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| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. |
Summary of Project Information (SPI) |
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| Project number | 10113 |
| Project name | UF Moldova Distribution Company |
| Country | Moldova |
| Sector | Utilities |
| Department | Infrastructure |
| Company name | RED Chisinau, RED Centru & RED Sud |
| Environmental category | B |
| Date SPI disclosed | October 17, 2000 |
| Projected board date | November 16, 2000 |
| Status | Active |
| Previous Events | Invested: February 6, 2002
Signed: November 19, 2001
Approved: December 20, 2000 |
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| Project sponsor and major shareholders of project company |
| The project sponsor is Unión Fenosa Desarollo y Acción Exterior, S.A. ("UFACEX"). UFACEX, a wholly owned subsidiary of the the Union Fenosa Group of Spain, manages the international operations of Union Fenosa. Union Fenosa is the second largest private-sector electric utility in Spain. |
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| Total project cost and proposed IFC investment |
| The total project cost is estimated at $132 million. The proposed investment is a $25 Million A Loan for IFC's own account. |
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| Location of project and description of site |
| The Project involves three electricity distribution companies: "Retelele Electrice Chisinau" S.A., "Retelele Electrice Centru" S.A., and "Retelele Electrice Sud" S.A. Headquartered in the capital city of Chisinãu, the three companies supply electricity to the Central and Southern areas of Moldova. |
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| Description of company and purpose of project |
The project involves making a $25 million loan on IFC's own account to three electricity distribution companies in Moldova. These companies were privatized in early 2000 and UFACEX 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 $132 million over a five year period, of which $78 million is for the five-year investment program and the remaining $54 million is for working capital and other financing requirements. IFC and the European Bank for Reconstruction and Development (EBRD) plan to finance $25 million each with the balance provided by the borrowers and UFACEX. Thereby, IFC and EBRD are providing long-term financing currently unavailable in Moldova due to the transitional nature of the economy while, also, encouraging much needed foreign direct investment in Moldova.
The project’s beneficial impacts are:
(i) Better cost efficiency due to a significant reduction in technical and commercial electricity loss;
(ii) Improved service to the consumer as a result of a reduction in supply outages; and
(iii) A beneficial impact on the balance of payments as the need for electricity imports is reduced due to reduction in losses. |
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| Environmental and social issues - Category B |
This is a category B project, according to IFC's Procedure for Environmental and Social Review of Projects because (i) a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria, and rather (ii) positive environmental impacts are expected due to reduction of technical distribution losses and implementation of environmental actions. The review of the Project consisted of appraising technical, environmental and social information submitted by Union Fenosa, including "Environmental Due Diligence" report prepared for EBRD by KMPG Russia, dated September 1999.
To view the environmental documents for this project, click here
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| Location of environmental documents in locally affected community |
"Retelele Electrice Chisinau" S.A.
str. A.Doga 4,
mun. Chisinau
MD 2024
Republic of Moldova
"Retelele Electrice Centru" S.A.
str. Luceafarul 13
or. Vatra, Sud Chisinau
MD 2055
Republic of Moldova
"Retelele Electrice Sud" S.A.
str. Lenin 56
or. Comrat
MD 3800
Republic of Moldova |
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| To contact the project company, please write to: |
Adil Marghub, Investment Officer
Power Department
International Finance Corporation
email: amarghub@ifc.org |
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