Capital expenditure and working capital programme for the repair and upgrading of the power generation and heat distribution facilities in Karaganda.
The project aims to increase the reliability and efficiency of power and heat generation and delivery systems, to reduce commercial and technical losses, and to improve environmental performance.
The project will:
support private investment in the country and sector; and
demonstrate the effect of improved corporate governance and business conduct resulting from compliance with sound international standards and practices.
The borrower is TOO Karaganda Power (KPC), a privately owned limited liability Kazakh company operating two coal-fired CHP plants (totalling 470 MW installed electric capacity and 1500 MW heating capacity) and the associated district heating network for Karaganda, the second-largest city in Kazakhstan.
The sponsor is Karaganda Holding Company. Fifty per cent of the capital stock is owned by, or through subsidiaries of, Ormat International Inc, and the remaining 50 per cent by National Power Plc, the second largest UK generator and a major investor in overseas power markets.
US$ 40 million (ECU 33.8 million), consisting of a US$ 22 million (ECU 18.6 million) ten-year A loan corporate credit and a seven-year B loan to be syndicated.
US$ 62 million (ECU 52.3 million).
The project was screened B/1, requiring an environmental analysis of the proposed investment and an environmental audit of TOO Karaganda Power’s main facilities, primarily TETS 1 and TETS 3 thermal power stations. These were carried out by an independent consultant. Environmental issues identified included ash disposal, air emissions, waste management, some soil contamination and worker health and safety issues. Some of these issues, for example ash disposal and air emissions, are already addressed in the project investment plan.
The key compliance issue relates to air emissions. The two power stations use primarily high ash coal, resulting in high particulate emissions that, though in compliance with national regulations, are in excess of World Bank emission standards. Sulphur dioxide and nitrogen oxides are in compliance with national as well as World Bank standards. The current investment plan will already significantly reduce particulate emissions and the sponsor has agreed, as part of an Environmental Action Plan (EAP), to carry out additional measures to achieve compliance with World Bank standards.
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Text of the PIP