€150 million syndicated loan to upgrade Latvenergo’s Riga CHP-2 power plant
The EBRD is stepping up its support for the creation of a modern power system in the Baltic region with a €150 million loan for the construction of a state-of–the-art gas turbine facility in Latvia following the closure of the Ignalina Nuclear Power Plant.
The proceeds of the loan will be used to upgrade power plants run by Latvia’s Latvenergo, the state-owned group whose operations include generation, transmission and distribution of electricity and heat energy.
Structured under the Bank’s A/B loan scheme, the EBRD is retaining €85 million of the total loan on its own account, with the remaining €65 million syndicated by UniCredit, DnB Nord and Nordea.
Latvenergo produces around 95 per cent of the total Latvian power capacity via its two combined heat and power facilities – Riga CHP-1 and Riga CHP-2 and its hydroelectric power plants.
The EBRD funds will help finance the completion of the Riga CHP-2 power plant rehabilitation programme, which includes the replacement of old generating facilities with two new state-of-the-art combined cycle gas turbine (CCGT) units.
With the Bank’s support, Latvenergo will build the second CCGT unit at Riga CHP-2, to replace the outdated conventional gas-fired units. The new facility will have a capacity of 400 MW (electric) and 270 MW (thermal), benefiting from significantly improved efficiency. The first CCGT unit was successfully commissioned by Latvenergo in 2008.
The rehabilitation of the Riga CHP-2 power plant will improve the security and reliability of energy supply in Latvia and in Baltic region, following the closure late in 2009 of the Ignalina Nuclear Power Plant in Lithuania. The increased generation capacity of the upgraded plant will also help Latvia reduce its dependence on imported energy.
In addition, the rehabilitation of the power plant, will also promote the development of the Common Baltic Electricity Market.
“The EBRD is pleased to provide necessary financing for the implementation of this crucial project especially at a time when credit market conditions remain tight. The modernisation of Latvenergo’s facilities will enable the company to increase the competitiveness of its generating capacity and to significantly improve Latvia’s energy infrastructure”, said Peter Reiniger, EBRD Managing Director for Central and South Eastern Europe.
“This is a very important project for Latvenergo AS and its implementation implies that one of the most modern and effective cogeneration plants in the region will be put into operation by the end of 2013 after the reconstruction of Riga TEC-2. We would like to thank the EBRD for its continuous support and key role in the mobilisation of the necessary financing to complete this project in the current challenging economic environment in Latvia”, said Karlis Mikelsons, CEO of Latvenergo AS.
The construction of the second CCGT unit at Riga CHP-2 is being co-financed by a €100 million loan from the European Investment Bank, which was signed in October 2009.
In February 2010, the EBRD signed a €71 million loan to AB Lietuvos Elektrine for the construction of a new modern power generation facility in Lithuania.