The EBRD is lending Moldova EUR 300 million to boost its energy security by acquiring strategic gas reserves to supplement those currently provided by Russia through Ukraine. The loan is for on-lending to the state-owned energy trader JSC Energocom to procure gas on European Union hubs.
The loan will finance up to one-fifth of Moldova’s planned gas imports for 2022, which are vulnerable to potential interruption as a result of the war on Ukraine. Currently these imports all come from the Russian company Gazprom, under a contract that expires in 2026.
The loan, made under the Bank’s EUR 2 billion Resilience and Livelihoods Framework supporting Ukraine and neighbouring affected countries, will be divided into two tranches. A EUR 200 million emergency tranche will be used in case of supply disruption, while a further EUR 100 million will be used to create a strategic gas reserve to be stored in Romania or Ukraine to avoid seasonal price spikes and improve energy security.
The aim of the transaction is to ensure uninterrupted gas supply in Moldova and safeguard the basic needs and economic livelihoods of 2.7 million Moldovans and refugees from Ukraine.
Gas prices have reached record highs in the past year, prompting an energy crisis exacerbated by the war.
Recent progress in implementing 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, means Moldova now has the technical wherewithal to substitute provision from EU hubs in case of supply disruption.
“These EBRD projects give a lifeline for Moldova, both by helping to diversify its supply sources and by making it possible for the country to import 100 per cent of its energy needs from the EU via the interconnector in summer and up to 60 per cent in winter,” said Matteo Patrone, the EBRD’s Managing Director, Eastern Europe and the Caucasus.
The Moldovan government has authorised Energocom to procure gas from alternative sources on the spot market by running tenders mainly on the EU and Ukrainian borders.
This enables the EBRD to disburse the loan directly to pre-qualified EU suppliers selected by Energocom and agreed by the EBRD in line with EBRD procurement rules. The transaction is structured to ensure full transparency and traceability of loan proceeds.
In 2019, the EBRD agreed an earlier transaction to help Moldova with emergency gas because transit arrangements were under negotiation and ran to expiry before a new agreement was put in place.
The EBRD is a leading institutional investor in Moldova and, to date, has invested more than EUR 1.5 billion in the country through 154 projects. It has also provided advisory services to more than 1,000 Moldovan firms to help them improve performance and grow.
Its focus in Moldova is on creating an environment that supports private sector activity, promoting European standards across sectors and regional integration to bring domestic producers closer to their markets, as well as developing efficient and sustainable public utilities which have a direct impact on people’s lives.
Energocom is the successor of ‘Energocom’ State enterprise with main activity – the supply of electricity at unregulated tariffs. The main object of activity of the company 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.
Starting from July 2014, ‘Energocom’ obtained the Energy Regulatory License for the supply of natural gas at unregulated tariffs.