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Transgaz Equity Financing

Romania | Utilities

Identification Code:: OP/07/0685
Total Operation Cost:: — EUR
Maturity:: —
Operation Status:: BSTDB Approved Amount – Approval Date

40.000.000 EUR – 01 Dec 2007
: BSTDB Signed Amount – Signed Date

3.477.974 RON – 05 Dec 2007
: Status:
Completed
Description and Purpose of the Operation:: BSTDB participates with equity investment in Transgaz S.A. to support required financing for the rehabilitation and modernization of its transmission system. The proceeds of the on-going privatisation through listing on the Bucharest Stock Exchange will be used to restore the transport capacity of the main system components. The operation may also be considered an environmental project designed to address technical weaknesses and lead to improved environmental management. It will also be one of the largest operations in terms of amount of emissions reduction and will be supporting an environmentally responsible approach in the natural gas sector. The operation represents the first direct equity investment of the Bank in Romania, as well as the first carbon-credits project in a gas pipeline in the Balkan region and will therefore demonstrate the use of Carbon Credits as a cash flow enhancement mechanism.
Countries of Operation:: Romania (100,00%)
Financial Product:: Equity Investments
Sector:: Utilities
Domain:: Private
Borrower/Client:: SNTGN Transgaz SA, the sole operator of the National Transmission System (NTS) for gas in Romania. The pipeline system operated by the company provides gas domestically throughout the country and serves as nodal point for East-West and North-South gas transit.
Co-Financers/Participants:: Parallel equity investment by EBRD
Guarantors/Sponsors:: —
Developmental and Regional Cooperation Impact:: There is a strong regional cooperation element inherent to the operation since the proposed financing envisages an improved efficiency of the gas transit activity through the rehabilitation of the national gas transmission system links with the neighboring countries. These links are meant to secure the gas supply needed by the neighbour countries. Presently Romania represents an important nodal point in the transit of natural gas from Russia to the Balkan area and Turkey. The operation has a high economic development impact as it supports the modernization of the Romanian gas transmission company and is directed at improving the operational efficiency of Transgaz through reduction of gas leakages of the pipelines. This in turn is expected to increase the reliability in operation of the NTS and prevent discontinuities in the gas transit and transportation activity.
Environmental Classification and Impact:: The operation has been screened according to the BSTDB's Environmental Screening Categories as category C1, with few limited EH&S impacts. The Environmental Assessment exercise concluded that the Borrower is fully aware of the Environmental, Health & Safety (EH&S) implications of its business and is taking appropriate measures to control and reduce/avoid the likely negative impacts. Most of its operations are in compliance with local and EU standards, however there are issues which will need further actions to be made in order to be fully compliant, such as setting up an accredited environmental laboratory, modernization of it gas odourisation system, as well as noise reduction at its regulator stations. The Borrower certified its Environmental Management System according to ISO 14001 and has plans to certify its Health and Safety Management System according to OHSAS 18000. The Energy Efficiency Audit recently completed revealed a number of areas where actions are needed in order to reduce fugitive emissions and improve the overall efficiency, which would greatly reduce the Borrower's Green House Gas Emissions.
Operation Leader:: Energy & Infrastructure
E-mail:: ei@bstdb.org