Novgorod District Heating Project



Project number:


Business sector:

Municipal and environmental infrastructure

Notice type:


Environmental category:


Approval date:

22 Nov 2011



PSD disclosed:

24 Aug 2010

Translated version of this PSD: Russian

Project Description

The EBRD is considering financing the rehabilitation and upgrade of the district heating infrastructure in the City of Novgorod. The priority investments to be financed by EBRD will be defined by consultants in a feasibility study.

Transition Impact

Transition impact is expected to be achieved through the:

  • Introduction of a service agreement which will regulate the relationship between the Company (as operator) and the City (as owner) and specify the rights and responsibilities of each party to improve service levels;
  • Improvement in the tariff methodology to ensure full cost recovery and incentives for cost efficiency;
  • Skills and knowledge transfer through the Corporate Development Support Programme and related training;
  • Demonstration of successful cost restructuring including reductions in operating and maintenance costs.

The Client

“Teploenergo” MUE (the “Company”), a municipal company providing district heating services to both residential and industrial customers in the City of Novgorod (the “City”) and wholly owned by the City.

EBRD Finance

Senior corporate loan to the Company of up to RUB 1,000 million (equivalent of around EUR 25 million), guaranteed by the Novgorod Oblast.

Project Cost

Up to RUB 1.5 billion

Environmental Impact

Categorised B in accordance with EBRD's 2008 Environmental and Social Policy. The Project is expected to improve efficiency of the district heating services in the City. The potential adverse future environmental and/or social impacts of the rehabilitation of the district heating systems are likely to be site-specific and can be readily identified and addressed through adequate mitigation measures.

The environmental and social due diligence is on-going and will include an independent environmental and social audit/review of the Company's current EHS and labour/OHS management systems, operations and facilities, and an analysis of potential environmental, social, workers' and community's health and safety issues and benefits associated with the proposed investment project. Upon completion of the due diligence an Environmental and Social Action Plan (ESAP) satisfactory to the Bank will be prepared and agreed as a condition of the EBRD's investment to address any environmental and social issues identified during the due diligence. The ESAP will be targeted at ensuring the project's compliance with the Bank’s PRs, improving Company's operations and district heating facilities to meet national and EU standards.

The Client will also develop a Stakeholder Engagement Plan, including a grievance mechanism, and will release information on environmental and social performance and a summary of the agreed Action Plan to stakeholders. This PSD will be updated when the results of due diligence are known.

Technical Cooperation

Grant funds will be sought for:

  • Technical Feasibility Study to assist the Company with preparation of a feasibility study for the project, which will focus on the priority investment programme;
  • Project Implementation Support including establishment and training of PIU and its staff, engineering, design and procurement support and contracts supervision;
  • Corporate Development Support Programme.

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168

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

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