Early Warning System

Regions

Europe and Central Asia

Geographic location where the impacts of the investment may be experienced.

Countries

Romania

Geographic location where the impacts of the investment may be experienced.

Financial Institutions

European Bank for Reconstruction and Development (EBRD)

International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.

Project Status

Approved

Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.

Bank Risk Rating

Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."

Voting Date

Nov 15, 2022

Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.

Borrower

DISTRIBUTIE ENERGIE ELECTRICA ROMANIA SA

A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.

Sectors

Energy

The service or industry focus of the investment. A project can have several sectors.

Investment Amount (USD)

$ 48.77 million

Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Currency conversion note:
Bank reported 240
Converted using 2022-10-25 exchange rate.

Project Cost (USD)

$ 48.77 million

Primary Source

Original disclosure @ EBRD website

Updated in EWS Dec 9, 2022

Disclosed by Bank Oct 25, 2022

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Project Description

If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.

PROJECT DESCRIPTION

A senior loan of RON 240 million (equivalent to EUR 49 million) in favour of Distributie Energie Electrica Romania SA ("DEER", or the "Company"). The loan will be guaranteed by Societatea Energetica Electrica SA ("Electrica"), who owns 100% of the shares of the Company.

The transaction is presented under the EBRD's Resilience and Livelihoods Framework, one of the focus areas of which is energy security in Ukraine and neighboring countries.

PROJECT OBJECTIVES

The loan will finance the Company's liquidity needs to cover the increased cost of electricity purchases required for network losses. This will enable the Company to continue the distribution of electricity to Romanian consumers without interruptions and allow the Company to continue investments in the electricity grid in order to cope with integration of additional renewables generation.

TRANSITION IMPACT

ETI score: 65

Resilient: The Bank's loan will support the Company to maintain its financial stability in the midst of an energy crisis exacerbated by the war in Ukraine.

Inclusive: The operation will prevent electricity supply disruptions and safeguard access to vital energy services for both the Romanian population and Ukrainians refugees predominantly women, children and elderly.

EBRD financing effectively bridges a financing gap due to adverse market conditions. EBRD also provides comfort and complements financing provided by commercial lenders that are maximising their exposure in the Romanian energy sector.

ENVIRONMENTAL AND SOCIAL SUMMARY

Categorised B (ESP 2019). The proposed transaction involves a loan to Distributie Energie Electrica Romania SA to support the company's liquidity management and financial resilience on the back of electricity price increases following on the war in Ukraine. Therefore, given the structure of the transaction (energy purchase), there will be limited (at best) leverage over the electrical infrastructure that will be utilized for electricity supply, while key environmental risks on this transaction are associated with the physical infrastructure owned by DEER. The Bank is one of the major investors in Electrica, with a 5.1% stake in the company's share capital, and an ESAP has been agreed (opID 52212) for the client to comply with and implement EBRD's Performance Requirements. This is currently monitored under the existing agreements and results of the monitoring show good performance.

ESDD was conducted by ESD and included a review of annual E&S reporting by the Company, progress update on ESAP agreed previously and follow up questions as well as a meeting held with the Company to assess compliance with EBRD's 2019 E&S Policy. The Company operates certified management systems to manage environmental and health and safety risks. Social policies and labour provisions are in general aligned with PR2. However, further stakeholder engagement, grievance management, contractor control and supply chain management, and workers accommodation are needed and additional actions were advised into revised ESAP to be agreed before approval. Currently, no land acquisition is planned for the Project and new investments mostly prioritize using public land to avoid impacts on communities as much as possible. However, preparation of a land acquisition framework is included in ESAP for any future needs of land acquisition.

Investment Description

Here you can find a list of individual development financial institutions that finance the project.

European Bank for Reconstruction and Development (EBRD)

Contact Information

This section aims to support the local communities and local CSO to get to know which stakeholders are involved in a project with their roles and responsibilities. If available, there may be a complaint office for the respective bank which operates independently to receive and determine violations in policy and practice. Independent Accountability Mechanisms receive and respond to complaints. Most Independent Accountability Mechanisms offer two functions for addressing complaints: dispute resolution and compliance review.

Lucian Penes, Chief Financial Officer
lucian.penes@distributie-energie.ro
+40 730 006 666
www.distributie-energie.ro
Str. Ilie Macelaru, nr. 28A, Cluj-Napoca, Jud. Cluj

ACCESS TO INFORMATION

You can request information by emailing: accessinfo@ebrd.com or by using this electronic form: https://www.ebrd.com/eform/information-request

ACCOUNTABILITY MECHANISM OF EBRD

The Project Complaint Mechanism (PCM) is the independent complaint mechanism and fact-finding body for people who have been or are likely to be adversely affected by an European Bank for Reconstruction and Development (EBRD)-financed project. If you submit a complaint to the PCM, it may assess compliance with EBRD's own policies and procedures to prevent harm to the environment or communities or it may assist you in resolving the problem that led to the complaint through a dialogue with those implementing the project. Additionally, the PCM has the authority to recommend a project be suspended in the event that harm is imminent.

You can contact the PCM at: pcm@ebrd.com or you can submit a complaint online using an online form at: http://www.ebrd.com/eform/pcm/complaint_form?language=en

You can learn more about the PCM and how to file a complaint at: http://www.ebrd.com/work-with-us/project-finance/project-complaint-mechanism.html