The Government at its meeting on Wednesday is expected to formally initiate negotiations on a financing agreement with the European Bank for Reconstruction and Development for a project to modernize the combined heat and power plant CET-Nord in Balti, IPN reports.

The Moldovan negotiation team will be headed by Economy Minister Andrian Candu and will include representatives of the Ministry of Economy, the Ministry of Finance, and the State Chancellery.

The total cost of the project is estimated at 10 million euros and the EBRD has agreed to lend 7 million euros. The credit will be offered for a period of 15 years, with a grace period of 2-3 years, at Libor rate plus a 1-2% margin. The remainder will be granted by the Eastern Europe Energy Efficiency and Environment Partnership (E5P) fund.

The project envisages installing three gas-powered engines at CET-Nord to increase output by nearly 60%. An improvement will be the replacement of the coal-fired boiler with one burning biomass, and pumps, fans and fume aspirators will also be replaced. Further, connection points will be installed in 120 buildings in Balti municipality for about 28,000 residents.

The Ministry of Economy says the modernization will bring about both economic and environmental benefits, annually saving 52 million lei and cutting CO2 emissions by 12,650 tonnes.

The intention of implementing the project and obtaining an EBRD loan for this purpose was initially adopted at the Inter-ministerial Committee for Strategic Planning on 26 March 2014.