EU External Lending Mandate. This mandate provides the EIB with a guarantee covered by the EU Budget for projects of significant interest to the EU and its Eastern Neighbours in the areas of social and economic infrastructure, local private sector development and climate action. Since the launch of EIB lending operations in Moldova, the Bank has made lending commitments in the country amounting to some EUR 800 million, including the current project.
Dušan Ondrejička, email@example.com, tel.: +352 4379 83334/mobile: +352 621 459 234
The EBRD is a multilateral bank that promotes the development of the private sector and entrepreneurial initiative in 37 economies across three continents. The Bank is owned by 66 countries as well as the EU and the EIB. EBRD investments are aimed at making the economies in its regions competitive, inclusive, well-governed, green, and integrated.
The EBRD is the largest institutional investor in Moldova. Since the start of its operations in the country, it has invested over EUR 1.1bn in almost 120 projects in Moldova’s financial, agribusiness, energy, infrastructure and manufacturing sectors.
Olga Rosca, firstname.lastname@example.org, tel.: +44 2073388163/mobile: ++44 7881014095
Since Moldova joined the World Bank in 1992, over USD 1bn has been allocated to more than 60 operations in the country. Currently, the World Bank portfolio includes nine active projects with a total commitment of USD 358.5m. Areas of support include regulatory reform and business development, tax administration, education, roads, healthcare, agriculture, climate adaptation, and others.
The IFC’s committed portfolio in Moldova is USD 53.8m (USD 50.9m outstanding), consisting of 95% loans and 5% equity. The Multilateral Investment Guarantee Agency has provided guarantees totalling USD 95m. Both institutions are members of the World Bank Group.