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MarketScreener Homepage  >  Equities  >  BUCHAREST STOCK EXCHANGE  >  CNTEE Transelectrica SA    ROTEL   ROTSELACNOR9

CNTEE TRANSELECTRICA SA

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CNTEE Transelectrica : Moldova borrows €270mn to connect its power grid with Romania's

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07/12/2018 | 06:51am EDT

The government of Moldova on July 11 ratified two financing contracts with the European Bank for Reconstruction and Development (EBRD) and European Investment Bank (EIB), worth €80mn each, to finance the €270mn project aimed at streamlining the country’s power grid, making it compatible and connecting it with Romania’s grid. The World Bank will lend another €70mn and the European Union will extend a €40mn grant for the project.

Moldova can cover its entire power consumption, but its generation capacities are located on the separatist territory of Transnistria, so it is forced to indirectly finance the separatist regime in Tiraspol by purchasing electricity. To avoid this, the country relies at times on imports from Ukraine, but these are not fully reliable for technical reasons (the power grid’s topology involves Transnistria’s capacities since it was designed during the communist regime).

Moldova’s entire high voltage power grid will be enhanced to 400kV (from 330kV currently), which is the standard for central European countries, under the €270mn project.

There exists already an interconnector between Isaccea (in Romania) and Vulcanesti supporting such capacity.

The connection between Moldova and Romania will be created by enhancing to 600MW the capacity of the 400kV back-to-back station at Vulcanesti, meaning that the two grids will not be synchronised, which this would have required much greater investments. However, Romania’s power grid operator Transelectrica is ready to make the necessary investments for synchronising the two countries’ grids. In practical terms, this would mean that spot trading on both markets would be possible. Romania’s grid is already synchronised with those in Bulgaria, Hungary and Serbia, meaning that Moldova would get access to a greater pool of suppliers. 

In June 2017 Ukrenergo Head Vsevolod Kovalchuk signed an agreement on the conditions for the future integration of the energy systems of Ukraine and Moldova with Europe’s ENTSO-E energy system. This April, the governments of the two countries signed a memorandum on the synchronisation of their power grids with ENTSO-E. This prepared the ground for synchronised connection between Romania and Moldova. For technical reasons, it makes more sense for Moldova to synchronise its grid (with ENTSO-E) in a coordinated way with Ukraine, a situation that has prevented quicker developments during the past years.

Beside the upgrade of the back-to-back station at Vulcanesti, a 400kV line will be built to link Vulcanesti with the industrial concentration around the capital city Chisinau, and the station in Chisinau will be upgraded as well.

Moldova’s plans for its electricity grid match previous developments in the natural gas grid. Upon taking over Moldovan Vestmoldtransgaz, Romania’s Transgaz will operate the Iasi-Ungheni interconnector between the two countries, and will build a pipeline to bring natural gas to the industrial areas around the capital city Chisinau, thus ending Moldova's dependence on Russian gas.

And indeed, Romania’s power grid operator Translectrica has expressed interest in purchasing a stake in its Moldovan peer Moldoelectrica, though stressing that it is premature to go into detail on such plans. Moody's rating agency improved the outlook on Transelectrica to positive from stable on July 3, while affirming the Ba1 probability of default (PD) rating. Transelectrica benefits from a fair and rather transparent regime under a revenue cap model, which entitles the company to a 7.7% return on the Regulatory Asset Base and reasonable and timely recovery of costs incurred, Moody’s explained. 

Such robust revenues and particularly the transparent pricing regulations would strengthen the financial profile of Moldoelectrica and provide stability to the financing of the €270mn project endorsed by the government on July 11. Just like its peer in the natural gas sector Transgaz, Transelectrica is the recipient of grants from the European Union aimed at boosting the interconnectivity in the region. The European Commission approved in January a €27mn grant for Transelectrica, to be used for the construction of a high-voltage 400kV line in the eastern part of the country toward Bulgaria. In May, Transelectrica announced that it had commissioned the RON81.5mn (€17.4mn) 400kV electricity interconnection with Serbia, linking Resita in Romania with Pancevo in Serbia.

©2018 bne IntelliNews , source Magazine

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Financials (RON)
Sales 2019 2 862 M
EBIT 2019 121 M
Net income 2019 -
Debt 2019 33,1 M
Yield 2019 4,76%
P/E ratio 2019 -
P/E ratio 2020
EV / Sales 2019 0,55x
EV / Sales 2020 0,46x
Capitalization 1 539 M
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Mean consensus UNDERPERFORM
Number of Analysts 3
Average target price 22,5  RON
Spread / Average Target 7,1%
Managers
NameTitle
Georgeta-Corina Popescu Chief Executive Officer
Cristian-Eugen Radu Chairman-Supervisory Board
Marius Iulian Carabulea Member-Supervisory Board
Beatrice Ambro Member-Supervisory Board
Bogdan Bobora Member-Supervisory Board
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