Energy Community of South East Europe Project (ECSEE APL #1)

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A strategy paper for energy trade in South East Europe outlines the Bank's vision for regional energy market development, and defines its role in supporting the evolution of regional energy trade. The framework elaborates the Bank's role in supporting policy reform, institutional development, and lending for power generation, transmission, distribution. Within this framework, the Regional Energy Community of South East Europe Program will: a) Create a stable regulatory and market framework to attract investments to the region in gas, and power network systems; b) ensure the integration of regional markets in South East Europe; c) enhance the energy security of supply to South East Europe and the European Union, providing incentives to connect the Balkans to Caspian, and North African gas reserves; and, d) improve the environmental situation in relation to energy in the region. Under the Program, this project will finance the rehabilitation of the Lotru station, having Romania/Hidroelectrica been awarded the main rehabilitation contract for the Lotru Hydro Project in the country. Romania's transmission system operator (TSO) Transelectrica, uses the ancillary services made available by Hidroelectrica from its Lotru station, operating with a regional approach in power system operations. Romania's market operator - OPCOM - operates a functioning electricity market, with an increasingly regional approach. Hidroelectrica will monitor and evaluate project implementation on a regular basis, including achievement of the objectives, and should submit quarterly progress reports. The project however, triggers operational safeguards, both on the environment, and on international waterways aspects. Project design and environmental safeguards will be ensured through project implementation, while concerning issues on international waterways the project is on the Lotru River, which flows into the Olt River, in turn into the Danube on the border between Romania and Bulgaria, before reaching the Black Sea. Nonetheless, an exemption has been granted, because the Lotru Project does not involve works and activities that would exceed the original scheme, change its nature, or alter and expand its scope and extent, to make it appear a new or different scheme.