EBRD: Moldova Romania Power Interconnection Phase II

Project Description   Up to EUR 33.3 million sovereign loan to the Republic of Moldova, to be on-lent to Moldelectrica, for the (i) construction of a high-voltage electricity transmission line between the city of Balti on the Moldovan territory and the Romanian border, (ii) construction of Balti 400kV substation, (iii) rehabilitation of the existing domestic power transmission network of Moldova, and (iv) refinancing of the outstanding balance under the existing Moldova Romania Power Interconnection Phase I project after the cancellation of the unutilised portion of that loan (collectively, the "Project").   Total Project cost of EUR 81.3m will be co-financed by a parallel loan from the European Investment Bank ("EIB") of EUR 32 million and the EUR 16 million EU Neighbourhood Investment Platform ("EU NIP") grant. The EU NIP grant will be repurposed from the larger grant approved under the EBRD's Moldova Romania Power Interconnection Phase I following the cancellation of the undrawn amounts under the project.   Project Objectives   The Project will improve the energy security for Moldova by accelerating the ongoing integration with ENTSO-E and accelerate the development of regional integration as Moldova will introduce a new route for electricity exchange, potentially earning transit fees from transactions between Romania and Ukraine through constructing a new interconnection line with Romania. The Project will also lead to a reduction of losses in the electricity transmission network and increase the reliability of electricity supply through replacing and modernising the conceptually and physically outdated equipment.   Additionally, the Project will require the Republic of Moldova to continue implementing the Power Sector Reform Action Plan ("PowerSAP"), originally developed under the Moldova Romania Power Interconnection Phase I project and agreed in close collaboration among EBRD, European Union, European Investment Bank, World Bank, Energy Community Secretariat and the Republic of Moldova, to introduce a comprehensive reform package to implement EU Third Energy Package in Moldova's electricity market.   Transition Impact ETI score: 77 ETI Score: 77 Resilient / Integrated. Client Information MOLDOVA SOVEREIGN The Borrower is the Republic of Moldova, represented by the Ministry of Finance. The proceeds of the loan will be on-lent to Moldelectrica, a fully state-owned transmission system operator in Moldova under the supervision of the Ministry of Energy.   EBRD Finance Summary EUR 33,300,000.00 Total Project Cost EUR 81,300,000.00   Additionality EBRD offers financing, structure and tenor not available from commercial sources. EBRD's presence will mitigate non-financial risks at the time of an energy crisis exacerbated by ongoing geopolitical conflicts. EBRD will support further implementation of the energy sector reforms.   Environmental and Social Summary   Category A (ESP 2019). The construction of a 400kV overhead transmission line (OHL) between the city of Balti in the northern part of Moldova and the Romanian border requires a comprehensive Environmental and Social Impact Assessment (ESIA) including public consultation and disclosure for a minimum of 120 days.   The Project is located in the northern part of Moldova, in an area of relatively low topographic relief.  Land use in the area is mainly rural and agricultural, although in the western portions of the site there are wetlands.  Several alternative routes were reviewed considering technical, economical, social, cultural resources and environmental factors.    The central route was selected as this route minimised impacts on land use and to local populations while also minimising impacts to protected areas and biodiversity.  The selected route maximises use of existing infrastructure and borders of agricultural fields.  The route runs from the back to back (BtB) station located in Balti, Moldova and runs roughly westward to the border with Romania and will include 157 towers for overhead power lines.  The majority of these towers will be located in agricultural lands, with only one tower located in a forested area.  The route was selected to ensure that there are no residential units within the safety zone of the power lines and there is no physical displacement associated with the Project.  After construction all existing land use can continue beneath the lines and within the safety zone. A comprehensive set of management plans have been developed setting forth the actions that are to be implemented to avoid, minimise and mitigate potential impacts associated with construction and operation of the Project.  The towers will be designed to avoid electrocution to birds and to minimise collision risks, including diverters in high risk areas.    The Project cannot reasonably avoid all protected areas due to the extended protected areas along the Prut River marking the Romanian/Moldovan border.  While the Project has been designed to minimise length in protected areas, it is indeed expected to cross the Padurea Domneasca.  The exact locations for towers within this protected area will be selected with management of the protected area prior to construction, and the management of the protected area has agreed that the Project can be installed within the protected area without compromising the conservation objectives of the protected area.   Moldelectrica understand that one of the main risks on the Project will be adequate contractor management, and have prepared a detailed Environmental and Social Management and Monitoring Plan to help organise contractor management and to set forth the responsibilities of all parties.  A Project Implementation Unit will be established and will employ environmental, social, safety and community specialists.    An independent environmental and social consultant will be retained to monitor the Project two time per year during construction and up to once per year during operation, for the life of the loan.    The Project Environmental and Social Impact Assessment (ESIA) disclosure package was uploaded on the EBRD website on 22 May 2023.   (Source: https://www.ebrd.com/work-with-us/projects/esia/moldova-romania-power-interconnection-phase-ii.html)