GrCF 2 W2 E2-Termoelectrica: Chisinau District Heating

Overview
Project Summary Document
Environmental and Social Documentation
Procurement
Complaints

Overview

A sovereign loan (the "Loan") to the Republic of Moldova (the "Borrower") for the benefit of Termoelectrica JSC (the "Project Entity" or "Company") to finance demand side measures, such as: (i) Construction of Horizontal Networks in Buildings; (ii) Supply and Installation of Individual Heating Sub-stations; (iii) Rehabilitation of District Heating Primary Network; (iv) Construction of Pumping Stations; v) Implementation of Pilot Projects Focused on Energy Efficiency Measures in Residential Buildings; vi) Design and Construction Supervision; and (vii) PIU Staffing and Special Account Audit (the "Project").

The Project will be a follow-on investment under approved Chisinau Green City Action Plan ("GCAP"), in relation to the strategic objective of Sustainable and efficient energy.

Project ID 54427

Status Signed

Location

Moldova

Business Sector

Municipal Infrastructure

Notice Type

State

Project timeline

Exploratory
Passed Concept Review
Passed Structure Review
Passed Final Review
Board Approved
Signed
Implementing
Completed

Company Contact Information

Iurie Razlovan
anticamera@termoelectrica.md
+373 022 43-64-59
https://termoelectrica.md/contacte/
6, Tudor Vladimirescu street, Chisinau, MD-2024, Republic of Moldova

Project ID 54427

Status Signed

Location

Moldova

Business Sector

Municipal Infrastructure

Notice Type

State

Environmental Category

Approval Date

20 Nov 2024

Disclosure date

19 Sep 2023

Project description

The Project will be a follow-on investment under approved Chisinau Green City Action Plan ("GCAP"), in relation to the strategic objective of Sustainable and efficient energy.

Project objectives

The Project will improve district heating ("DH") infrastructure, reduce fuel consumption and promote the system's decarbonisation. It will enhance DH operational and energy efficiency through improved system control, introduce apartment level consumption-based billing to DH consumers and the resumption of affordable domestic hot water supply. It will increase the cost efficiency and competitiveness of the DH system, resulting in enhanced energy security and significant savings of CO2 emissions.

Transition impact

ETI Score:70

ject will primarily help to promote the Green transition quality via the installation of Individual Heating Substations ("IHS") and horizontal networks. It is expected to enable energy savings and reduce net CO2 emissions, as a result of avoided gas and electricity consumption from individual boilers and optimised operation of the DH system.

The Project will also support the Well-governed objective through the development of a tailored Corporate Development Programme ("CDP"). The Programme will aim to foster the Company's corporate governance, as well as to assess sector reform capacity gaps in the DH sector in Moldova, in compliance with the Energy Community and European Union ("EU") legislation and scale up the consumption-based billing and metering through the necessary legislative changes.

The Project is also Gender Additional by supporting the Company's inclusive policies and practices through the revisions of its Human Resources ("HR") policies to promote women's employment within the Company.

Client information

MOLDOVA SOVEREIGN

Borrower: Republic of Moldova, represented by the Ministry of Finance ("MoF"). The Project will be overseen by the Ministry of Energy.

Beneficiary: Termoelectrica - a joint-stock company, state-owned, the largest DH supplier in the country, the main producer of thermal energy in cogeneration mode and electricity.

EBRD Finance Summary

EUR 143,500,000.00

Sovereign financing is to be provided in three tranches.

Total project cost

EUR 326,540,000.00

The loan is expected to be complemented by investment grants of up to EUR 24.5 million from the European Union Neighbourhood Investment Platform ("EU NIP") and up to EUR 15.0 million from the Eastern Europe Energy Efficiency and Environment Partnership ("E5P"). The European Investment Bank ("EIB") is also expected to provide a parallel sovereign loan of up to EUR 143.5 million.

Additionality

The additionality sources for the Project are:

- Financing structure;

- Risk mitigation;

- Standard-setting: helping Projects and clients achieve higher standards;

- Knowledge, innovation, and capacity building.

Environmental & Social Summary

Categorised B (2019 ESP). The Project is aligned with Chisinau GCAP and is expected to result in significant Environmental and Social ("E&S") benefits associated with the overall improvement in the quality of heating and hot water services, improved energy efficiency, reduction in heat and water losses, and substantial reduction in GHG emissions. Implementation of the proposed Priority Investment Programme is expected to result in a reduction of 40,824 tonnes of CO2/year and save 827,355 GJ/year of primary energy over 20 years. The Project will not involve any investment into generating capacities and focus only on the distribution side measures in the existing buildings.

Environmental and social due diligence ("ESDD") has been carried out as part of the Feasibility Study by independent consultants. This involved a corporate E&S audit of the Company, review of risks associated with the current operations, associated facilities and management systems, and an E&S assessment of the investment components. The ESDD has established that the Company has an integrated Environmental & Social Management System ("ESMS") in place that is certified to ISO 14001 for Environmental Management and ISO 45001 for Health and Safety Management. While the organizational structure for ESMS is in place, the assessment has shown that the Company lacks internal E&S capacity and consistency to implement it currently in line with IFI standards. Key gaps in environmental management within the Company's day-to-day operations relate to contractor management, resource efficiency, hazardous substances and materials management, and waste management.

The Company's Human Resources systems are fully aligned with national laws of labour and occupational health and safety ("OHS") and include internal policies, procedures, and a collective agreement. All staff members receive environment health and safety ("EHS") training, and the Company has a dedicated OHS department that conducts inspections, coordinates training sessions, oversees medical checks, investigates incidents/accidents, and develops and implements safety procures. The Company also has an Emergency Preparedness and Response procedure in place. Some improvements should be implemented concerning a workforce grievance mechanism to ensure compliance with EBRD's Performance Requirement 2 ("PR2") and included in the Environmental and Social Action Plan ("ESAP").

The Company has also undergone two rounds of collective dismissal in the recent years and currently is developing a new plan for further reorganisation which could result in further collective dismissals. Appropriate ESAP measures have been developed to address the risk of economic uncertainty and job insecurity for workers, requiring the Company to implement the process following EBRD PR2. Gender-Based Violence and Harassment related risks have also been assessed during ESDD, and the internal grievance mechanism will need to be further improved to address potential risks.

The Project is still in the design phase, but the Company has confirmed that best available technology will be considered during the design to maximize resource efficiency within the Project. The Project will go through the national environmental impact assessment process and local approvals to obtain the necessary construction and environmental permits prior to the start of the construction works.

The Project will be implemented in heavily urbanised areas, and most of construction works will take place within the footprint of the current sites. It will result in neither physical displacement nor permanent or significant economic displacement. The Project will not have impacts on any sensitive areas or protected sites. The only potential limited impact on biodiversity may take place at the city's Riscani forest-park due to the construction of a new pumping station that will require the removal of about 600 m2 of tree vegetation. The Company will fully comply with the environmental permitting requirements set by the authorities, and Company's management has confirmed that as a mitigation measure these trees will be replanted elsewhere in the city. Additionally, under a concurrent World Bank project, a Road Map for the country is being prepared as part of overall decarbonisation efforts.

The Project's E&S impacts and risks will be mostly temporary and related mainly to the construction phase. Impacts will include dust and noise generation, increased traffic and nuisance, temporary disruptions to supply of heat and hot water to the community and restrictions of public access. The main receptors of these impacts will be the local population in the buildings undergoing rehabilitation works and the nearby communities, hence ensuring their health and safety and adequate stakeholder engagement throughout the rehabilitation phases will be of utmost importance. The identified impacts and risks can be managed through specific mitigation measures that have been incorporated in the Project's ESAP, including in relation to further improving the Company's E&S capacity, improving resource efficiency, pollution prevention (air emissions, waste and hazardous substances and materials management), community health and safety, traffic safety, biodiversity conservation, cultural heritage, stakeholder engagement and grievance mechanism. To ensure safe handling of any asbestos-containing materials ("ACMs"), an ACMs Management Plan will need to be developed and implemented prior to the start of the construction works, and any ACMs will need to be removed and disposed of safely by competent contractors. The contractors will also be required to develop the construction EHS management plans and include Chance Finds Procedures. The Company must ensure that relevant E&S requirements are fully incorporated in tender documents for suppliers and contractors.

The ESAP and a Stakeholder Engagement Plan have been developed to address the identified issues and management of the EHS aspects of the DH system improvements in line with the Bank's Performance Requirements. The ESAP will be agreed with the Company prior to the Project approval. The Project Implementation Support Consultant will assist with the ESAP implementation, and the Lender Monitor Consultant will provide an independent oversight and monitoring of the works contract. The Project will be monitored through annual E&S reports provided by the Company and site visits, if deemed necessary.

Technical Cooperation and Grant Financing

Pre-Loan Signing:

Feasibility Study - EUR 475,560 financed by Sweden.

Post-Loan Signing:

Project Implementation Support - estimated at up to EUR 2,655,000, funding source to be confirmed.
Procurement Support - estimated at up to EUR 20,000, to be financed by the EBRD Shareholder Special Fund.
Corporate Development Programme - estimated at up to EUR 300,000, funding source to be confirmed.
Lender's Monitor - estimated at up to EUR 300,000, funding source to be confirmed.

Company Contact Information

Iurie Razlovan
anticamera@termoelectrica.md
+373 022 43-64-59
https://termoelectrica.md/contacte/
6, Tudor Vladimirescu street, Chisinau, MD-2024, Republic of Moldova

Implementation summary

PSD last updated

22 Oct 2024

Understanding transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with the EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and its associated Environmental and Social Requirements (ESRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”. The ESP and the ESRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation, and to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about the environmental and social (E&S) performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD also requires its clients to disclose information, as appropriate, about the risks and impacts of projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all of the Bank's activities in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The EBRD believes that identifying and resolving issues in the project assessment and approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts andhelps to monitor integrity risks in projects post-investment.

OCCO is further responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, either within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. OCCO will follow-up all matters reported. It will review all matters reported. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP, which entered into force on 1 January 2025, sets out how the EBRD discloses information and consults with its stakeholders to promote better awareness and understanding of its strategies, policies and operations. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (for example, through the client’s project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the mechanism is: to support dialogue between project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or the project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate and how to submit a Request for review. Alternatively, contact IPAM by email at ipam@ebrd.com for guidance and more information on IPAM and how to submit a request.

Environmental and Social Documentation is not available for this project.

Selected procurement notices related to this project may be shown below. Further procurement opportunities related to this and other projects, if available, maybe be viewed in the EBRD Procurement Portal.

The EBRD's Environmental and Social Policy (ESP), Access to Information policy (AIP) and Project Accountability Policy (PAP) enable sound and sustainable development in its projects. The Independent Project Accountability Mechanism (IPAM) deals with complaints about environmental, social and disclosure matters related to the Bank’s investments.

No complaints about this project have been made so far.

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GrCF 2 W2 E2-Termoelectrica: Chisinau District Heating

Overview

Project timeline

Company Contact Information

Project description

Project objectives

Transition impact

Client information

EBRD Finance Summary

Total project cost

Additionality

Environmental & Social Summary

Technical Cooperation and Grant Financing

Company Contact Information

Implementation summary

PSD last updated

Understanding transition

Business opportunities

General enquiries

Environmental and Social Policy (ESP)

Integrity and compliance

Access to Information Policy (AIP)

Independent Project Accountability Mechanism (IPAM)