Project detail - ELECTRIC NETWORKS OF ARMENIA CJSC

ELECTRIC NETWORKS OF ARMENIA CJSC

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Who is our client

Electric Networks of Armenia CJSC is the client, established in Armenia as a closed joint stock company (ENA). ENA is the sole electricity distribution company in Armenia.

Funding objective

ENA plans to invest more than USD130m during the period 2021-2023/24. The European Bank for Reconstruction and Development (“EBRD”) and the Asian Development Bank (“ADB”) were mandated and will fund USD 60m (net) and USD20m (net), respectively. Under EBRD’s syndication, FMO’s B-Loan stands at USD 10m. ENA will fund the remainder from its cash flows. The investment objective and rationale are as follows: (i) the reconstruction and modernization of ENA’s existing substations and lines and replacement of outdated equipment; (ii) the expansion of the automated electricity metering system (reading and billing); (iii) the expansion of the network and connection of new users; and (iv) installation of a new automatic control system and other auxiliary investments. EBRD and ADB signed their first loan agreements in July 2017, with FMO then taking a USD10m B-Loan with the EBRD (remaining amount is about USD6.3m). For this “Phase 2” Investment, FMO also participated for USD 10 mln under EBRD Syndicated loan agreement.

Why we fund this project

ENA’s investments contribute to a.o. an improved distribution network with lower technical losses, better metering and more electricity to end-users in need. Supporting the funding of ENA’s investments fits well with FMO’s strategy, which includes a.o. (i) contributing to energy savings (by a.o. reducing technical losses, better metering, etc.) and (ii) enabling more and better connections with all end-users of electricity.

Environmental and social rationale

FMO E&S category for this transaction is B+, reflecting health and safety risks to employees and communities, pollution (oil contamination at storage sites), and potential impacts on informal land users, biodiversity and cultural heritage. IFC PS1-4 are triggered; 5, 6 and 8 may potentially be triggered due to the nature of the distribution network, spread over the country. IFC PS7 is not expected to be triggered as the project is not likely to impact communities of indigenous people. Explicit reference is made to EBRD’s ex ante Disclosure and Project Summary Documents: this can be found at EBRD’s website (i.e.: https://www.ebrd.com/work-with-us/projects/psd/52868.html).

More investments

Date Total FMO financing
12/4/2017 USD 10.00 MLN
Region
Europe & Central Asia
Country
Armenia
Sector
Energy
Signing date
8/16/2021
Total FMO financing
USD 10.00 MLN
Fund
FMO
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk Environmental & Social Category
(A, B+, B or C)
B+