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The project concerns the purchase by the EIB of Green Bond instruments issued by Electrica under its Green Financing Framework. The proceeds resulting from the operation will finance new eligible projects in Romania, compliant with the EIB 's Climate Action and Environmental Sustainability (CAES) framework and eligibility criteria.
The aim is to contribute to climate action and environmental sustainability (CA&ES) objectives, in particular to climate mitigation, and pollution prevention and control. The operation is in line with Article 309 point (a) projects for developing less-developed regions and point (c) common interest of the Treaty on the functioning of the European Union.
The green bonds will finance investments in electricity distribution, production of electricity from renewable sources as well as electricity storage. Through the issuance, the company will improve its electricity distribution network, build up a portfolio of renewable electricity projects, and pave the way for future green bond issuances, this being the first for a Romanian corporate. The project will contribute towards the decarbonisation targets set out in the Romanian National Energy and Climate Plan, as well as the REPower EU Action Plan.
The EIB intervention is justified by the presence of certain market failures that may result in sub-optimal investment. The Project will enable the Promoter to meet the increase in demand and the requests for new connections while maintaining or improving the reliability and quality of the distribution network They also contribute to the integration of additional renewable generation, which results in lower carbon and air pollution externalities. Investments contribute to maintaining security of supply, a public good.
The project falls under the EIB's Climate Action and Environmental Sustainability (CAES) Framework and it is expected to be fully implemented in EU cohesion regions. The operation's overall economic justification is deemed Very Good, with a Very Good broader social benefit. The Promoter is an experienced utility and is capable of implementing and operating the underlying assets.
The EIB is expected to be a cornerstone investor in this first corporate green bond issuance in Romania, by providing a strong signalling effect to other investors. At project origination and preparation, EIB support was key to the structuring of the operation to align it fully with policy objectives (CAES, EU Taxonomy alignment).
Some schemes covered by the operation may be subject to an Environmental Impact Assessment (EIA). These schemes will fall under Annex I or II of the EIA-Directive 2011/92/EU as amended by Directive 2014/52/EU, requiring either an EIA including public consultation, or screening by the national competent authority on the basis of Annex III of the same Directive, to determine the need for an EIA. The promoter will need to comply with sustainability-related disclosure requirements under national and EU legislation, which is applicable to its activities, e.g. publication of EIAs. If EIAs of the underlying schemes are not published by the competent authorities, the promoter will need to ensure the EIAs are made public, to ensure compliance with the Bank's Transparency Policy. In any case, the promoter will need to keep the EIAs on file and ensure that the environmental permit requirements are adequately implemented. Environmental and social due diligence will focus on the capacity of the promoter to identify, assess, manage and monitor environmental, climate and social effects, and to ensure that underlying schemes comply with national and EU legislation, as applicable, and with EIB Environmental and Social Standards (ESS) and relevant guidelines. This due diligence will be based on public and non-public information.
The Bank will require the promoter to ensure that contracts for implementation of the project will be tendered in accordance with the applicable EU procurement legislation, Directive 2014/25/EU as well as Directive 92/13/EEC or Directive 89/665/EEC as interpreted by the Court of Justice of the EU, with publication of tender notices in the EU Official Journal, as and where required.