Cutting down on energy costs? Yes you can

ECONOMY > MOLDOVA

Cutting down on energy costs?

Yes, you can The old wooden windows were replaced, a new steam boiler was www.enpi-info.eu installed, and even the light bulbs were changed.

New, modern equipment was also purchased. At lonel, the largest clothes producer in Moldova, the innovations did not only result in a direct reduction of energy consumption. They also increased productivity, improved the general atmosphere and enhanced competitiveness. An EU Neighbourhood Info Centre journalist looks at how the Moldovan Sustainable Energy Financing Facility (MoSEFF) - launched by the European Bank for Reconstruction and Development (EBRD) and financially supported by the European Union through its INOGATE programme – is changing the life of Moldovan companies and their workers.

Text by Dmitri Kalak Pictures by AFP ©EU/Neighbourhood Info Centre

This publication does not represent the official view of the EC or the EU institutions.

The EC accepts no responsibility or liability whatsoever with regard to its content.

CHISINAU – Finding investment and resources to pay for upgrading facilities and acquiring new equipment hardly constitutes a priority for many companies in times of financial crisis. Any outlay deemed as non-essential is usually put on hold, to be seen to when things ‘pick up again’.

“We were aware of the need to cut down on energy costs and to modernize our enterEmployees of the Ionel prise. But how could we risk doing this while suffering losses every year because of the N garment factory at work in Chisinau. economic crisis?” asks Tamara Lukina, the director of Ionel, the largest Moldovan clothes producing company.

Thankfully for Lukina, the Moldovan Sustainable Energy Financing EU Neighbourhood Info Centre Facility (MoSEFF) had the answer. “MoSEFF experts made all the nec- Feature no. 93 essary calculations and convinced us that even in times of crisis, it is possible to find resources. And what is more important, that it would be profitable,” she says. Ionel was established in 1945 and is one of the country’s most popular brands, working both within the domestic market and supplying many well-known manufacturers in Europe.

This is a series of features on projects funded by the EU Regional Programme, prepared by journalists and photographers on the ground or the EU Neighbourhood Info Centre. © 2013 EU Neighbourhood Info Centre

Cutting down on energy costs? Yes, you can

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In 2010, the company was able to embark on a large modernization programme for its factory, focusing on energy efficiency, thanks largely to the cooperation with the Moldovan Sustainable Energy Financing Facility (MoSEFF). Under the facility - financially supported by the European Union through its INOGATE programme - the European Bank for Reconstruction and Development (EBRD) has made a total of €20 million available for on-lending through local partner banks. In order to make investments for such projects even more attractive, MoSEFF contains a grant component for eligible projects.

N Ionel director Tamara Lukina.

“The workshops have become a cozier place and the mood is lighter, the workers take fewer sick leave days and productivity has considerably increased”

Encouraging investment activities On average, energy intensity in Moldova is around three times higher than in EU member states. Essentially, this means that Moldovan companies use three times as much energy to produce the same output as companies in the EU, something that has a profoundly negative impact on the competitiveness of enterprises, as well as hindering economic development on a large scale. In 2012, the government adopted a longterm development strategy for the energy sector, with one of the key targets of increasing energy efficiency. However, without considerable investment in the sector, it is difficult to achieve this goal. MoSEFF is designed to encourage investment activities of enterprises by not only providing loans and grants for projects (grants amounting to 5 to 20% of the credit line), but alsofree technical assistance by international experts who help companies optimise their projects.

The Ionel company received a credit of €420,000, while the total programme expenses amounted to €621,000. Just one year on, the company was reaping the rewards. Gas consumption in 2011 fell by 37%, while energy savings amounted to €210,000. The installation of a new steam boiler and modern ironing equipment, the replacement of wooden window frames with double-glazed window panes, as well as the introduction of energy efficient light bulbs, all contributed to achieve that. A new more economical and productive equipment was also installed. However, the reduction in energy consumption was not the only benefit to the company.

“The workshops have become a cozier place and the mood is lighter, the workers take fewer sick leave days and productivity has considerably increased,” says Larisa Tamashuk, head of the second sewing workshop.

“We have also bought five automatic machines to make pockets and buttonholes. The old ones often broke down, and we had to reset them manually. This had caused disruptions in the delivery schedule, which is unacceptable when dealing with European partners.” For Ionel, such problems appear as far memories.

“MoSEFF experts made all the necessary calculations and convinced us that even in times of crisis, it is possible to find resources.

And that it would be profitable”

N Rodika Marku the head of a cutout shop of the Ionel garment factory in Chisinau, together with a worker.

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“Saving time and improving quality”

N Employees of the Ionel garment factory at work in Chisinau.

“The example of the this factory shows that energy efficiency projects do not only result in energy savings, but can also increase productivity, improve the general atmosphere and enhance competitiveness”

Thanks to MoSEFF, over 20 new tools and machines have been purchased for various operations. Two ironing presses have not only cut down on vapor consumption (as well as power for its production), but also resulted in considerable quality improvement. The ‘cutting process’ workshop, where pieces of garment are arranged as multiple layers and cut-out, saw a real revolution with the purchase of a €90,000 automatic ‘cutout’ complex.

“We used to spend two and a half hours just for cutting out one section, eight people working at one table during the same shift,” says workshop head Rodika Marku.

“Using the new complex, we cope with one section within 12 to 15 minutes, while waste and idle times have been reduced.”

During the year, due to the combination of the reduction of waste during the ‘cutout’ process, plus the reduction on energy costs, 1.5 million Moldovan leu (around €100,000) were saved.

While the management at Ionel is certainly enjoying the benefits that the new equipment has had on company finances, employee Ludmila Afanas probably appreciates having the new equipment more than most.

“Imagine, we used to work with a vertical hand-knife, weighing around 10 kilograms.

At the end of the working day, you could not feel your hands anymore. Now you just set the programme and control the process.”

Designers from the experimental workshop feel the same. They used to cut out the templates manually and then copy them, working at the designer table in turn.

“Now we have purchased a new programme and an automatic machine for making templates: we save time, and improve quality,” says Inga Petrova, a designer at the company.

Reducing CO2 emmissions by more than 30,000 tons Since its launch three years ago, the MoSEFF Facility has supported 120 projects aimed at increasing energy efficiency for Moldovan enterprises, which have received credits from the EBRD via partnership with local banks.

More than half of these projects have already been completed or are being implemented, with the loans provided so far amounting to €15.2 million.

Annually, MoSEFF projects have facilitated primary energy savings of 96,400 MWH (mega-

N One employee of the garment factory at work.

Cutting down on energy costs? Yes, you can

EU Neighbourhood Info Centre – Feature no. 93

watt per hour), which equals the annual energy consumption of 42,800 people. Thanks to the implementation of the projects, CO2 emmissions have been reduced by more than 30,000 tons.

This has not gone unnoticed by other companies in the country.

“Moldovan companies are getting increasingly interested in the MoSEFF programme,” says Alexandru Bologa, MoSEFF expert in energy auditing.

“The example of the Ionel factory shows that energy efficiency projects do not only result in energy savings, but can also increase productivity, improve the general atmosphere and enhance competitiveness.”

INOGATE www.inogate.org The INOGATE Programme is an international energy cooperation programme between the European Union, the littoral states of the Black and Caspian Seas and their neighbouring countries. The co-operation framework covers the areas of oil and gas, electricity, renewable energy and energy efficiency.

The EU and Partner Countries have agreed to work together toward achieving the following four major objectives: Converging energy markets on the basis of the principles of the EU internal energy market, taking into account the particularities of the countries involved.

Enhancing energy security by addressing the issues of energy exports/imports, supply diversification, energy transit and energy demand.

Supporting sustainable energy development, including the development of energy efficiency, renewable energy and demand side management.

Attracting investment towards energy projects of common and regional interest.

Energy saving in the building sector in Eastern Europe and Central Asia (INOGATE) www.enpi-info.eu/maineast.php?id=319&id_type=10

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N Ionel garment factory produces fashion cloche for sale in Moldova but also for export to Europe and to other countries.

Moldovan Sustainable Energy Financing Facility (MoSEFF) www.moseff.org/index.php?id=13&L=1 The European Bank for Reconstruction and Development (EBRD) has recognized the increasing importance of energy efficiency and the key role it will play in the future of Europe.

In September 2009 the first Moldovan Sustainable Energy Financing Facility (MoSEFF) was launched in order to support energy efficiency investments in Moldovan enterprises. A credit line of 20 million Euro combined with a 5-20% grant component was provided for on-lending to Moldovan companies through EBRD’s partner banks. MoSEFF provides also technical assistance to the projects through Fichtner - a leading German engineering and consulting company.

To find out more MOSEFF project fiche www.moseff.org/fileadmin/files/factsheets-engl/app0153-factsheet-englIONEL_2012-01-25.pdf European Bank for Reconstruction and Development www.ebrd.com/pages/homepage.shtml#&panel1-3 EU Neighbourhood Info Centre Thematic portal: ECONOMY www.enpi-info.eu/themeeast.php?subject=4

EU Neighbourhood Info Centre An ENPI project The EU Neighbourhood Info Centre is an EU-funded Regional Communication project highlighting the partnership between the EU and Neighbouring countries.

The project is managed by Action Global Communications.

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