EUR 300 million loan to boost Moldova’s energy security through strategic gas acquisitions

The EBRD is lending 300 million euros to Moldova to strengthen its energy security by acquiring strategic gas reserves to supplement those currently supplied by Russia via Ukraine. The loan is intended to be on-lent to the public energy trader JSC Energocom to supply gas to hubs in the European Union.

The loan will fund up to a fifth of Moldova’s planned gas imports for 2022, which are vulnerable to potential disruption due to the war with Ukraine. Currently, these imports all come from the Russian company Gazprom, under a contract that expires in 2026.

The loan, provided under the Bank’s EUR 2 billion Resilience and Livelihoods Framework for Ukraine and affected neighboring countries, will be split into two tranches. An emergency tranche of EUR 200 million will be used in the event of a supply disruption, while an additional EUR 100 million will be used to create a strategic reserve of gas to be stored in Romania or Ukraine in order to avoid seasonal price spikes and improve energy security.

The objective of the transaction is to ensure an uninterrupted supply of gas to Moldova and safeguard the basic needs and economic livelihoods of 2.7 million Moldovans and refugees from Ukraine.

Gasoline prices hit record highs last year, sparking an energy crisis exacerbated by the war.

Recent progress in the implementation of the EU’s third energy package and the commissioning of a gas interconnector between EU member Romania and Moldova in 2021, which was financed by the EBRD, mean that Moldova now has the technical means to replace the supply of EU hubs in the event of a supply disruption.

“These EBRD projects are a lifeline for Moldova, both by helping to diversify its sources of supply and by allowing the country to import 100% of its energy needs from the EU via the interconnector in summer and up to 60% in summer. winter,” said Matteo Patrone, EBRD Managing Director for Eastern Europe and the Caucasus.

The Moldovan government allowed Energocom to source gas from alternative sources on the spot market by organizing tenders mainly at the borders of the EU and Ukraine.

This allows the EBRD to disburse the loan directly to prequalified European suppliers selected by Energocom and approved by the EBRD in accordance with EBRD procurement rules. The transaction is structured to ensure full transparency and traceability of the loan proceeds.

In 2019, the EBRD entered into an earlier transaction to help Moldova with emergency gas, as transit agreements were being negotiated and were expiring before a new one was in place.

The EBRD is a leading institutional investor in Moldova and to date has invested over EUR 1.5 billion in the country through 154 projects. It has also provided consulting services to more than 1,000 Moldovan companies to help them improve their performance and grow.

Its objective in Moldova is to create an environment that supports private sector activity, to promote European standards in all sectors and regional integration to bring national producers closer to their markets, as well as to develop efficient and that have a direct impact on people’s lives.

About Energocom

Energocom is the successor of the state enterprise “Energocom” whose main activity is the supply of electricity at unregulated tariffs. The main object of the company’s activity is the supply of electricity: import and export of electricity, electricity exchanges with external interconnection partners for the internal electricity balancing market in order to avoid production and consumption imbalances.

Since July 2014, ‘Energocom’ has obtained the energy regulation license for the supply of natural gas at unregulated tariffs.

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