UF Moldova Distribution Company

completed

The Project involves making a US$ 25 million loan to three electricity distribution companies (the Borrowers) in Moldova: Retelele Electrice Municipiu Chisinau (RE Chisinau); Retelele Electrice de Distributie Centru (RED Centru); and Retelele Electrice de Distributie Sud (RED Sud). These companies were privatized in early 2000 and Union Fenosa ACEX of Spain (the Sponsor) was selected as the new owner as a result of an international competitive tender process. The Government of Moldova has made the reform of the power sector a high priority. The basis for the reform is a new energy law that came into effect in 1999. The law sets the stage for the transformation of the sector from a vertically integrated structure into an unbundled structure with various private generators and distributors. The transmission system is expected to remain in government hands. The sector will be regulated by an independent entity that was set up in 1999 under the guidance of the World Bank.The Project involves: (a) rehabilitating existing fixed assets to increase reliability and reduce technical losses; (b) improving billing, metering and internal control systems to increase collections and reduce non-technical losses; and (c) providing working capital requirements. The Project includes the capital investment programs of the Borrowers. The total estimated Project cost is US$ 132 million over a five year period, of which US$78 million is for the five-year investment program and the remaining US$54 million is for working capital and other financing requirements. IFC and EBRD plan to finance US$ 25 million each with the balance provided by the borrowers and Union Fenosa.