Provision of up a senior loan up to the TRY equivalent of USD 50 million to the Osmangazi Elektrik Dagitim A.S (OEDAS, the company or the borrower), the electricity distribution company of the Osmangazi region in inner western Anatolia, Turkey. The company is owned by Zorlu Enerji Elektrik Uretimi A.S. (Zorlu Enerji) through a subsidiary, Zorlu Osmangazi Enerji Sanayi ve Ticaret A.S. (Zorlu Osmangazi), and serves around 2.79 million people.
The transaction is part of an up to c. USD 350 million financing in TRY for investments required by the Energy Market Regulatory Authority (EMRA, the regulator) for the 5-year regulatory period between 2021 and 2025 (the project). The project will be financed with USD 350m debt (the financing) to be provided by the EBRD along with a group of international financial institutions and commercial banks.
The proceeds of the financing will be used to fund the capex programme for the 4th regulatory period covering investments scheduled for the years 2021-2025, which amount to c. USD 380 million in total. These include the upgrade, modernisation and expansion of the distribution network in the Osmangazi region, reduction of distribution losses, enhancing environmental and safety standards, improving efficiency and reliability of supply by enhancement of smart metering and smart grid systems to support network digitalisation.
ETI score: 70
The Transition Impact arises from the Inclusive and Green qualities:
Inclusive - The company will i) contribute to the revision of Early Childhood Care and Education regulations to support women's employment in the sector and ii) develop and implement a training programme targeting young people including women to provide accredited green skills across predominantly smaller and more remote cities in Turkey.
Green - Through the installation of new infrastructure, more-efficient equipment and enhancement of smart grid applications the project is expected to lead to reduced losses and direct CO2 savings.
OSMANGAZI ELEKTRIK DAGITIM AS
OEDAS is owned since 2017 by Zorlu Osmangazi, a company founded in 2016 by Zorlu Holding A.S. as a 100 per cent subsidiary of Zorlu Enerji. OEDAS is the incumbent for the distribution of electricity in the Osmangazi region which includes five provinces covering a c. 49,344 km2 area, Afyonkarahisar, Bilecik, Eskisehir, Kutahya and Usak, with a total population of around 2.79 million people. The company has circa 50,787 km of distribution lines and c. 7,855MVA of transformer installed capacity.
EBRD Finance Summary
Total Project Cost
The EBRD's additionality derives from (i) its involvement in the financing given the limited funding sources available due to unfavourable macroeconomic conditions, and (ii) supporting the company's access to funding opportunities in the context of uncertain market conditions.
Environmental and Social Summary
Categorised B (2014 ESP): Independent consultants have been engaged to carry out a comprehensive environmental and social appraisal of OEDAS. This included a review of the Company's current Environment Health and Safety ("EHS") and labour management systems, including progress in implementing the ESAP agreed for the previous transaction, and an assessment of its operations against EBRD Performance Requirements.
OEDAS distributes electricity to 2.79 million people in 125 towns and 1,339 villages. The investment programme will involve upgrading and expanding the existing network, which will reduce supply losses and outages. An ESAP was agreed in 2018 for the previous transaction and has been updated and expanded following the due diligence carried out for this loan. The company has been diligent in implementing its commitments. Actions in the original ESAP included upgrading the EHS management systems and appointing an environmental and social team in each province with relevant qualifications and defined roles and responsibilities. The company has implemented an EHS management in line with the ISO14001 OHSAS18001 standards. Occupational Safety and Health ("OHS") management improvements have included adopting a corporate OHS policy and introducing an accident investigation and reporting procedure, near miss reporting, job safety analysis and measures to protect public safety and avoid third-party accidents.
Actions in the original ESAP will apply to the new project. New actions have been added to address new lender policy requirements, for example in relation to labour standards and gender-based violence. The Project will not require any resettlement of households or businesses and the majority of the investment plan will be carried out on public land in urban locations. Some land acquisition in rural areas may be required and the company has committed to avoiding land take in agricultural areas. An updated Land Acquisition Policy Framework has been prepared and the Company will implement a Stakeholder Engagement Plan. This defines consultation, compensation and monitoring measure required for any land acquisition, in line with EBRD Performance Requirements and Turkish law. The Bank will support the company in developing a gender action and strengthening its HR policies to enhance career opportunities for women.
EBRD will monitor the environmental and social performance of this project through periodic audits by independent consultants and through annual reports provided by the client.
Technical Cooperation and Grant Financing
A Technical Cooperation (TC) component of up to EUR 70,000, operated through the EBRD Gender and Economic Inclusion Framework (TCRS 12804), will be attached to the loan. A 15 per cent client contribution is expected. Under the TC, a group of specialised consultants will assist the Company in designing the new skills development programme for high-school students.
Company Contact Information
+90 212 456 2300
+90 212 422 00 99
Levent 199, Buyukdere Cad. No:199, Postcode 34394, Istanbul
PSD last updated
08 Sep 2021
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