Ust-Kamenogorsk DH Modernisation



Project number:


Business sector:

Municipal and environmental infrastructure

Notice type:


Environmental category:


Approval date:

25 Jul 2017



PSD disclosed:

25 May 2017

Translated version of this PSD: Russian

Project Description

Financing modernisation of the district heating system in Ust-Kamenogorsk. Subject to the due diligence, components of the project are to include (i) automation of the central heating stations (the "CHS") and pumping stations; (ii) procurement of special vehicles to improve operational efficiency;

(iii) rehabilitation and construction of the networks operated by the Company; and (iv) modernisation of the DH system in Menovnoye settlement.

Project Objectives

The project is expected to result in more efficient energy use through reduction of heat losses in the system and automation of the CHSs. Renewal of the Company's special vehicle fleet, in conjunction with the rehabilitation of the networks, will allow better use of its workforce improving operational efficiency.

Transition Impact


Transition Impact for this Project is expected to derive from the below:

  • Development PSCs: The project will include the introduction of a Public Service Contract ("PSC") to define clearly, and on a performance-basis the expected level of service to be performed in exchange for any support mechanism needed on affordability grounds.
  • Tariffs and metering: The Project will include an analysis of the specific methodology on the establishment of cost reflective tariffs for user groups. The elimination of any cross subsidies will also be sought, as well as the introduction of metering and the possible application of RAB methodologies.
  • Commercialisation: The Project will carry out a Financial and Operational Performance Improvement Programme ("FOPIP") as a part of the overall Corporate Development Programme ("CDP") supported by TCs with the objective of raising managerial, financial and operational performance at the Company level.

Client Information


Joint-stock company "Ust-Kamenogorsk Teplovye Seti" is in charge of (i) heat and hot water transmission and distribution, (ii) heat and hot water sales, and (iii) heat generation. The Company is 100 per cent owned by the Akimat of Ust-Kamenogorsk.

EBRD Finance Summary

KZT 3,000,000,000.00

Senior loan of up to KZT 3.0 billion.

Total Project Cost

KZT 5,000,000,000.00

The Sub-project is expected to be co-financed by the Government of Kazakhstan (the "GoK") under the Enhanced Partnership Framework Arrangements (the "EPFA") with up to KZT 2 billion, subject to approval by the GoK.

Environmental and Social Summary

Categorised B (2014 ESP). The potential environmental and social issues and impacts associated with the rehabilitation of the existing district heating networks can be readily identified and mitigated. Independent consultants were engaged to carry out environmental and social due diligence as part of the feasibility study for this project. This included an audit of the company’s existing operations and an appraisal of the proposed investment programme. The consultants have developed a Non-Technical Summary (NTS), Stakeholder Engagement Plan (SEP) and Environmental and Social Action Plan (ESAP). The Company provides district heating services to 195 thousand people in Ust-Kamenogorsk (about 62% of the total city population). It operates seven boiler houses for district heating, of which six are coal-fired, and 375.2 km of district heating networks, including 89.7 km of mains and 285.5 km of distribution networks. The company generates around 7% of its own energy with the bulk being purchased from a local, separately owned, CHP. Environmental and health and safety management systems were found to be operating in compliance with EBRD PRs and the requirements of the ISO 14001 and OHSAS 18001.

The Preliminary Investment Program will include: pipe replacement, closing of two boiler houses, transfer of district to a “closed” type, modernisation of some of the power supply and automation systems, and procurement of vehicles and special equipment. The project will improve the overall energy efficiency of the company, reduce water consumption and leakages and lower emissions of CO2 and other pollutants. The consultants estimate that overall GHG savings as a result of the project will be around 14 thousand tonnes of CO2 per year. The project will also extend service provision to new customers and allow better control of heating levels in homes.

The negative impacts are predominantly short-term in nature and relate to the construction stage. They include noise generated by equipment, local short-term increase of traffic intensity and corresponding air emissions, soil and landscape disturbances during excavation works. Proper management of these impacts will enable compliance with EBRD Performance Requirements and the ESAP includes requirements to include EHS clauses in contracting documents and to ensure that contractors develop and implement adequate mitigation and monitoring plans. The SEP requires the company to provide adequate information to people potentially affected by the project and establishes a grievance mechanism. The company will provide annual environmental and social reports that include updates on implementation of the SEP and ESAP.

Technical Cooperation

Pre Loan Signing

  • TC 1: Feasibility Study, including: (i) a technical review of the proposed operation to improve the district heating services in the city, demand, revenue and operational cost projections;

    (ii) preparation of technical and functional specifications of the PIP components; (iii) financial and economic analysis of the Company, the City and the Oblast with consideration of the proposed investments, including cost estimates and the preparation of the financial model for the Company;

    (iv) environmental and social due diligence; and (v) analysis of the proposed potential for climate resilience. Gender aspects will be taken into account as part of the feasibility study preparation. The cost of the assignment is EUR 200,000 financed by SSF.

Post Loan Signing

  • TC 2: Project Implementation Support, including: (i) assistance with procurement of the goods and services under the PIP, development of tender documentation, evaluation of tenders, contracting, assistance with technical acceptance, documentation and training; (ii) assistance with the implementation of the ESAP. The estimated cost of the assignment is EUR 500,000, donor to be determined.
  • TC 3: Corporate Development Programme (CDP) to include PSC and FOPIP, which will support operational and financial improvements, secure the sustainability of operations, and improve the Company's ability to attract and manage investment finance in the future, development of PSC.

The estimated cost of the assignment is EUR 230,000, donor to be determined.

Company Contact Information

Mr Renat Urazbayev, General Director
8 (7232) 26-93-43
61, Gorkogo street, Ust-Kamenogorsk

Business opportunities

For business opportunities or procurement, contact the client company.

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General enquiries

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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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