Translated version of this PSD: Ukrainian
The EBRD is considering providing a loan to the district heating utility Poltava Oblast Communal District Heating Enterprise “Poltavateploenergo” (the “Company”), operating in the Poltava Oblast and the City of Poltava (the “City”) to finance the installation of individual heating sub-stations, biofuel boiler, network replacement with pre-insulated pipes, modernisation of boilers and control systems, and the installation of monitoring and dispatching system in the City (the “Project”). The project aims at significantly improving the energy efficiency, reducing energy losses, gas and electricity consumption and improving the quality of heat and hot water supply services in the City.
The Project is part of an Integrated Approach to Reform in the Ukrainian District Heating Sector that sets out specific transition objectives for the sector which, by their nature, would benefit from a multi-project and strategic approach, to create a synergy between priority investments, technical cooperation, and sector policy dialogue. The transition impact of the project is expected to derive from:
Framework for markets: The Project will support a tariff setting methodology development and adoption at the National Utility Tariff Regulator level with a view to ensuring: (i) full operating cost recovery and cost control; (ii) full investment cost recovery based on the investment programme assessment to be performed by the National Utility Tariff Regulator and (iii) improved revenue predictability and planning through a process of formalised, regular, transparent and timely adjustment of rates. The City and the Company will enter into a Public Service Contract, which will clearly define the City and the Company’s rights and obligations regarding the district heating services provision and capital improvements including the tariff setting rules and policy. The demand-side measures proposed by the project will help the Company increase its consumption-based billing and further improve revenue collection.
Demonstration of successful restructuring: Through physical investments and commercialisation resulting from implementation of the Corporate Development Programme, the project will improve the operational and financial performance of the Company and will have a significant demonstration effect for other cities and utilities in Ukraine concerning ways to improve energy efficiency of district heating operations and reduce losses and costs.
Energy Efficiency: Through investment programme implementation the project is expected to result in significant energy efficiency gains as well as enable better energy management at the building level, thereby providing incentives for energy-savings by end-users.
Poltava Oblast Communal District Heating Enterprise “Poltavateploenergo”, a communal district heating utility operating in the Poltava Oblast and the City of Poltava and wholly owned by the Poltava Oblast.
€15 million EBRD loan to the Company, and €4 million from the Clean Technology Fund (CTF), both secured by a municipal guarantee of the City.
The project is expected to be co-financed by a grant of up to €5 million from the Eastern Europe Energy Efficiency and Environment Partnership (E5P).
The project is expected to be co-financed by a local contribution from the Company of up to €4.5 million.
Up to €28.5 million.
The project has been categorised B in accordance with EBRD's 2008 Environmental and Social Policy. The priority investments into the rehabilitation and modernisation of the district heating infrastructure are expected to bring environmental and social benefits associated with the overall improvement in the quality of heating and hot water services in the City, improved energy efficiency, reduction in fuel and electricity consumption, heat and water losses, and lower air emissions.
The due diligence is on-going and includes a corporate review of the Company’s corporate environmental, health and safety and social management capabilities and procedures in relation to its own workforce and construction contractors, and an analysis of the environmental and social impacts and benefits of the proposed priority investment programme to establish the level of the project's compliance with EBRD's Performance Requirements (PRs). Any adverse impacts are expected to be limited to short-term environmental, health and safety issues arising from construction works which can be adequately mitigated by taking environmental protection measures into consideration in construction planning and work practices. Particular attention needs to be paid to conducting an asbestos survey and developing and enforcing implementation of strict procedures for handling and removal of asbestos-containing materials.
An Environmental and Social Action Plan (ESAP), containing mitigation measures for identified issues along with a framework for the provision of information to stakeholders is expected to be developed and agreed with the Company. The Company will need to implement the ESAP, provide timely information to stakeholders affected by the Project and submit annual environmental and social reports to the Bank.
• Feasibility Study (€ 200,000) under the Ukraine District Heating Project Preparation Framework, financed by the Government of Sweden;
• IFRS audit (€ 15,000), financed by the Bank’s own resources;
• Corporate Development Programme to improve financial and operational performance of the Company (€ 220,000), to be financed by an international donor;
• Project Implementation Support covering procurement advisory services, implementation support and contract supervision (€ 550,000), to be financed by an international donor.
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