The provision of a senior secured loan of up to USD 150 million on a project finance basis to finance the development, design, construction and operation of the 500 MW Dzhankeldy WPP located in the Peshku district, Bukhara region of Uzbekistan. The project also entails B loans for the account of the expected B Lenders.
This is one of the pilot wind projects developed by ACWA Power and the Government of Uzbekistan under the Government's efforts to attract private investment to the generation sector. The project will be highly representative in terms of energy supply diversification, increased use of renewables potential and attracting private investment. It will assist the country in its low-carbon transition, reducing its current high reliance on thermal power generation.
ETI score: 75
The project's transition impact is based on the Green TI quality as the Project will add 500 MW of wind generation capacity to the Uzbekistan power system. It also features Inclusive TI as the project will increase access to skills and employment opportunities for youth by (i) introducing an accredited training programme in the wind energy sector, and (ii) developing national occupational skills standards and educational standards for two emerging occupations in the renewable energy field.
ACWA POWER DZHANKELDY WIND FE LLC
The borrower will be an SPV created solely for the purpose of implementing the project, incorporated in the Republic of Uzbekistan and owned by ACWA Power Company, a Saudi Listed Joint Stock Company (previously known as "International Company for Water and Power") (ACWA Power).
ACWA Power is an international developer of power generation, desalinated water and green hydrogen production projects.
EBRD Finance Summary
Total Project Cost
The EBRD offers long-term financing that is not available in the market from commercial sources on reasonable terms and conditions. The EBRD offers a tenor above the market average, which is necessary to structure the Project and ensure the delivery of the longer-term TI objectives.
The Bank offers an innovative financing structure on terms not available otherwise, providing a long-term senior loan on a project finance basis and mobilising commercial banks under the EBRD A/B loan structure for the first time in the Uzbek market.
The EBRD's involvement in a project triggers a change in the policy, sector, institutional or regulatory framework, or enhance practices at the sector or country level. The Project is a key milestone for the country's renewables sector, and will further its green agenda, serving as a pilot for further renewables development.
Environmental and Social Summary
Categorised A (ESP 2019). The cumulative development of two 500 MW greenfield wind farms (Bash and Dzhankeldy WPPs; located in different locations), and grid connection infrastructure of over 290 km of HV OHTL, is associated with potentially significant environmental and social impacts and risks, notably biodiversity as well as land and livelihoods impacts on herders, and requires an Environmental and Social Impact Assessment ("ESIA") in line with EBRD ESP and 60 days' disclosure prior to the Board consideration. An ESIA package for each WPP was disclosed on 20 May 2022 on EBRD's and the Sponsor's websites. An updated ESIA was uploaded on 30 September 2022 on the Sponsor's website, and a summary of material changes posted on EBRD's ESIA website; the changes do not contradict the previously-disclosed ESIA, and support and confirm the conclusions and assumptions of the original ESIA by further elaborating its specific aspects. Additional in-person public consultations with local stakeholders have been undertaken during the disclosure period, which were attended by the Bank staff. Additional E&S management plans have been developed post-disclosure as part of Sponsor's pre-Board commitment. The Bank has engaged with leading ornithological NGOs during the consultation process. No significant public concerns have been raised against the Project during ESIA preparation or disclosure process.
An international consultant was retained by lenders and undertook an Environmental and Social Due Diligence ("ESDD") including a gap analysis of the client's ESIA, assessment of cumulative impacts of the Projects and the associated infrastructure, community health and safety, livelihood impacts, gender and labour risks during construction and operation, as well as supply chain risks. The ESDD has been undertaken jointly with other lenders, including ADB.
The Dzhankeldy WPP is located in Peshku district of Bukhara region south-east of the Kyzylkum desert on the territory of the Kuldhuktau mountain range. Bird flight activity data was collected across four seasons between 2020-2022 and an assessment on bird collision risk undertaken. In addition, biodiversity baseline surveys included additional information on all species present at the site, including red lists species as well as an independent Critical Habitat Assessment. The Project has been subject to a comprehensive impact assessment with the participation of local and world-class ornithologists, who have analysed in detail the collision risks associated with the operation of the wind farm following best international industry practice and developed appropriate mitigation measures. Consultations were also undertaken with local and international nature protection organisations, namely Birdlife International (UK HQ) and their local partner in Uzbekistan and their feedback taken onboard during the ESIA process. As an outcome of the ESIA, the project will implement a selective shut-down-on demand (SDOD) to cover all turbines within 1km of known raptor nest locations. The SDOD will be implemented using a state-of-the-art camera system (Identiflight). In addition, an adaptive management will be employed for the rest of the wind farm based on the fatality monitoring undertaken for the project.
In relation to Critical Habitat species, the project will implement the Biodiversity Action Plan and Biodiversity Monitoring and Evaluation Plan and a Compensation Offset Plan. The BAP includes a loss/gain assessment informed by pre-construction surveys and also identifies measures to further inform habitat restoration measures to meet net gain objectives. To manage the biodiversity risks and interrelated mitigation measures, the project will have a dedicated E&S Manager who will oversee the implementation of all the operational phase biodiversity management and monitoring requirements. In addition, ACWA Power will employ a Corporate Biodiversity Manager who will be responsible for oversight.
The impacts of the OHTL were also assessed and route alignment has been altered to avoid potential risk areas for birds, further measures to prevent bird collision/electrocution with the conductors were proposed, such as bird-friendly design of towers and bird diverters. A Biodiversity Management Plan Package - including Breeding Bird Protection Plan, Flora Conservation Action Plan, Reptile Relocation Plan, Collision Risk Management Plan, Post-Construction Fatality Monitoring Plan, and Livestock Management Plan, as well as offset programme - was developed. Overall, the Bank has structured the Project to achieve No Net Loss/Net Gains of biodiversity and thus full compliance with PR 6.
The Project will lead to economic and physical displacement of local herders within the project sites and temporally disrupt their grazing activities; the Dzhankeldy WPP will impact 0.017% of total grazing lands under ownership of Dzhankeldy LLC (used by 11 herders) during construction. Majority of the land users on the OHTLs routes will experience short-term temporary impacts (during the construction period) but they will be able to grazing along the OHTL during the operation phase. The livelihood impacts will be mitigated through fair compensation packages and additional livelihood restoration programmes defined in Resettlement Action Plan ("RAP") which were developed in consultation with herders, landowners and local authorities.
The Project is also going to involve an influx of a workforce during the construction phase and associated labour risks related to working conditions for the contractor's workers on the project site including temporary accommodation facilities. To address these risks, the Environmental and Social Management Framework ("ESMF") developed for the Projects included mitigation and monitoring requirements for the duration of the Projects. To add to this, given the large workforce influx to the rural area and contextual risk profile related to gender-based violence and harassment ("GBVH"), the Borrowers will implement a GBVH policy and code of conduct to address potential GBVH risks.
A detailed supply chain risk assessment conducted for core suppliers of wind turbine generator (WTG) and their sub-suppliers which proved that there is no evidence of child and forced labour risks in their supply chain and the WTG has a robust supply chain policy and practices which includes a code of conduct embedded into contracts with their core suppliers requiring suppliers to identify and address labour risks in their operations. Other mitigations adopted for the Projects include but not limited to: (a) ESAP actions requiring the Company to establish a responsible sourcing policy and ensure traceability from EPC to WTG and their core suppliers; (b) having EPC, WTG and its primary suppliers adopt self-declarations and codes of conduct regarding prohibition of any forms of forced labour in their operations; (c) list of core suppliers to be involved in production/assembly of wind turbine components to be contractually locked; d) legal covenants added into the EPC contract mandating the EPC to map and then complete risk assessment of primary suppliers and continue to monitor and report on their compliance during construction; (e) to address non-compliances that were identified through supply chain due diligence or will be identified in future audits through a Corrective Action Plan in a timely manner; (f) commitment for the Company to provide notifications to EBRD if/when forced labour risks or allegations are raised in relation to the WTG and its core suppliers; and (g) dis-engagement clauses added to the contracts in case of material non-compliance with key provisions listed above. The Project Company will continue to monitor supply chain risks during operation phase in line with the commitments made in the Supply Chain Management Plan (SCMP).
ESDD confirmed that the Project is structured to meet Bank's PRs and Client has agreed to further strengthen its institutional capacity to implement the ESAP requirements throughout the lifetime of the projects. The ESAP has been agreed with the Company and other Lenders prior to the Board.
Bank will continue to monitor the projects through bi-annual AESR reports and regular site visits to ensure effective implementation of these requirements.
The Project Environmental and Social Impact Assessment can be found here: https://www.ebrd.com/work-with-us/projects/esia/uzbekistan-dzhankeldy-wpp-.html
Technical Cooperation and Grant Financing
Company Contact Information
+971 58 634 6493
PSD last updated
04 Nov 2022
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Independent Project Accountability Mechanism (IPAM)
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