WASHINGTON, May 8, 2019 – Moldova will benefit from increased capacity and improved reliability of its power transmission system, supported by a US$ 70 million loan for the Power System Development Project, approved today by the World Bank’s Board of Executive Directors.
The project will enhance Moldova’s domestic transmission capacity and reliability, as well as support Moldova’s future power system interconnection with the European electricity grid through Romania. This will be vital to helping diversify Moldova’s electricity supply sources, allowing for competitively and transparently priced electricity supply.
Increasing energy efficiency and security of energy supply are critical factors for improving Moldova’s economic competitiveness - a priority for the World Bank Group. With declining efficiency and capacity to generate, Moldova needs to import 80 percent of its electricity to meet domestic demand and relies on a limited number of sources. Lack of effective power interconnections with the European energy system and the current electricity supply structure pose significant supply risks and hinder competition in the electricity supply, thus resulting in highly priced electricity and vulnerability to external shocks.
The project will finance the construction of a new 400 kV high-voltage overhead line between Vulcanesti, in the south of Moldova, and the capital Chisinau; the upgrading and expansion of the substations in Chisinau and Vulcanesti; as well as strengthening of power dispatch and metering system.
“The Word Bank welcomes the launch of this crucially important project that will help the Moldovan authorities to strengthen and diversify the country’s energy infrastructure and guarantee stable and secure energy supply for Moldova” said Anna Akhalkatsi, World Bank Country Manager for Moldova. “The project is part of a greater partnership with the European Union, the European Bank for Reconstruction and Development, and the European Investment Bank, who are financing the construction of a back-to-back converter station at Vulcanesti”
The Power System Development project will support the interim objectives of Moldova’s 2030 Energy Strategy’s through 2025, including: (i) consolidation of Moldova’s role as an energy transit country; (ii) ensuring access to European electricity markets; and (iii) building an institutional framework for a modern and competitive electricity market.
Diversification of electricity sources will open up Moldova’s electricity market to competitively and transparently priced electricity, enhancing access to European markets. This will further generate economic benefits for both companies and citizens.
Since Moldova joined the World Bank Group in 1992, over US$ 1 billion has been allocated to approximately 60 projects in the country. Currently, the World Bank portfolio includes 10 active projects with a total commitment of US$ 391.3 million. Areas of support include regulatory reform and business development, education, e-governance, healthcare, agriculture, local roads, environment, and more.
The International Finance Corporation’s committed portfolio in Moldova includes five projects totaling US$ 17. million (69% loans and 31% equity). The Multilateral Investment Guarantee Agency has provided guarantees totaling US$ 95 million. Both institutions are members of the World Bank Group.