GrCF2 W2 – Pristina Solar District Heating

Location:

Kosovo

Project number:

52751

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

B

Approval date:

29 Nov 2022

Status:

Passed Concept Review, Pending Final Review

PSD disclosed:

10 May 2022

As per section 1.4.2 (iii) of the Directive on Access to Information: "For Projects approved by Bank management where the Board of Directors has delegated the approval authority, the PSD shall be disclosed at the start of the relevant no-objection notification period to a member country of the Bank in accordance with Article 13 (iii) of the Agreement Establishing the EBRD."

Project Description

Provision of a sovereign loan in the amount of up to EUR 22.0 million to the Republic of Kosovo (the "Borrower"), to be on-lent to "Termokos" JSC, the municipal district heating company (the "Client" or the "Company"), to co-finance the construction of a solar thermal plant with a 30 MW capacity to provide additional heat energy capacity and extension of the district heating ("DH") network of the City of Pristina (the "Project"). The project scope includes a network extension which will be implemented in stages, with the first stage of up to 50 MW, with a possibility to extend a further 20 MW, subject to further due diligence.

The Project will be parallel co-financed with grant funding in the amount of EUR 31.6 million from the Government of the Federal Republic of Germany provided through the Kreditanstalt fur Wiederaufbau ("KfW"), which will partly be channelled to Termokos as a loan, and grant funding in the amount of EUR 22.5 million from the European Union Western Balkans Investment Framework ("WBIF").

Technical cooperation grants are expected to be provided by the Renewable District Heating in Western Balkans programme ("ReDEWeB") or the EBRD Shareholder Special Fund ("SSF").

Project Objectives

The Project aims to

  • increase the share of renewable energy in Pristina's DH network, thereby enhancing the City's energy security and sustainability; and
  • improve the financial and operational performance of the Company through the revision of tariff setting methodology and preparation of an infrastructure asset management plan

Transition Impact

ETI score: 70

The Project is part of the EBRD Green Cities Framework 2 ("GrCF2"), a strategic and multiproject approach targeting environmental issues in selected large cities in EBRD's countries of operation. The primary goal is to achieve significant environmental improvements and to promote the Green transition quality within the relevant cities. In addition to the environmental objective, the GrCF2 also promotes sustainable cities through inclusive, resilient, well-governed and smart urban development.

The Project will primarily help promote the Green transition quality by contributing to climate change mitigation. The new plant and extended DH network will reduce CO2 emissions associated with heating, improve air quality and integrate renewable energy supply into the city's district heating system. The Project will also support the Competitive transition quality through the development and implementation of Financial and Operational Performance Improvement Programme ("FOPIP"), aimed at building capacity, improving operational and financial performance as well as corporate governance of the Company. The FOPIP will include a review of the tariff setting methodology and update of tariff level requirements, address financial transparency and asset management, and support preparation of a Corporate Development Programme (CDP) for the Company.

Client Information

KOSOVO SOVEREIGN

The Borrower is Republic of Kosovo, represented by the Ministry of Finance of Kosovo.

The Client is Termokos JSC, a joint-stock company owned 100% by the Municipality of Pristina. Its activities include production, distribution, and supply of thermal energy to Pristina as the City's only district heating supplier. 

EBRD Finance Summary

EUR 22,000,000.00

A sovereign loan of up to EUR 22 million to be on-lent to Termokos JSC (the "Company", or the "Client"), a joint-stock company owned 100% by the City of Pristina. The Project will be co-financed by a grant in the amount of EUR 31.6 million issued by the Government of the Federal Republic of Germany and provided by Kreditanstalt fur Wiederaufbau ("KfW"), Western Balkans Investment Framework ("WBIF") grant in the amount of EUR 22.5 million, and national contribution in the amount of EUR 4.4 million.  

Total Project Cost

EUR 80,500,000.00

The Project's total estimated cost is EUR 80.5 million. 

Additionality

  • Financing Structure - Commercial long-term financing for public infrastructure investments.
  • Risk Mitigation - The proposed investment will result in energy savings and lower GHC emission, thereby reducing carbon transition risks and take climate action.
  • Standard Setting - Technical assistance and loan conditionalities will support capacity building.
  • Gender additionality - As part of FOPIP, HR policies will be assessed from a gender perspective and recommendations will be made with a view to strengthening gender and equal opportunities in the Company

Environmental and Social Summary

Categorised B (2019 ESP). Key environmental and social ("E&S") risks and impacts associated with construction and operation of a thermal solar plant (including a seasonal pit storage of 400,000m3 and a 4.2 km pipeline connection to the city) for district heating include but not limited to: land acquisition and impacts to livelihood (the project site is currently used for informal farming activities but no physical resettlement is expected for the Project according to E&S due diligence findings so far); occupational health and safety ("OHS") procedures for contractors; labour management; community health and safety; disruptions to supply of heat and hot water to the community and public access; design safety (dam for the seasonal thermal pit storage); cultural heritage (the project site is close to two cultural heritage sites and one graveyard); landscape/visual impacts, stakeholder engagement and grievance mechanism.

The KfW has contracted a consultant to develop the environmental and social impact assessment ("ESIA"), a stakeholder engagement plan ("SEP") and a livelihood restoration plan ("LRP") for the Project. The EBRD's E&S due diligence (ESDD) in line with EBRD's 2019 E&S Policy will be undertaken by an independent consultant and will include site visits, a review of the environmental and social impact assessment ("ESIA") package that has been prepared by KfW's independent consultant, an assessment of the Company's current operations and management systems, and the preparation of an Environmental and Social Action Plan ("ESAP"). Additional technical cooperation support for ESAP implementation will be required.

The Project will be further assessed for alignment with Paris Agreement criteria for climate mitigation and climate adaptation. The PSD will be further updated once the ESDD is finalised.

Technical Cooperation and Grant Financing

Pre-signing:

  • Environmental and Social Due Diligence

Post-signing:

  • Support for development and implementation of Financial and Operational Performance Improvement Programme ("FOPIP")
  • Support for implementation of Environmental and Social Action Plan  ("ESAP")

Company Contact Information

Naim Bytyci
naim.bytyci@termokos.org

PSD last updated

30 Sep 2022

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP 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 following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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