Project summary document

Project description
and objectives:

The proposed project will include an equity and debt facilities to Taganrog Teploenergo, one of the first Russian private operators in the district heating sector, to finance rehabilitation and upgrade of district heating infrastructure in the city of Taganrog in the Russian Federation.

Transition impact:

The project will assist in increasing private sector participation in the district heating market in the Russian Federation by supporting the Company’s ongoing investment plans. The project will support restructuring by reducing costs, increasing operating and energy efficiencies and improving service levels, resulting in greater commercialisation in the sector and long-term sustainability. These outcomes help to demonstrate that the private sector can be instrumental in implementing improvements in efficiency and increased service level in district heating supply. The project will also support Company’s growth and expansion.

The project will bring corporate governance and transparency improvements including introduction of Shareholders Agreement, Agreement on Dividend Policy, IFRS, a corporate governance code, publication of accounts and environmental reoports, appointment of an independent Director to the Company’s Board.

The client:

Taganrog Teploenergo, a privately owned district heating company, currently providing heat and hot water services to both residential and industrial customers in the City of Taganrog.

EBRD finance:

Equity: up to RUB 133 million
Debt: up to RUB 221 million

Total project cost:

RUB 354 million.

Environmental impact:

Screened B/1 requiring an environmental analysis of the proposed project and environmental, health and safety audit of existing operations and the company. Rehabilitation of the district heating system should mainly result in environmental benefits associated with reduction of heat and hot water losses.

The project might be associated with some environmental issues of the disposal of demolition and construction waste, increased noise and dust levels during the construction stage.

Health and safety issues that might be associated with the potential presence of asbestos in the pipe lagging, wall partitions and roofing material of the buildings that were constructed between 1960-1980. An asbestos survey would need to be conducted, and, in case, the asbestos is identified, detailed procedure for asbestos removal and handling developed and implemented in order to prevent a contamination of the surfaces and air with asbestos fibre. Other health and safety issues will be mitigated by the fact that the Company regularly conducts work place assessments for the employees, and, also organises a training on health and safety related issues, such as a training on Work at Height; Safety Measures for Operation of Industrial Equipment and Processes; Fire Safety and Fire Extinction Methods; Hazardous Activities and Control Measures, Firs Aid in case of Accidents and Professional Injuries, etc.

TeploEnergo is planning to implement a redundancy programme reducing the number of permanent personnel from 424 to 252 people and completely cutting seasonal personnel by 2010. Redundancies will need to be carefully planned, and implemented.

Technical
cooperation:

None.

For consultant opportunities for projects financed by technical cooperation funds, visit procurement of consultants.

Company contact:

Gennady Dvoryaninov
General Director
Lomakina 23a, Taganrog, 347900
Tel/Fax: +7 (8634) 38-39-52

EBRD contact:

Anna Schin, Operation Leader: schina@ebrd.com

Business opportunities:

For business opportunities or procurement, contact the client company.

General enquiries:

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com