A seven-year EBRD loan of 12 billion roubles (equivalent to around EUR 280 million) will enable a major thermal power plant (TPP) in the Urals industrial heartland of Russia to convert from coal to gas, thus cutting pollution while increasing efficiency.
The transaction is part of the Bank’s strategy to encourage industry to switch away from using carbon fuels to generate electricity.
This is another major step in the EBRD’s strategy to support the modernisation and de-carbonisation of electricity generation, said Riccardo Puliti, the EBRD’s Managing Director for Energy and Natural Resources.
The borrower is Inter RAO Credit BV. A number of commercial banks are considering participation in the syndication of part of this loan, which is guaranteed by JSC Inter RAO.
The loan will be used to fund the construction of a 420MW Combined Cycle Gas Turbine (CCGT) power unit at the Verkhnetagilskaya thermal power plant in the town of Verkhni Tagil, which is situated in Russia’s Sverdlovsk region.
This strategic cooperation with EBRD provides not only additional financing for the Inter RAO Group investments, but supports the establishment of good corporate governance practices, including targeted compliance with best practice environmental standards, said Dmitry Palunin, Member of the Management Board and Chief Financial Officer of JSC Inter RAO.
Such a complex approach to financing the project increases the Group’s attractiveness for investors and expands its opportunities on debt capital markets, Mr. Palunin added.
Once the new unit has been completed, the Company plans to decommission 264MW of coal-fired capacity by the end of 2015 and an additional 288MW of coal-fired capacity by the end of 2017.
The closure of these outdated coal-fired boilers and associated steam turbines and their replacement by a Combined Cycle Gas Turbine will cut local carbon dioxide emissions by 1.6 million tons a year. This is equivalent to the annual pollution caused by 800,000 cars in Europe.
The EBRD Environmental and Social Action Plan agreed with the Company focuses on measures to improve environmental and social performance standards, policies, procedures and practises.
The CCGT unit will employ Best Available Techniques (BAT) regulating emissions, thus setting high environmental and energy efficiency standards that go far beyond existing national practices.
The new unit will have to meet the Bank's Performance Requirements (PRs) and EU environmental standards, namely the EU Industrial Emissions (IE) Directive.
This loan brings total EBRD investments to over EUR 2 billion in Russian power since the sector’s reform process was launched in 2001.