EBRD funding will enable two Russian cities, Lipetsk and Vologda, to modernise their district heating and water treatment systems as part of a strategy which brings the Bank’s total investments in the renewal of the country’s municipal infrastructure to over EUR 750 million over the last 14 years.
Two 10-years loan agreements signed today nearly 1,000 km apart in different parts of Russia will provide a total of 778 million roubles (equivalent to EUR 19.2 million) for infrastructure investments. Both are follow-on transactions building on the success of earlier EBRD-funded municipal projects in the two cities.
Vologda, situated 450 km northwest of Moscow, is getting a loan of 467 million roubles for urgent work on its district heating network. Lipetsk, 500 km to the south of Moscow, will get up to 311 million roubles to renew its main wastewater treatment plant. Both 10-year loans are issued under a guarantee from the respective cities.
Around half of all the fuel consumed in Russia is used to operate district heating systems. Making them more energy efficient is therefore a major economic priority, especially as energy intensity is on average four times higher than in the EU and vast energy and water losses are caused by the use of obsolete and inefficient heating systems.
Savings resulting from the EBRD-funded programme in Vologda are estimated at approximately 5.6 million cubic metres of gas, 1.6 million kWh of electricity and nearly 6,000 cubic metres of water while the amount of heat purchased to provide hot water and heating for the 300,000-strong population is expected to fall by 2,035 Gcal a year. Heat purchases account for 63 percent of Vologda district heating system’s operating costs.
In Lipetsk, which has a population of some 500,000, the capital investment programme funded by the Bank is expected to reduce the contamination of the Voronezh River and the Volga-Don basin, allowing the city’s main wastewater plant to achieve compliance with EU effluent discharge standards as well as Russian regulatory requirements.
In addition, the cities will benefit from EUR 1.9 million in non-refundable technical cooperation funds from EBRD shareholders including Austria, Canada, Finland and Germany as well as the EBRD Shareholders’ Special fund. The Northern Dimension Environmental Partnership (NDEP) is contributing a further EUR 2 million.
In providing long-term funding in local currency for the sector, the EBRD pursues three priority goals: improving the environment and particularly water quality, promoting energy efficiency and helping service providers to achieve financially sustainability so they can afford to make necessary infrastructure investments in good time.