A 12-year EBRD loan equivalent to EUR 100 million will fund a much-needed modernisation of the power infrastructure in the Russian Far East, a region badly hit by massive flooding last summer, in what will be the Bank’s first power distribution project in its largest country of operation.
The energy efficiency benefits are expected to correspond to over 300,000 tons of reduced carbon dioxide emissions a year.
Part of the 4.4 billion rouble loan will support large-scale programme of the Far East Distribution Company (FEDC) relating to smart meters installation, as well as a new grid management and control system modernisation that will be accompanied by reduction in electricity losses.
Upgrading metering system comes as a priority for FEDC because existing meters are inaccurate and easy to tamper with. They are to be replaced by some 65,000 modern electronic meters that can be monitored remotely and used to cut off electricity.
Improved metering systems should lead to greater energy efficiency as consumers realise the full value of what they are consuming.
Part of the EBRD loan will also be used to restructure FEDC’s balance sheet, which mostly consists of short-term debt maturing in the near future.
The worst flood on record forced the evacuation of some 170,000 inhabitants of the Russian Far East last August and damaged more than 300 of FEDC’s transformer sub-stations in the region.
FEDC owns low and medium-voltage electricity distribution networks in the Russian Far East whose transmission lines exceed 100,000 km in length.
The borrower is JSC RusHydro, which indirectly controls FEDC. RusHydro, a long-standing client of the Bank, is the second largest hydro power generator in the world and accounts for around 16 percent of the Russia’s total installed capacity.
RusHydro strategy for its Far East assets foresees replacing economically inefficient capacity with effective hydro and thermal power generation. Focusing on opportunities to export electricity to neighbouring countries will be another priority.
RusHydro is majority owned by the Russian state and its shares are listed on the Moscow Exchange while its ADR trades on the London Stock Exchange.