The World Bank’s Board of Executive Directors approved a EUR66 million (US$84.3 million equivalent) loan to the Romanian hydropower generator Hidroelectrica S.A., with the guarantee of the Government of Romania, in support of the first phase of the US$1 billion Energy Community of South East Europe program (ECSEE APL). The ECSEE APL program is aimed at integrating energy systems in South East European countries into the internal energy market of the European Union. The ECSEE is being developed following the Athens Memorandum on the regional energy market process, signed in Athens, Greece, on December 8, 2003. An international Treaty has been substantially negotiated and is expected to be signed in mid-June 2005.
“The Energy community is a great opportunity for the countries of South East Europe to work together and exploit the economies of scale in energy sector operations and investments to provide a stable and continuous energy supply on competitive terms and to improve the security of energy supply. The creation of an area without internal frontiers for energy will contribute to economic development and social progress in the region,” said Task Team Leader Mr. Kari Nyman.
Romania is one of the first participants in the multi-country effort to develop the energy market. Specifically, the loan approved today will help finance the rehabilitation of Hidroelectrica’s Lotru Hydropower Station and technical assistance for its institutional development and project implementation.
The rehabilitation of the Lotru Hydropower station will ensure reliable services to the national power grid for another 20 years maintaining the power supply at the current necessary level of 510 megawatts. According to Mr. Nyman, “in view of Romania’s progress with its energy sector reforms and its active participation and important role in the Energy Community’s development, it is appropriate for Romania to be the first beneficiary of the ECSEE APL facility.”
The fixed-spread Euro 66 million loan will be at the standard variable interest rates for LIBOR-based Euro-denominated single currency loans, payable in 17 years, including 5 years of grace.
The World Bank has been a committed partner in Romania’s development process since 1990, with loans totaling over US$4.2 billion. The 2004-2005 lending program is likely to be the highest amounting to almost US$ 850 million.
