December 15 (SeeNews) - The European Investment Bank (EIB) said is lending a further 50 million euro ($59 million) to Romanian gas pipeline operator Transgaz [BSE:TGN] for the first phase of the EU-backed Bulgaria-Hungary-Romania-Austria (BRUA) gas pipeline project.
For the first time, the EIB's loan will be disbursed in Romania's currency, the bank said in a press release on Thursday.
The agreement for the first tranche of 50 million euro from the EIB for the BRUA project was signed in October.
The EIB funds will finance the construction of a new European gas transmission corridor to increase security of gas supply and to reduce energy dependence through diversification of gas supply routes and sources.
"This is the first EIB loan provided in Romanian Leu to a corporate since the launch of EIB lending operations in the country in 1992. It will enable Transgaz greater flexibility to avoid currency exchange risk in financing gas infrastructure in the region," EIB Vice President Andrew McDowell said.
The project also contributes to the expansion of the number of gas suppliers in South-Eastern Europe and opens the regional market to increased competition which will benefit consumers in terms of reduced prices and improved Security of Supply, the bank's vice-president added.
The operation is backed by the European Fund for Strategic Investments (EFSI), which is the main pillar of the Investment Plan for Europe (IPE).
"For our company, this funding line is part of a set of core measures on which we rely for our major infrastructure projects," Transgaz director general Ion Sterian said.
The new pipeline represents the first phase of the Romanian section of the gas pipeline from Bulgaria to Austria via Romania and Hungary (BRUA).
The EIB funds will finance the construction of a 478-km natural gas transmission pipeline between Podisor and Recas and the construction of three compressor stations located in Podisor, Bibesti and Jupa in Romania.
In September 2016, Transgaz received a 179.4 million euro grant from the European Commission for the same project.
On Wednesday, Transgaz said it has formed a consortium with Spanish company Regasificadora del Noroeste to participate in the second stage of a process for the procurement of a 66% stake in Greek gas transport operator DESFA. Transgaz will acquaint its shareholders with the tie-up's proposal at an extraordinary shareholders meeting on January 8.
Transgaz's net profit rose 21% to 433.5 million lei ($109 million/93 million euro) in the first nine months of 2017, while operating revenues rose 5% to 1.3 billion lei, mainly due to higher capacity booking revenues and higher volumes of transmitted gas.
Transgaz shares traded 1.04% higherat 389 lei on the BVB as at 1007 CET on Friday.
(1 euro=4.6332 Romanian lei)
CNTEE Transelectrica SA is among the biggest companies in SEE. You can download our SEE Top 100 ranking
here or subscribe to our free Top 100 newsletter
here