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Project summary
Hydro OGK is a 100% owned subsidiary of RAO UES of Russia and the Company
charged with the ownership and operation of hydro power stations in the
Russian Federation. HydroOGK currently operates hydropower plants located
throughout Russia with 21,350 MW of installed capacity that account for around
10% of the installed capacity of the Russian Federation. Upon completion of
the company’s consolidation, HydroOGK will operate hydropower plants with
27,273 MW of installed capacity.
The project is to finance the upgrade/refurbishment of existing infrastructure
owned by the company, mainly the Volga-Kama cascade. This includes nine hydro
power plants of the Volga-Kama cascade, many of which date from the middle of
last century and are in need of repair and upgrade. The planned project will
include installation of new transformers, turbines, new pressurised oil filled
cable power lines as well as security and automated control systems.
The Bank will provide finance for part of an overall modernization programme
being undertaken by Hydro OGK at existing facilities in Russian Federation.
The Bank’s financing of the proposed projects will not involve any change of
the hydro regimes or construction of new hydrological structures (such as
dams) or new generating assets.
Environmental classification and rationale
The project was screened B/1, requiring an Environmental Audit and
Environmental Analysis in line with the Bank’s Environmental Policy and Public
Information Policy. The modernisation of existing hydro plants is focussing
mainly on rehabilitating and modernizing existing facilities, which are
associated with a number of environmental issues, which can be readily
identified, assessed and mitigated as part of an Environmental Analysis.
As part of the environmental due diligence an Environmental Audit and Analysis
was undertaken by an independent consultant. A separate technical and safety
review was also undertaken.
Key environmental issues and mitigation
The key environmental issues for existing hydrogeneration plants are normally
associated with the impact such plants can have on local hydro regimes, fish
management as well as risk of oil leakage from existing machines. The impacts
are greatest during any development and change of operational regime. The
environmental due diligence confirmed that the project is structured in
accordance with best international practice and will enable the facilities to
attain both EU and Russian Federation environmental and safety standards. The
Company has spent considerable effort in maintaining its existing structures
and day-to-day environmental management. The ongoing investment programme will
enable the facilities to be further upgraded, ensuring that they continue to
meet best international practice as well as Russian Federation environmental
and safety standards. The Bank will monitor the project through among others
the procurement programme, which will enable the selection of appropriate
technology and equipment, which meets both EU and Russian standards.
A corporate environmental, health and safety review was undertaken of the
Hydro OGK as part of the due diligence. This included review of corporate EHS
structure, operational and development control and management. The company is
implementing an environmental management system based on policy requirements
from RAO UES of Russia and is implementing new procedures and guidance for the
sector. The Bank will work with the company in developing new guidance as
appropriate.
Environmental opportunities
The proposed project is expected to bring significant environmental and energy
efficiency benefits, as new state-of-the-art energy efficient generating units
will replace old inefficient units and therefore provide more reliable and
efficient electricity generation utilizing existing infrastructure. The
increased power generation capacity of the existing HPPs creates an
opportunity to lower carbon emissions per unit of electricity generated on
macro level by increasing the share of renewable energy in the grid and by
reducing the need for additional fossil-fuel based power generation capacity
or even by substituting some of the existing capacity. The project will
therefore yield possible carbon reduction opportunities. The Project will also
reduce oil leakage from existing units.
Summary of Environmental Action Plan
The Company will be required to adhere to Russian Federation environmental,
health and safety regulations and EU environmental standards. All relevant
permits will need to be obtained during the modernization process.
An Environmental Action Plan (EAP) has been developed following the due
diligence and is being agreed with the Company. The EAP will address, inter
alia, the overall management of the environment, health and safety issues at
the corporate level as well as individual sites.
Disclosure of information and consultation
In the context of the EBRD’s participation in the project, the Company will
release locally a summary of relevant environmental issues associated with the
project and summarise mitigation measures, action plans and other initiatives
agreed.
Monitoring and reporting
The Company will monitor the environmental impact of its operations in
accordance with national law and regulations. The Bank will evaluate the
project's compliance with the applicable environmental and social requirements
during the lifetime of the project by reviewing annual environmental reports
prepared for the project covering:
(i) ongoing performance of project-specific environmental, health and safety
activities as reflected in the results of periodic and quantitative sampling
and measuring programmes, and
(ii) the status of implementation of environmental mitigation and improvement
measures. The Bank’s representatives will also conduct periodic site
supervision visits when deemed appropriate.
If required, the Bank will carry out monitoring visits to individual plants
and will meet with the Company’s EHS management on an annual basis.
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