OSSH electricity distribution efficiency improvement program

Overview
Project Summary Document
Environmental and Social Documentation
Procurement
Complaints

Project ID 41251

Status Complete

Location

Albania

Business Sector

Energy

Notice Type

Private

Project timeline

Exploratory
Passed Concept Review
Passed Structure Review
Passed Final Review
Board Approved
Signed
Implementing
Completed

Project ID 41251

Status Complete

Location

Albania

Business Sector

Energy

Notice Type

Private

Environmental Category

Approval Date

15 Mar 2011

Disclosure date

15 Dec 2010

As per section 1.4.2 (iii) of the Directive on Access to Information: "For Projects approved by Bank management where the Board of Directors has delegated the approval authority, the PSD shall be disclosed at the start of the relevant no-objection notification period to a member country of the Bank in accordance with Article 13 (iii) of the Agreement Establishing the EBRD."

Translated version of this PSD: Albanian

Project Description

The proposed transaction is a EUR 50 million long-term senior loan to the Electricity Distribution Company of Albania (“CEZ Shpërndarje”, or “the Company”) to fund the Company’s turnaround and capex programme estimated at around EUR 200 million during 2010-2014, aimed at reducing electricity distribution losses, upgrading and modernising the electricity distribution network, as well as improving the Company’s financial and operational performance (“the Project”). CEZ Shpërndarje is 76% owned by the Czech energy group ČEZ, a.s. which is acting as the Sponsor in this transaction.

The Company’s investment plan during 2010-2014 amounts to around € 200 million and includes the following measures:

(i) modernisation of the distribution network, covering both low (€ 50m) and medium voltage lines (€ 44m);

(ii) refurbishment of substations (€ 54m);

(iii) installation of new meters (€ 49m); and

(iv) implementation of a new billing system, SAP (€ 3m).

This investment programme is expected to lead to a substantial improvement in the Company’s operating performance, reduction of distribution losses from the current 34% and the implementation of metering which will support improvements in payment discipline and thus enable CEZ Shpërndarje to improve the collection rates from the current 82%.

Transition Impact

The Project’s transition impact stems from two factors:

(i) the demonstration effect of a successful turnaround, where EBRD will support ČEZ, a.s., an experienced Sponsor with a successful track record of turning around electricity distribution companies in Bulgaria and Romania; and

(ii) setting standards for business conduct – loss reduction.

The Client

CEZ Shpërndarje is the sole electricity distribution and retail company in Albania. The Company owns and operates the entire 110 kV distribution network in the country, covering 69,000 km, and currently serves around 1.1 million customers. Total supplied electricity amounted to 4.1 TWh in 2009. CEZ Shpërndarje was unbundled from an integrated utility into a separate entity in 2008 and privatised in May 2009, when the sale of a 76% stake to ČEZ, a.s. was completed.

EBRD Finance

The EBRD is considering extending a senior corporate loan of up to € 50 million to fund a portion of CEZ Shpërndarje’s turnaround and efficiency improvement programme of around € 200 million in 2010-2014. The IFC, other commercial lenders and CEZ Shpërndarje in co-operation with ČEZ are expected to provide the balance of the financing.

Project Cost

€ 200 million.

Environmental Impact

The Project is categorized B. The proposed capital investment programme includes mainly investments in network and substation modernisation, new meters and billing system. The currently available information is not sufficient to carry out an E&S analysis for the capital investment programme, however the investment programme will not involve any high voltage lines and therefore, its implementation is likely to have limited adverse environmental and social impacts, which can be avoided or mitigated by adhering to generally recognised performance standards, guidelines or design criteria.

Due diligence undertaken and outcomes

The due diligence undertaken for the project comprised of the following:

the review of the Distribution Networks Environmental Baseline Conditions report that was prepared for IFC in 2008;
management review of the Company; and
an environmental and social audit of the operations and facilities of the Company, to assess its ESMS and past/current performance against relevant PRs.

The main issues identified during the due diligence relates to lack of defined environment, health and safety (EHS) management systems; soil and groundwater contamination; human resources policy and procedures; labour and working conditions; management of planned redundancies; third party incidents; and stakeholder engagement.

Summary of Environmental and Social Action Plan (ESAP)

An ESAP has been drafted to address the issues identified during the due diligence and is being negotiated with the EBRD and IFC. The priority tasks in the ESAP cover the following:

Development of an EHS Policy within the Company and establishment of EHS Management Systems within the Company;
Development of EHS and human resources procedures and technical guidelines and their dissemination to the employees;
E&S appraisal of the investment programme components once they are defined;
For all substations, registration of urgent security gaps (e.g. open manholes, fire protection, fencing) and implementation of proper repair measures;
Registration of PCB contaminated oils, soil and groundwater and development of a management program;
Establishment of a soil and groundwater monitoring programme;
Registration of asbestos containing materials and management of these materials;
Development and implementation of training programs;
Development and implementation of a retrenchment plan; and Development and implementation of a Stakeholder Engagement Plan.

Monitoring and reporting

The Company will:

provide the Bank with an Annual Environmental and Social Report (AESR), including updates on the ESAP, and notification on any material accidents or incidents;
facilitate periodic monitoring visits by the Bank’s staff or appointed representatives when deemed necessary.

Technical Cooperation

None.

Transition impact

ETI Score:60

PSD last updated

01 Feb 2019

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

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

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Environmental and Social Documentation is not available for this project.

Selected procurement notices related to this project may be shown below. Further procurement opportunities related to this and other projects, if available, maybe be viewed in the EBRD Procurement Portal.

The EBRD's Environmental and Social Policy (ESP), Access to Information policy (AIP) and Project Accountability Policy (PAP) enable sound and sustainable development in its projects. The Independent Project Accountability Mechanism (IPAM) deals with complaints about environmental, social and disclosure matters related to the Bank’s investments.

No complaints about this project have been made so far.

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