EBRD extends 40 million Euro loan to Electrica for investments in electricity distribution network

The European Bank for Reconstruction and Development (EBRD) is extending a 40 million Euro loan in RON-equivalent to Distributie Energie Electrica Romania SA (DEER), the electricity distribution subsidiary of Electrica Group. DEER serves more than 3.8 million users – residential and industrial – in the regions of Northern Muntenia, Northern Transylvania and Southern Transylvania. It operates 198,988 km of electric lines in 18 counties, representing just over 40 per cent of Romanian territory.

DEER is implementing a comprehensive investment programme to upgrade its distribution network as well as improve the quality of its services and operational safety. Priorities in this upgrade also include digital transformation through systems such as SCADA, which is used to monitor and control industrial processes.

The investment programme supports the roll-out of smart meters and will enable more renewable capacity to be connected to the distribution network. It will significantly improve the network’s reliability, reduce grid losses, and consistently contribute to increased renewable energy use to the detriment of conventional energy, saving about 67,100 tonnes of CO2 equivalent a year.

The guarantee and loan agreements were signed by Mark Davis, EBRD Regional Director for Romania and Bulgaria; Corina Popescu, CEO of Electrica; and Valentin Branescu, Deputy CEO of DEER, on the side lines of the EBRD’s 2021 Annual Meeting and Business Forum.

Mark Davis said: “Our new financing will help Electrica Group build a resilient distribution network in Romania with enhanced efficiency and ready to integrate more renewable projects to achieve the country’s ambitious renewable targets.”

Corina Popescu, CEO of Electrica, added: “In view of the business development opportunities and the ambitious investment plan, Electrica Group is exploring several options for diverse financing sources. The main objectives of the strategy defined for the distribution segment consider optimisations in three areas: operational performance, quality of services and optimisation of costs to the final consumer. Added to these are the long-term strategic directions, focused on the business model’s development, corroborated with the preparation of the distribution networks to face the challenges of energy transition.”

As part of its cooperation with the EBRD, Electrica Group has committed to providing a more equal workplace and improving working conditions for women. The company will adopt a gender-based violence and harassment policy in line with international best practice and offer training to employees and contractors on how to implement this.

Electrica’s distribution network covers more than 40 per cent of Romania’s territory. The state has a stake of 48.8 per cent in the company, with the remaining shares being held by investors, including the EBRD, on the Bucharest and London stock exchanges. Since its IPO in 2014, Electrica Group has invested a total of RON 4.39 billion in upgrading and retrofitting electricity distribution networks. As a result, service quality has improved significantly, contributing positively to the company’s solid financial results.

The EBRD’s overall investment in Romania stands at almost 9 billion Euro, with 76 per cent in the private sector. Its focus is on financing infrastructure, especially in less-developed regions, boosting private sector productivity and further developing the financial sector and capital markets.