The provision of a sovereign guaranteed loan of up to € 20 million for the modernisation of power distribution networks in southern Tajikistan. The Bank's financing will target the modernisation of a low-voltage distribution network in the cities of Kulob and Bokhtar, the construction of a new and an upgrade of the existing 110/35/10 kV substation in Kulob, and the installation of automatic billing and metering systems in both cities.
OJSC "Shabakahoi Taksimoti Bark" (the "Company"), established as part of the on-going unbundling of the Open Stock Holding Company "Barki Tojik" (OSHC Barki Tojik), the national power utility, will be the Borrower and Project implementing entity. The loan will be guaranteed by the Republic of Tajikistan.
The Project will target one of the key constraints to economic development in the country - limited access to the reliable energy supply. The Project's principal objectives are to: (i) address the most urgent needs for the replacement of aged infrastructure, (ii) contribute towards the reduction of distribution network losses resulting in financial and CO2 emissions savings, and (iii) introduce modern billing and metering infrastructure, improving payment discipline and cash collection, upholding operational and financial efficiency and sustainability of OSHC Barki Tojik at present.
ETI score: 66
The expected transition impact of the Project is twofold:
Resilient: Through the planned network upgrades and replacement of distribution lines, the reliability of the electricity distribution network in the cities of Bokhtar and Kulob will be significantly improved. Additionally, the Project will support more efficient functioning of the distribution network operator through improved transparency and accountability and introduction of billing and metering.
Inclusive: The Project will support improvements in the employability of youth by expanding high-quality and certifiable skills training opportunities, in collaboration with local educational institutions, which is of particular importance in light of job losses and drop in remittances caused by the COVID-19 crisis.
SHABAKAHOI TAKSIMOTI BARK OJSC
Borrower is in the process of establishment following the unbundling of OSHC Barki Tojik and shall consolidate all distribution activities and attributable infrastructure, revenues and expenses.
Guarantor: Republic of Tajikistan
EBRD Finance Summary
Up to € 20 million long-term sovereign-guaranteed loan to OJSC "Shabakahoi Taksimoti Bark", with a sovereign guarantee provided by the Republic of Tajikistan. The Project will be co-financed with a € 15 million grant from the European Union's Investment Fund for Central Asia (IFCA).
Total Project Cost
The Bank provides long-term financing necessary to structure the Project. The Bank's technical, institutional and regulatory expertise with the turnaround of national utilities, technical cooperation and policy dialogue are complementary to the ongoing work in the power sector of Tajikistan.
Environmental and Social Summary
Categorised B (2014 ESP). The environmental and social impacts associated with the modernisation of the power distribution networks in the cities of Kulob and Bokhtar and their surroundings have been identified and will be managed by the implementation of an Environmental and Social Action Plan (ESAP). The Bank's due diligence was carried out by an independent consultant; it included the review of a questionnaire and information package supplied by the client, discussions with BT in-country (including on lessons learnt of the Sugd Energy Loss Reduction project) and field visits of the existing facilities in Kulob and Bokhtar. The results of the ESDD indicated that while BT activities are currently driven by the obligation to comply with the applicable regulation of Tajikistan only, the existing PIU has been operating for many years, and has a solid experience with EBRD. The main E&S risks are occupational health and safety (very poor practices observed on site), the demobilisation of the fee collectors (a retrenchment plan is required) and the stakeholder engagement associated with the introduction of new payment methods (smart metering). The ESAP has been agreed with the Client.
The Project is not subject to an environmental impact assessment under the legislation of Tajikistan or would be under the EU EIA Directive. OJSC "Shabakahoi Taksimoti Bark" established as part of the on-going unbundling of BT, the national power utility, will be the Project implementing entity. An existing PIU will help implement the Project and the PIU has recently recruited an environmental specialist who will be in charge of following ESAP implementation. Support will be needed at Cities level. The ESAP includes overarching measures such as (i) the designation in both Bokhtar and Kulob of a person in charge of the implementation of the ESAP, (ii) the development and operation of an environmental and social management system, and (iii) the implementation of a stakeholder engagement plan.
At BT level, the application of the labour code is done through a collective agreement that is specific to BT and covers all employees; it is accessible on BT intranet. BT has a formal workers' organisation. The installation of smart meters will result in a reduction of the work for fee collectors, and subsequently Bokhtar and Kulob City Electricity Network Companies (CENC) to reduce their staff because of the Project. The numbers of jobs to be cut (at least 10% of the number of workers in each establishment) is significant, and triggers the requirement for the preparation and implementation of a retrenchment plan in line with PR2. Currently there are 83 fee collectors (including one woman) for a total staff number of 509 over both sites.
The elimination of pollution sources within the premises of Bokhtar and Kulob CENC, essentially related to oil and oil waste management, as well as to the presence of asbestos, is also included in the ESAP. The annual reduction of GHG emissions due to the Project is estimated to 435 tCO2eq/year.
The Project construction and operation will not generate any additional public health risks. The electric equipment will be safer (especially insulated cables), which will reduce the risk of electrocution. Today, the observations made on site showed a quasi-absence of any OHS measures on site. The Project will be an opportunity to improve OHS conditions for BT workers, since it will have an Occupational Health & Safety (OHS) component, including an improvement of the OHS management system, the provision of the personal protection equipment and a refurbishment/reconstruction of the technical buildings (workshops, storages, substations facilities) in both Kulob and Bokhtar. Before starting any construction activities, the contractor that will implement the project's construction/rehabilitation activities will have to prepare a Health, Safety and Environment Management Plan.
The Project does not require any physical resettlement or any involuntary resettlement. The only required land acquisition in the context of the Project is the acquisition of a one-hectare land plot (presently used for farming, but not irrigated) for the construction of the new substation in Kulob. The ESAP requires an inventory and a compensation at replacement value of the lost livelihoods for the previous user(s) since the procedure of transfer of the land use right was in process at the time of the ESDD.
The Project does not extend further in the countryside or in rural areas of the Khatlon province: it is therefore essentially an urban project, that will be implemented far from natural habitats. The Project does not trigger any significant risk for biodiversity. The primary objective of the Project is to reduce network losses. These network losses that will be reduced are of both technical and commercial origin. With the introduction of smart metering and modernization of networks, the billing chain and the payment methods will change, and the disconnection of non-payers will be readily and remotely implemented. The overall change is expected to be positive for consumers, but there is a risk that some consumers will find it difficult to understand or adapt to the new system. The stakeholder engagement plan (SEP) that was prepared for the Project includes a commitment to disseminate information about the new system, and to implement a grievance mechanism. In addition, the ESAP requires a one-year transition period to be put in place, during which customers who have not paid their bill within the set 5 days limit will be contacted directly by the CENCs - with a main objective to identify vulnerable customers.
The ESAP also requires developing and implementing an environmental and social management system (ESMS) aligned to ISO14001 and ISO45001 standards at corporate level; this ESMS shall include biodiversity management procedures in relation to birds' protection, such as sensitivity mapping and incorporation of insulations to new/modernised lines. The Bank will monitor implementation of the ESAP through review of Annual Environmental and Social Reports (AESR) and communications with the Company as necessary.
Technical Cooperation and Grant Financing
- IFRS support for the Project financed by the SSF
- Consultancy support for environmental due diligence of the Project financed by the SSF
- Project implementation support to assist the project implementation unit with procurement of goods, works and services for the Project and to provide organizational and technical assistance financed by SSF
- Gender assessment to be financed by the IFCA grant.
Company Contact Information
OJSC SHABAKAHOI TAKSIMOTI BARK
PSD last updated
15 Oct 2020
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