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EBRD extends financing for Moldova’s gas reserves

The European Bank for Reconstruction and Development (EBRD) announced on Tuesday (17 October) that it is extending its finance for Moldova to acquire strategic gas reserves with a new a 199 million-euro package, which includes a 165 million-euro loan and a 34 million-euro grant from Norway.

The extension now brings the total EBRD-led finance for Moldova’s gas procurement since the start of the Russian invasion of Ukraine to almost 500 million euros.

The loan and grant to Moldova are for on-lending to state-owned energy trader JSC Energocom to procure gas on EU hubs. The loan element was signed on Tuesday by Mark Bowman, EBRD’s Vice President for Policy and Partnerships, and Victor Parlicov, Moldova’s Minister of Energy.

An initial 300 million-euro revolving facility in 2022 enabled Moldova to diversify its gas supply, meeting around 20 per cent of demand last winter with supplies from the EU, an increase from less than five per cent in 2021.

Moldova’s gas imports previously came from Russian state-owned energy company Gazprom, with which it has a contract until 2026, but which are vulnerable to potential interruption as a result of the war in Ukraine, the EBRD said in a press release.

Increasing EBRD financing now is expected to facilitate the import share of natural gas from Europe up to at least 75 per cent next winter.

Natural gas makes up under a third of Moldova’s energy consumption mix, with 70 per cent of the country’s gas used in district heating for its 2.7 million citizens and around 100,000 Ukrainian refugees who have taken up permanent residence there since the Russian invasion of Ukraine in February 2022.

Announced last year amidst the energy crisis, the loan was made under the EBRD’s two billion-euro Resilience and Livelihoods Framework supporting Ukraine and neighbouring affected countries.

The loan has not only supported gas purchases but also the creation of a strategic gas reserve stored in Romania or Ukraine to avoid seasonal price spikes and improve energy security, the EBRD said in the press release.

The Moldovan government has authorised Energocom to procure gas from alternative sources on the spot market by running tenders mainly on the EU and Ukrainian borders. This enables the EBRD to disburse the loan directly to pre-qualified EU suppliers selected by Energocom and agreed by the EBRD in line with EBRD procurement rules.

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