E.ON Romania S.R.L

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The project is a purchase of a minority equity stake in a Romanian holding company from E.ON Ruhrgas Group, the indirect owner of 51% of the shares in E.ON Gaz Romania, a gas distribution company supplying northern Romania. Through this transaction EBRD shall have an indirect 5% stake in E.ON Gaz Romania (formerly Distrigaz Nord), the operating company which was privatised to E.ON Ruhrgas Group in June 2005 through a transparent, public, international, and competitive tender. The objective of the project is to support and facilitate the efforts made by E.ON Ruhrgas Group to realise technical and operational improvements to develop best international practices (including all necessary measures in respect to restructuring and improvements of the local business) over time in the operating company. The Government of Romania pre-approved EBRD as a permitted transferee to which investors interested in the privatisation of the gas distribution companies could sell shares. The indirect participation of EBRD in E.ON Gaz Romania S.A. would therefore be in accordance with the terms and conditions set forth in the privatisation agreements between the Government of Romania and the E.ON Ruhrgas Group. Bank's potential participation will support the on-going privatisation, liberalisation and modernisation of the gas sector in Romania, in line with the EU directives on Gas and with the South East Europe Regional Energy Market. Specifically the Bank will: support private participation in gas distribution sector; support the establishment of a transparent tariff methodology, based on pass-through of unavoidable costs, fair return on invested capital, and adequate incentives to improve operational efficiency and its monitoring; provide a degree of support against regulatory risk; facilitate modernisation of assets and improvements in operational and financial efficiency of distribution companies; indirectly, catalyse competition and further private participation in the gas industry. The gas distribution company E.ON Gaz Romania S.A. is based in Targu Mures and supplies 1.2 million customers in the northern part of the country. This transaction involves the purchase of 9.8% equity stake in E.ON Gaz Romania Holding, established by E.ON Ruhrgas Group to hold 51 % of E.ON Gaz Romania – the balance of 49% ownership is held by the Government of Romania. Approximately EUR 33 million. The project was screened C/1 requiring an environmental audit of the two existing distribution networks and facilities to identify the current environmental, health and safety policy and practices and potential environmental, health and safety liabilities. The environmental due diligence will (i) review existing pre-privatisation audits and other environmental data (ii) address corporate environmental, health and safety issues (iii) review selected facilities to identify potential liabilities (iv) establish the current status of compliance with Romanian and EU environmental health, safety and public consultations requirements. There are likely to be considerable environmental opportunities associated with this project given the environmental experience and track record of the investors. None. Georg Friedrich Rosenstock Regional Manager Central/East European Shareholdings E.ON Ruhrgas International AG Email: georg.rosenstock@eon-ruhrgas-international.com