Red Chisinau, S.A.; Red Centru, S.A.; and Red Sud, S.A.

A $61.1 million guarantee is giving Union Fenosa Internacional of Spain protection against the political risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract for investments in the upgrading of three newly privatized electricity distribution 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 this Eastern European country.

The guarantee, MIGA's second for a project in Moldova, covers part of an investment by Unisn Fenosa, 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 Moldovan government to help revive the economy in a country where more than half the population lives on less than $1 a day. The IFC and the European Bank for Reconstruction and Development are both lending $25 million to the project.

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. The project is expected to have a significant impact on the lives of Moldovans, and will be an important component in Moldova's efforts to reform its energy sector.