MIGA Issues 500th Guarantee: Project to help improve power service in Moldova

MIGA Issues 500th Guarantee: Project to help improve power service in Moldova

WASHINGTON, DC, April 9, 2001 — The Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, announced today the issuance of its 500th guarantee for an investment in a developing country.

"This symbolizes our unflagging commitment to reducing poverty by facilitating foreign direct investment into the world’s developing economies, which are often ignored by investors," said MIGA’s Executive Vice President, Motomichi Ikawa. Since its inception, MIGA has provided over $7.7 billion in guarantees, covering investment projects in 76 developing countries. Cumulative FDI facilitated by guarantees is estimated at nearly $39 billion.

The new $61 million guarantee offers protection against political risks for investments in the upgrading of three newly privatized electricity companies in Moldova. The project is expected to help reduce power shortfalls and blackouts that until recently disrupted service delivery up to eight hours a day in some parts of the Eastern European country.

The guarantee, MIGA’s second for a project in Moldova, covers part of an investment by Unión Fenosa Internacional SA, of Spain, which bought the electricity distribution companies from the government in February 2000. The purchase was part of an energy sector overhaul engineered by the World Bank and the Moldavian government to help revive the economy in a country where over half the population lives on less than one dollar a day.

The project’s chief thrust is to reduce technical and commercial energy losses—resulting mainly from poorly maintained equipment and low levels of bill collection—that have made the companies financially unsustainable and led to unreliable power supply. Investments will focus on metering and a state-of-the-art customer management and billing system. Infrastructure and technology improvements are expected to lead to decreased carbon dioxide emissions.

"We think this project will have a strong impact on the lives of Moldavians, and will be an important component in Moldova’s efforts to reform its energy sector," said MIGA’s Vice President of Guarantees, Roger Pruneau. "This project should also serve as a model for other investors."

The International Finance Corporation of the World Bank Group and the European Bank for Reconstruction and Development are both lending $25 million to the project.
 

For information

Philippe Valahu,
pvalahu@worldbank.org, t. 202-473-8043
Angela Marcarino Paris,
aparis@worldbank.org, t. 202-458-0563
Angela Gentile,
agentile@worldbank.org, t. 202-473-3509