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EBRD provides first major private power financing in Kazakhstan
To ensure a reliable supply of heating and electricity to Kazakhstan’s second-largest city, the European Bank for Reconstruction and Development (EBRD) has signed a loan agreement for a US$ 40 million (ECU 33.8 million) loan to Karaganda Power Company (KPC), a private power and heat utility located in the city of Karaganda.
"This is a very important investment, ensuring a reliable supply of essential energy to the Karaganda region while improving collection discipline and increasing efficiencies," said Ananda Covindassamy, Director of the EBRD’s Power and Energy Team. "This is also the first significant private power financing in that part of the world and will demonstrate that the introduction of private finance to the sector can bring mutual benefits to customers and shareholders. It should encourage political will and private sector appetite to pursue similar projects in the future."
The financing will enable KPC to repair and strengthen its electricity and heat generation facilities and heat distribution system, to reduce heat and water losses in the district heating network, and to improve environmental performance and health and safety standards. It will also support the privatisation process in Kazakhstan.
The financing consists of a US$ 22 million A loan for the EBRD’s account and a US$ 18 million B loan to be syndicated to participating banks.
KPC is owned by a joint venture, Karaganda Holding Company, which is owned equally by subsidiaries of Ormat Industries of Israel and National Power Plc of the UK. Both owners contribute vital operational and managerial expertise to KPC. They will also provide
US$ 22 million (ECU 18.5 million) towards the project.
Lucien Y. Bronicki, Chairman of both Ormat Industries Ltd and KPC, stated: "With this loan the EBRD is expressing its confidence in Kazakhstan’s economy, in spite of the circumstances prevailing in neighbouring Russia. The Bank is also expressing confidence in the abilities of Ormat and National Power to turn around the energy business in Karaganda."
David Casale, National Power Asset Manager and Director of KPC, noted: "We now have an important vote of confidence to go on with our joint stewardship of KPC to meet the energy needs of the people and businesses of Karaganda".
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