Project Summary Documents
Project Summary Documents (PSDs) are disclosed for each project prior to Board
consideration. They contain project descriptions, financial details, client
information, environmental issues, tender guidelines, and contact details.
PSDs for private sector projects are disclosed at least 30 days prior to Board
consideration and for state sector projects, at least 60 days.
Project Summary Documents
Signed projects
Board approval is the final stage in the project approval process. After Board
approval, the EBRD and the client sign the deal and it becomes legally
binding. Signed project lists reflect year-end data.
Signed projects
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Case studies
Charging up Russia’s power sector
One of the most ambitious elements in Russia’s project to dismantle old state
controls of its economy is the reform of a once-centralised state electricity
business, splitting it into separate generation, transmission and distribution
companies and turning yesterday’s unwieldy monolith into tomorrow’s
multi-player market.
As the Russian economy grows, and electricity consumption rises by more than 5
per cent a year (making it ever more important to rebuild the nation’s
outdated energy infrastructure), RAO UES, Russia’s largest power utility, is
being split into separate generation, transmission and distribution companies.
The EBRD’s pivotal role in this giant reform is confirmed as the first shares
in one of the new generation companies are sold to private investors. In
November 2006 the EBRD threw its weight behind a landmark first initial public
offering by one of Russia’s six wholesale generating thermal companies by
acquiring a minority stake in OGK-5.
This investment is part of the strategy of OGK-5’s controlling shareholder,
RAO UES, to raise private funding on the open capital market for the
investment programme. The Bank’s decision to take about 7.5 per cent of the
equity publicly reaffirms the EBRD’s support for the latest phase of Russia’s
power sector reform.
The Bank has been involved in the multiple-stage reform since 2001, when
Russia’s electricity supremo, Anatoly Chubais, the Chief Executive Officer of
RAO UES, asked the EBRD for help in dismantling Russia’s electricity monopoly.
Now the programme has reached its third stage, in which the state prepares to
bow out and investors step in to take strategic stakes in newly separated
electrical entities unbundled from RAO UES.
The strategy of the Russian government and RAO UES is to attract investors to
participate in capital increases that will finance urgent refurbishment and
new capacity needs. OGK-5, with two of its four plants in the fast-growing
central Russian Ural region, has high investment needs. Proceeds from the
November public offering of 5.1 billion shares will be ploughed back into
modernisation and developing new capacity.
The equity sale brought RAO UES’s stake in OGK-5 down from 87 per cent to
about 75 per cent. A second equity sale to a strategic investor, this time of
25 per cent plus one share, is planned for 2007.
The EBRD’s Strategy for Russia, approved in 2006, commits the Bank to pursuing
equity investments in generating companies. “The interest of private investors
in the sector will, from now on, be one of the determining factors of the
overall success of the reforms,” said the CEO of OGK-5, Anatoly Bushin. “The
Bank’s involvement sends supportive signals that private capital can
successfully be attracted in the Russian power sector.”
The EBRD participation in OGK-5 was conditional on the company agreeing to
improve environmental performance and corporate governance. A Memorandum of
Understanding was signed incorporating these requirements.
Plugging into a more efficient network, Slovak Republic
Shifting electricity companies from state ownership to the private sector can
bring benefits to the economy, the companies themselves and their customers
through more efficiency, greater investment and better collection of bills.
Around 1 million customers in the Slovak Republic will see these improvements
first hand following the first stage of the privatisation of Zapadoslovenska
Energetika (ZSE), the electricity distribution company in the west of the
country.
For the Slovak Republic, this transaction marks an important milestone in the
country’s plans to achieve a market-based power sector in line with EU
membership requirements. The EBRD has been actively involved with the
Government throughout the process and the Bank’s presence was instrumental in
bringing leading international investors into the country’s energy sector.
The EBRD purchased a 9 per cent stake in ZSE from E.ON Energie, one of
Europe’s leading energy companies, which had previously purchased a 49 per
cent stake in the distribution company. The combination of E.ON’s technical
skills and the Bank’s knowledge of the region will help ZSE to upgrade its
business and support the liberalisation of the energy sector.
ZSE is now well-positioned to invest in its transmission network, which serves
customers ranging from households to heavy industry. Improvements in
management and operations will lead to a reduction in costs and a stronger
focus on customer service. The success of this privatisation should also lead
to further private sector involvement in the country’s energy system,
including the privatisation of the state-owned generator.
“We are confident that the combination of E.ON Energie and the EBRD will bring
benefits to our customers and employees in the region and support the
long-term restructuring of the energy sector in the Slovak Republic,” said
Johannes Teyssen, Chairman of E.ON Energie.
Technical cooperation funding was provided by the United Kingdom and the
United States.
EPS Power II, Serbia and Montenegro
Elektroprivreda Srbije (EPS) is a vertically integrated electricity utility.
It is responsible for 95% of the electricity generation in Serbia and
Montenegro. The project consists of the modernisation of equipment installed
at the Tamnava West lignite mine and upgrade of the power system control and
internal communications. Both components are identified as priority
investments by EPS.
The total project cost is €100 million including a €15 million contribution
from EPS. EBRD financing consists of long-term sovereign-guaranteed loan of
€50 million for the two components: €35 million for the lignite mines and €15
million for the communications network.
Cofinancing for the communications network component will be provided in the
form of a €25 million loan from the European Investment Bank and a €10 million
grant from the State Secretariat for Economic Affairs.
A cost-effective and reliable supply of fuel is vital in restoring the
infrastructure required for further improvement of the power sector. An
improved control and communications system, a pre-condition to Serbia’s full
membership in the Union for the Coordination of Transmission of Electricity,
is crucial to the regional network. As such, overall sector reform, not only
the mining and transmission sectors, is a condition of the loan.
RAO UES restructuring loan, Russia
RAO UES is a holding company with investments in many parts of the Russian
power sector. The company owns and operates the national grid and three power
stations with a total installed capacity of 2.1GW. It holds equity stakes in
46 large stand-alone power stations (59GW) and almost all the regional
vertically integrated heat and power companies that have a monopoly on sales
to the final consumer.
The total project cost is €100 million. EBRD underwrote the whole amount and
then syndicated €50 million to commercial banks.
The project concerns: (a) the refinancing of short-term debt, including
overdue accounts payable as part of the financial restructuring of the company
prior to privatisation; and (b) the financing of urgent priority investments
for the improvement in the efficiency of operations of the company.
The project is expected to help RAO UES to prepare for industry restructuring
and ensure that it is properly carried out, striving for higher levels of
transparency and corporate governance throughout the restructuring process.
Power distribution post-privatisation, Moldova
The efficiency of Moldova's power supply is to be improved with the assistance
of an EBRD investment of €34 million. The Bank is providing the financing to
three recently privatised electricity companies, which are majority owned by
Union Fenosa (UF), a major Spanish utility.
The EBRD is providing a €29.4 million ten-year loan (alongside an equal amount
from the IFC) and a €5.9 million equity investment. In structuring the loan,
UF and the EBRD agreed an innovative risk-sharing structure allowing UF to
avoid a traditional corporate guarantee.
The loan will enable the three electricity companies, which supply electricity
to some 720,000 customers, to modernise their commercial practices and power
distribution networks. This will help to alleviate serious problems with
losses and levels of collection.
Since privatisation, UF has improved the reliability of electricity supply,
with power cuts reduced from 4,710 hours per year to 51 hours. These
reductions should increase business production and encourage greater reliance
on the system. The loss reduction programme will decrease pressure on the
balance of payments of Moldova, which currently imports over 60% of its
electricity.
National Power Grid Company, Romania
The project supports the establishment of the independent National Power
Transmission Company "Transelectrica" SA (NPGC) as a Romanian state-owned
joint-stock company in September 2000. Transelectrica aims to become a major
Transmission System Operator in the South East Regional Electricity Market.
Romania has become a full member of UCTE in May 2003.
NPGC operates 750 KV, 400 KV and 220 KV overhead lines of about 8,800 km as
well as 36,000 MVA installed in 76 transmission substations. NPGC is
responsible for power transmission, system operator, market operator and
interlinks management. NPGC ensures equal and reliable third-party access to
the transmission grid, to generators and distributors.
The project finances priority investments to improve service quality and
efficiency and to develop the market operator.
The total project cost is USD204.5 million. EBRD loan proceeds of USD51.5
million covers two important components of the investment programme:
communications terminal equipment and metering and RTU facilities. The
project is co-financed by the European Investment Bank and EU Phare provides
an investment grant.
Mosenergo, Russia
Mosenergo is Russia’s largest vertically integrated utility responsible for
producing and supplying the majority of the power and heat demand of Moscow
and the surrounding region. Mosenergo is 50.9% owned by RAO UES, the national
grid and power holding company.
The project is expected to help Mosenergo optimise its balance sheet, finance
urgent rehabilitation investments, as well as help it prepare for
restructuring and ensure that it is properly carried out, striving for higher
levels of transparency and corporate governance throughout the restructuring
process.
The financing consists of USD70 million corporate loan. Up to USD35 million
will be syndicated to commercial banks. The proposed loan would be used to
partially refinance the 1997 Mosenergo Eurobond as well as finance priority
investments into Mosenergo’s generating capacity.
Mutnovsky, Russia
One of the first independent power projects in the Bank’s countries of
operation, the project consists of the construction and installation of a
50MWe (2 x 25MWe) geothermal power plant located in Mutnovsky, southern
Kamchatka, Russian Federation for a total cost of USD150.2 million.
The EBRD provided a USD99.9 million sovereign loan to the Russian Federation,
with a 15-year maturity (including a five-year grace period). The loan was
subsequently on-lent to Geoterm, the project company. The operation of the
power plant is governed by a long-term power purchase agreement with a power
distribution company Kamchatkaenergo.
The objectives of the Mutnovsky geothermal project are: (a) to assist the
Kamchatka region in its strategy of diversifying its energy base; (b) to
reduce the imported fuel bill and the cost of power generation; (c) to
decommission environmentally damaging old fuel-fired plants; and (d) to
develop the first independent power producer in the region.
Enguri, Georgia
The project aims to make improvements at the tallest arch dam in the world,
alleviate critical power shortage in Georgia at a low cost and enhance the
environmental benefits of the 1300 MW Enguri hydropower station which provides
40% of the energy demand in Georgia.
The EBRD is providing a USD38.8 million loan for the first phase of
rehabilitation. Other co-financiers are the European Union, the Japanese
Government, KfW and Sakenergo. The borrower is Sakenergo, a state-owned power
utility responsible for power transmission. The total project cost is
approximately USD147 million.
The project aims: (a) to improve the dam operational safety and enhance the
environmental benefits of the power plant; (b) to raise the availability of
non-polluting renewable energy in the country by increasing Enguri's energy
production by 15%, using water that is currently wasted; (c) to restore the
station's capacity to provide peak power, and (d) to ensure the longevity of
the plant.
The project has provided an opportunity for the Bank, in consultation with
other IFIs, to provide guidance and grant support to the Government during a
critical period of reform and privatisation of the Georgian Power sector.
Syrdarinskaya Power Plant rehabilitation project, Uzbekistan
The project consists of the rehabilitation of turbines and the water intake
system and provision of a cleaning device for condensers at the Syrdarinskaya
Power Station in Uzbekistan.
The total project cost will amount to USD48.2 million and the proposed EBRD
finance will be USD28 million. The proceeds will be used to fund the foreign
cost of the rehabilitation of the Syrdarinskaya Power Plant, including
engineering and project management services for project implementation.
The project will move MPIE towards its commercialisation by improving its
financial performance, strengthening its commercial management and
facilitating the implementation of an institutional reform programme. It will
accelerate the policy reform by promoting the development of a competitive and
efficient power sector and will support the country's move towards a market
economy.
Starobeshevo power modernisation project, Ukraine
The project consists of the supply and installation of a 210 MW fluidised bed
boiler with ancillary equipment at Unit 4 of the Starobeshevo Power Station in
eastern Ukraine. It has an installed generating capacity of 8,170 MW, which
is equal to 15% of the total installed capacity in Ukraine.
The aim of the project is to support the ongoing restructuring and
commercialisation of the power sector, and the implementation of the sector
investment plan. The project is expected to reduce the atmospheric emissions,
the country's energy intensity and imports through better utilisation of
locally produced coal.
The total project cost amounts to USD163 million. EBRD financing is USD113
million and USD21 million will be provided by export credit agencies under
ECLAT financing. The borrower is Donbasenergo, one of four state-owned
thermal power generation companies that were established in June 1995 under
the wholesale reorganisation of the Ukrainian power sector. It will finance
the balance of USD29 million from its own resources.
The project contributes to the transition process by supporting the
commercialisation of the power sector and establishment of the competitive
wholesale power market; by helping Donbasenergo achieve sound corporate
finances; and by supporting payment discipline in the power sector.
Talas transmission network improvement project, Kyrgyzstan
The project aims to improve the transmission and distribution network in the
Talas region. It will support private involvement in power distribution in
the country as part of the power sector restructuring and will finance power
losses, reducing investments of the state-owned power utility of Kyrgyzstan.
The borrower is Kyrgyzenergo, a state-owned joint-stock power company
responsible for power generation, transmission and distribution as well as the
operation of the country's heating systems. Kyrgyzenergo has been enacted as
a commercial joint-stock company under the laws of Kyrgyzstan, and its charter
was registered in June 1997. The total project cost is USD30.2 million and
EBRD financing is USD20.7 million.
The project objectives are: a) to support the Government's on-going programme
of sector restructuring and efforts to promote privatisation of power
distribution to improve collection and reduce commercial losses; and b) to
improve the efficiency of electric power transmission and increase reliability
of supply to the Talas region.
The proposed loan will support progress towards private management of power
distribution for the first time in the Central Asian region. It will also
enable the country to provide the most economic source of electricity to the
Talas region, which has good potential for economic development.