Post-Privatisation Power Distribution Loan

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The proposed EBRD financing consists of a loan to three power distribution companies owned by a strategic investor, Union Fenosa Internacional of Spain (UFISA), and located in Chisinau and the central and southern regions of Moldova. The financing will enable the companies to renovate, modernise and provide working capital for their power distribution networks with the aim to reduce losses, increase collections and increase reliability and efficiency of electricity distribution in their respective service areas. The project supports the continuing privatisation of the electricity sector in Moldova and the development of management know-how and technology, which should lead to collection and performance improvements. S.A. Retele Electrice Municipiu Chisinau, S.A. Retele Electrice de Distributie Centru, and Retele Electrice de Distributie Sud (the companies), three electricity distribution companies recently privatised to Spanish sponsor UFISA and incorporated in Moldova. UFASA (Spain), the sponsor, is a wholly owned subsidiary of Union Electrica Fenosa S.A., a major private Spanish utility with electricity distribution experience in emerging markets. US$ 25.0 million loan to the companies (€30.2 million). The IFC is also proposing to a make a US$ 25.0 million loan. US$ 78.0 million (€94.2 million). The project was screened C/1, requiring an environmental audit of the three regional electricity distribution companies (REDs). The audit, carried out by independent consultants, did not reveal any major environmental, health and safety concerns. The issues identified included possible PCB use, safety upgrades of the sites, improvements to fuel storage areas, hazardous waste handling and "housekeeping". Measures have been included in Environmental Action Plans (EAPs) for the REDs to address these issues. In addition, recommendations were made regarding general environmental management at the REDs. The EAPs have been agreed with UFISA. The project offers the opportunity to steer the companies towards environmental management practices in line with western standards. This includes, over and above compliance issues, improved resource use, energy efficiency at facilities, reduction of distribution losses and improved materials and waste management. The implementation of the project would result in the reduction of carbon dioxide emissions by approximately 30,000 tons per annum after 2005. None.