World Bank approves $40m energy efficiency project in Moldova
The World Bank’s Board of Executive Directors today approved a US$40.5 million financing to the Republic of Moldova for the District Heating Efficiency Improvement Project, which will fund investments aimed at improving the efficiency of the district heating services in Chisinau.
Although Moldova is dependent on imports to meet its energy demand, inefficient energy use in Moldova is leading to higher energy costs for both industries and residents, posing a serious bottleneck to growth and competitiveness. Moreover, the electricity and heat generation infrastructure are obsolete and deteriorating.
The inefficient and worn-out district heating system, as well as disconnections by wealthier consumers, have led to high heat tariffs for the less well-off in Chisinau. Tariff levels have reached the limit of affordability for almost all residents in Chisinau and are having a disproportionately high impact on the vulnerable population. Surveys show that heating expenses alone have taken up more than 10 percent of monthly expenditure for all income groups. The poorest population spends up to 26 percent of their monthly expenditure on heating.
“For many years old infrastructure and heavy financial losses have blocked progress in the municipal heating sector. This project is a chance to develop a modern and efficient heat supply network for ordinary residents of Chisinau,” says Alexander Kremer, World Bank Country Manager for Moldova.
The Corporate Restructuring Plan, approved by the Government of Moldova on November 13, 2013, envisioned the merger of 3 companies (Termocom, CHP-1 and CHP-2) into a new company that will provide district heating services in Chisinau. The project aims to improve the operational efficiency and financial viability of the new company, by upgrading its infrastructure and management.
The project will benefit the population of Chisinau at large through increased efficiency of the district heating sector and increased reliability of district heating services; and the Moldovan district heating sector stakeholders, including the new heating services company, as well as Moldovagaz and Chisinau-Gaz.
Since Moldova joined the World Bank in 1992, over US$1 billion has been allocated to 49 projects in the country. Currently, the World Bank portfolio includes 8 active projects with total commitment of US$235.2 million. Areas of support include regulatory reform and business development, education, social assistance, e-governance, healthcare, agriculture, environment, and others. The International Finance Corporation has invested US$233 million in 24 projects in various sectors, and the Multilateral Investment Guarantee Agency has provided guarantees totaling US$95 million. Both institutions are members of the World Bank Group.