Provision of senior debt financing to finance the construction and operation of a 50 MW solar PV plant under the first round of large scale solar IPP in Tunisia.
The Project will further promote private sector participation in the Tunisian power sector and increase the share of renewable energy in the energy mix in line with the nationally declared targets.
The Project will add 50 MW of green generation capacity to the Tunisian power system - currently dominated by gas-fired power plants (94.7% of installed capacity) to support the country's low-carbon transition by reducing its reliance on thermal power generation.
ETI score: 80
The Project will contribute to the "Green" transition quality by adding 50 MW of new renewable capacity to the Tunisian electricity generation sector currently dominated by thermal power plants, thus contributing to a reduction in CO2 emissions.
The Project will also support the "Competitive" quality by funding a renewable project developed by a private developer in the power generation sector, which remains majority-owned by state-owned STEG.
SCATEC SIDI BOUZID MEZZOUNA PV POWER
"Scatec Sidi Bouzid Mezzouna PV Power" is a Limited Liability Company to be incorporated in Tunisia for the sole purpose of constructing and operating a solar photovoltaic (PV) power plant in the area of Sidi Bouzid, Tunisia, with an installed capacity of 50 MW. The Project Company will be ultimately owned by Scatec ASA.
EBRD Finance Summary
The 50 MW solar PV project would benefit from senior debt financing of up to EUR 35 million including 1) an EBRD loan of up to EUR 15 million, 2) a SPREF loan of up to USD 5.7 million (equivalent to EUR 4.7 million), to be provided by the Clean Technology Fund and the Global Environmental Facility, secured under the SEMED Private Renewable Energy Framework and administered by the EBRD, and 3) a parallel loan of up to EUR 15 million from Proparco.
Total Project Cost
Financing Structure: EBRD offers financing that is not available in the market from commercial sources on reasonable terms and conditions, e.g. a longer grace period than the market average. Such financing is necessary to structure the Project. The terms and conditions offered by EBRD are not available from commercial banks, and only offered by IFIs. This is due to the fact that large scale RE IPPs are new to the country hence the market is still not tested.
Policy, sector, institutional, or regulatory change: EBRD's involvement in a project is considered additional when it is designed to trigger a change in the policy, sector, institutional or regulatory framework, or enhance practices at the sector or country level (e.g., an introduction of cost-reflective pricing of energy, water etc.).
Over the past 5 years, the EBRD has been a key partner to the Tunisian Government in developing the country's solar programme, providing constant, direct support to ensure the bankability of the contractual framework.
Environmental and Social Summary
Category B (2019 ESP). The environmental and social due diligence (ESDD) was carried out by an independent consultant; it included the review of an information package supplied by the client, visit of the Sidi Bouzid site, and a review of the E&S Scoping Studies conducted previously for the PV site and the transmission line. The environmental and social (E&S) risks and impacts associated with construction and operation of the solar 50 MW PV plant and associated transmission line (5.1 km for Sidi Bouzid) are site specific, readily identified and will be managed by the implementation of an Environmental and Social Action Plan (ESAP). The main points of the ESAP have been agreed in principle with Scatec, and the ESAP will be finalised prior to signing. The Bank's enhanced DD on specific suppliers for solar panels will have to be completed before signing. The approach in relation to informal users on site also needs to be agreed in writing before signing.
The PV project will be designed, built and operated by a company that is majority-owned by Scatec ASA. The transmission lines will be designed and built under STEG's control, and operated by STEG. The ESAP requires Scatec to i) assign an E&S manager in Tunisia before the start of the construction, ii) include E&S clauses in the construction contracts, iii) develop an E&S management system aligned with ISO14001 standards for the operation phase. The Project does not require an environmental permit under the Tunisian legislation.
Up to 300 construction personnel will be employed during the peak period of the construction works on the site. The recruitment of local workforce will be implemented through a transparent mechanism agreed with the local population representatives and the employment bureau, as confirmed in the ESAP. The Scatec Global HR policy, aligned with PR2, will apply to the Tunisian Company (an SPV yet to be established). Worker grievance mechanisms will be developed by Scatec and STEG during the construction phase. Before starting any construction activities, Scatec will prepare specific Health, Safety and Environment Management Plans (HSEMP). Scatec has experience building and operating such PV plants in compliance with international standards and ISO 14001 / ISO 45001 standards.
There is no domestic water network at the PV site; the main source of water will be from cisterns/tankers brought to sites. The ESAP recommends waterless solution for solar panel cleaning. Scatec will require PV panels' suppliers to meet the key objectives of the EU Directive on Waste Electrical and Electronic Equipment (WEEE) in terms of the collection, treatment, recovery and environmentally sound disposal. The CO2 emissions avoided are estimated to be approx. 60,000 tCO2 eq for the Project.
The Project does not encroach on protected or internationally recognized areas, and the Project is not affecting critical habitats (the main type of habitat is sandy-clayish desert). Reptiles (snakes, lizards, geckos...), out of whom many species are classified as "rare and endangered" under the Tunisian legislation, are present on the site. The transmission line in Sidi Bouzid is located between two Important Bird Areas that also have a Ramsar site status (the closest one being Sebkhet Ennoual, 2.5km from the end of the transmission line). The adopted mitigation measures (confirmed in the ESAP) include the collection and relocation of reptiles from the PV site, and the installation of bird diverters on the critical section of the Sidi Bouzid transmission line. Fences around the PV site will also be designed so that they allow reptiles passage. Sidi Bouzid is not associated with any risk of cumulative impacts.
The Project site is not located next or close to a cultural or historic site that might be visually impacted. The presence of artefacts (flint cuts, pottery) was observed on Sidi Bouzid project site, and the National Heritage Institute also mentioned the possible presence of archaeological objects (near but outside the PV site). Pre-construction surveys will therefore be undertaken at the Sidi Bouzid site. Potential for chance finds is not excluded and the contractor will therefore prepare, adopt and implement a Chance Find Procedure.
The PV site as well as the transmission line will occupy a limited area of a vast state domain land, away from any urban area. The Project does not require any physical resettlement. The land required for the Project will be leased from the State. There are informal uses of land in the Project area: essentially crops, palm or olive trees, and occasional grazing. The Bank advised Scatec and the Ministry to declare the cut-off date as soon as possible to prevent new people from moving into the area, and to compensate the informal users (present before the cut-off date) as per PR5 requirements. Written commitment from Scatec and the Ministry confirming their acceptance of a PR5-aligned approach and defining an agreed cut-off date in the near future (for both Projects) is necessary before Project signing (CP to signing).
The solar panel supply chain is associated with forced labour risks. A comprehensive Supply Chain questionnaire was used by the Bank to understand how Scatec are approaching the matter. According to their Procurement Framework disclosed on their website and to be signed by the Suppliers, Scatec expect "all vendors to act in accordance and demonstrate compliance with their Supplier Code of Conduct", which includes the requirement to conduct business consistently with the UN Guiding Principles on Business and Human Rights, including the elimination of all forms of forced and compulsory labour and effective abolition of child labour. Scatec will require all module suppliers considered for Project Procurement to be audited and to have a fully transparent traceability map completed prior to any procurement. An Integrity Due Diligence (IDD) screening of the suppliers and third-parties engaged on the Project is completed by Scatec. Scatec is currently working with an independent consultant to assess five of its top PV module suppliers regarding traceability throughout the module value chain. For the Project, the solar panel suppliers are not selected yet. The draft ESAP requires Scatec to develop due diligence and management procedures for the sourcing of solar modules in accordance with the EU Guidance on Due Diligence for EU Businesses to Address the Risk of Forced Labour in Their Operations and Supply Chains (2021), including i) Mapping and risk assessment of solar module and solar component suppliers, ii) Inclusion of appropriate clauses in procurement notices and contracts, iii) Labour audits of first tier solar supplier(s), iv) Requirements for traceability protocols from solar suppliers down to wafer/ingot producers. The Bank will include specific provisions in the Loan Agreement. The Bank's enhanced DD on specific suppliers will have to be completed before signing (CP to signing).
Scatec is committed to develop Community Development Initiatives in the Project area, based on a needs assessment. A Stakeholder Engagement Plan (SEP) has been developed during ESDD; it will be disclosed by Scatec. The Bank will monitor closely the implementation of the ESAP, through review of annual Environmental and Social Reports (AESR) as well as communications with the Company and site visits, as necessary.
Technical Cooperation and Grant Financing
- Project Preparation Support (TCRS Assignment ID 13398/108883): The Bank has secured EUR 400,000 (EUR 100,000 from SEMED Multi-Donor Fund ("MDF") and EUR 300,000 from SSF) to partially cover part of the costs associated with the lenders' due diligence costs for Tozeur and Sidi Bouzid solar projects. Grant Review approval 08/04/20 & 17/08/21.
Client Contribution: The client will make a parallel contribution to the Project Preparation Support by financing any due diligence costs that are not covered by TC funds. As agreed with the client the TC funds will cover for an amount up to the lower of (i) 80% of total costs of the lenders' due diligence and (ii) EUR 400,000.
- Environmental and Social Scoping study on the seven sites tendered under the first round of the Concession Regime (5 solar and 2 wind) / TCRS Assignment ID 1272 / Grant approval 07 October 2015 i EUR 74k, funding requested from SEMED MDA.
- Environmental and Social Scoping study on the transmission lines for the solar projects tendered under the first round of the Concession Regime / TCRS Assignment ID 100501 / Grant approval 25/01/2021i EUR 50k, funding requested from SEMED Cooperation Funds Account.
- Land acquisition framework: TCRS Assignment ID 102315 / Grant approval 02/03/2021i EUR 50k, funding requested from SEMED Cooperation Funds Account.
Reimbursement: The above TCs will be non-reimbursable TCs required to support STEG and the Tunisian authorities to implement these strategic renewable energy projects.
In addition to the above donor funded EUR 20,000 from Infrastructure Project Preparation Facility ("IPPF") to hire international and local counsels to support the Bank in negotiating with the Ministry of Energy bankable Project Documents (Concession Agreement, PPA, Direct Agreements and Land Lease Agreement).
Company Contact Information
Askekroken 11, 0277 Oslo, Norway
PSD last updated
24 Mar 2022
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