Wednesday, July 22, 2009

EBRD signs loan with Romania to fund energy cleanup

BUCHAREST, July 21 (Reuters) - The European Bank for Reconstruction and Development and several commercial banks will lend 170 million euros ($241 million) to Romania to modernise its top power plant, the EBRD said on Tuesday.

The loan is part of the EBRD's plan to invest 1 billion euros in the new European Union member over the next two years, its participation in a 20 billion foreign aid package led by the International Monetary Fund and secured by Romania in March.

Like many power plants in Romania, the coal-powered Turceni plant in the south of the country, built under the communist regime, needs cash to upgrade its facilities to meet EU environmental standards.The EBRD said the loan programme was oversubscribed, suggesting hefty interest among foreign investors to bring cash to Romania, hit hard by the global financial crisis.

'There is a steady appetite for foreign investment in Romania,' Riccardo Puliti, head of the EBRD's Energy Businesss Group, told a news conference.Still, direct investment from abroad has fallen 42 percent on the year to 2.48 billion euros by the end of May and many market watchers warn that Romania needs to work on solid economic policies to ensure foreign cash returns after the global economy stabilises.

Commercial banks participating in the loan include: Austria's Erste, which owns Romania's biggest bank BCR, as well as Societe Generale, UniCredit and Intesa Sanpaolo. The Black Sea Trade and Development Bank will also participate.The London-based EBRD has committed more than 4.2 billion euros in projects in Romania and wants to trigger investments in sustainable energy projects worth up to 15 billion euros over the next three years across its areas of operations in the former Soviet bloc.

Romania, which produces around 20 percent of its power output in nuclear reactors, hopes to become a major regional hub for energy but its plans are mired by outdated technology and the risk of closures of facilities that don't meet EU rules.

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