The provision of long-term senior debt of up to US$ 33 million for the development, construction and operation of a solar photovoltaic power plant with an installed capacity of 220 MW on a site located in the Samarkand region of Uzbekistan ("Project"). The Project will be developed by a newly established special purpose vehicle in Uzbekistan, which will act as the borrower for the project financings. Abu Dhabi Future Energy Company PJSC (Masdar) will act as the sponsor for the Project.
The Project will contribute to the strategic priority of the government of Uzbekistan to increase the share of renewable projects in the national energy mix. It will contribute to the mitigation of climate change impact by adding 220 MW of solar generation capacity to the national energy system and will assist the country in its low-carbon transition drive.
ETI score: 80
The transition impact stems from the potential contribution of the Project to the EBRD Green Economy Transition ("GET") approach as it will allow producing electricity using solar power, which will reduce the country's current high reliance on thermal power generation.
The transition impact of the Project is expected to come also from its contribution to the currently state-dominated power sector in Uzbekistan by adding a new private entrant.
NUR SAMARKAND SOLAR PV FE LLC
The Borrower is an Uzbek Project SPV fully owned by Masdar.
Sponsor: Abu Dhabi Future Energy Company PJSC - Masdar (Masdar), a global leader in renewable energy and sustainable urban development. It was established in 2006 as a strategic government initiative to invest, incubate and establish new energy industry in Abu Dhabi and around the world.
EBRD Finance Summary
Total Project Cost
Financing Structure: the EBRD offers financing that is not available in the market from commercial sources on reasonable terms and conditions, e.g. a longer grace period and flexible revolving credit facilities to support VAT financing. Such financing is necessary to structure the project.
Risk mitigation: the EBRD's long-term relationship with a client provides comfort to the client to be willing to take on more risk and/or finance, enabling outcomes such as innovation or expansion into new markets.
Environmental and Social Summary
The Project has been Categorised B in accordance with the EBRD's Environmental and Social Policy (ESP) 2019. An Environmental and Social Impact Assessment (ESIA) has been completed by the Sponsor's consultants and Environmental and Social Due Diligence (ESDD) has included a review of the environmental and social documentation by the Lender's independent E&S Consultant (LESC).
The draft ESIA and associated documentation, including Non-Technical Summary (NTS), Stakeholder Engagement Plan (SEP) and Livelihood Restoration Plan (LRP)has been disclosed in December 2022 by the Sponsor on the Project website (https://masdar.ae/Masdar-Clean-Energy/Projects/Samarkand-Solar-Project) and has been communicated via electronic and social media to local stakeholders which will be followed by physical copies, for a public consultation period with consultation activities to be undertaken as outlined in the SEP. Results of the ESDD undertaken by the EBRD, the wider Lender group and the LESC, are summarised below and conclude that the Project is structured to comply with the EBRD Performance Requirements (PRs).
It is understood that a site selection process was undertaken prior to the Sponsor securing the Project by the Government of Uzbekistan, with support from international consultants as part of preparations for the Project auction. A review of the site against typical criteria used for selection of solar projects indicates that the site selection process has balanced environmental and social and other factors and largely avoided key E&S impacts due to the site's distance from designated biodiversity areas and avoidance of significant economic displacement, predicted impacts can be mitigated and the site location is not considered materially sub-optimal from an E&S perspective.
The majority of impacts are currently expected to be site-specific and mitigated through the measures outlined in the ESIA and through the implementation of an Environmental and Social Action Plan (ESAP) which has been agreed in principle with the Sponsor and will be finalised prior to Board approval. The Borrower is fully owned by the Sponsor who has the capacity to implement the Project in accordance with the PRs.
The area of land required for the solar photo-voltaic (PV) site is 438ha and is located in modified habitat on recently cultivated agricultural land in Ishtihan district. The site is not located in a protected area. The 4.5km 220kV new Overhead Transmission Line (OHL) crosses intensively cultivated agricultural landscape in Kattakurgan district connecting to the existing Ishtihan sub-station. The Critical Habitat and Priority Biodiversity Features (PBFs) assessment undertaken for the Project notes that the PV site supports a very low population of the Central Asian Tortoise and could potentially support one other reptile species both classified as PBFs, for which No Net Loss (NNL) is required to be achieved through a combination of mitigation measures including pre-construction translocation, adapted fencing and offset of lost habitat through restoration of the available modified habitat within the PV site.
The Project is not located on a major bottle-neck or geographical feature that would concentrate migrating bird species and does not contain features which would attract migrating or over-wintering birds. The site and OHL are located in proximity to three areas which are important wintering habitat for Great Bustards (IUCN VU; UzRL CR) during cold winters. Although, no birds were observed in the closest area (20km from the OHL) in recent surveys and the habitats on the PV site or OHL route are unlikely to be of significant importance, the airspace occupied by the OHL is classified as critical habitat on a pre-cautionary basis, however there is a low likelihood that the OHL would cause significant impacts on this population. Several other species of soaring birds present in low numbers have been assessed as PBFs and operational phase collision risk will be mitigated by the installation of bird diverters. A post-construction fatality monitoring programme will be in place for these bird species. Since bird diverters are not fully effective for the Great Bustard which remains susceptible to collision risk, offset measures focussing on a reduction of poaching (currently identified as the biggest threat to this species) will be developed and implement to ensure a Net Gain (NG). The Sponsor will be required to develop and disclose a Biodiversity Action Plan to elaborate on the offset strategies and monitoring of mitigation and offset measures proposed in the ESIA including further consultation on these measures with recognised stakeholders in avian conservation, to demonstrate NNL/NG for CH and PBFs.
No physical resettlement is required and the final route and tower location for the OHL have been selected in consultation with leaseholders to avoid structures and higher value crops where possible. Livelihood impacts are anticipated at the PV site, since the area was recently used by 5 leaseholders where leases were terminated for Project purposes prior to involvement of the Sponsor. An audit of the historical land acquisition has identified gaps against Lenders' standards which will be addressed in the form of additional compensation for affected agricultural assets and provision of livelihood restoration measures including a specific land enhancement grant and technical assistance to improve the capacity of leaseholders remaining land. The site also provides relatively high-quality grazing and is used by five community herds and as a supply of vegetation used for winter livestock feed. Livelihood restoration measures proposed include securing and enhancing alternative community grazing land, maintaining access to the project site to continue feed collection and development of feed storage facilities as well as specific measures for affected herders. Compensation for temporary and permanent impacts to 4 leaseholders along the OHL will also be provided. A draft Livelihood Restoration Plan (LRP) has been developed and disclosed for the PV site and the OHL covering historical and future impacts and will be subject to finalisation in consultation with affected people.
The remaining project impacts are anticipated to be generally restricted to the construction phase and mitigated with good practice environmental and social mitigation measures. The ESIA includes the Project's framework Environmental and Social Management and Monitoring Plan (ESMMP) which includes such mitigation and monitoring measures and responsibilities through the project life-cycle. These measures will be incorporated into the Project's Environmental and Social Management System through Construction and Operational Environmental and Social Management Plans. The Engineering Procurement and Construction and Operation and Maintenance contractors will also be required to develop and implement a range of management plans consistent with the requirements of the ESMMP.
Traffic impacts to and from the site will be managed through selection of final site access roads to minimise safety and disturbance impacts and implementation of a traffic management plan. Workforce will either be accommodated in large population centres where sufficient capacity and infrastructure exists or a dedicated workforce camp will be developed. All accommodation will be managed in accordance with a Workforce Accommodation Management plan consistent with IFC/EBRD guidance. Given peak workforce numbers of approximately 500 during the short construction period, a Local Hiring Plan will be developed to maximise employment opportunities for local communities. In addition, measures to mitigate potential influx of people and Gender Based Violence and Harassment (GBVH) risks will be implemented. The Sponsor will also develop and implement a Community Development Plan in consultation with the local communities that aims to provide a range of benefits, particularly to communities subject to land access restrictions to offset any residual impacts. A cemetery and mosque is located adjacent to the PV site, however access will remain available during construction and operation and consultations have been conducted and will continue with users and the local authorities.
Enhanced supply chain due diligence has been conducted for the solar components in accordance with the Management Approach for Solar Supply Chain Risk Management. The Sponsor has provided evidence of a functioning supply chain management system including a number of policies and position statements stating that the Sponsor has a zero tolerance to labour violations. The supply chain for this particular Project, to polysilicon, has been mapped and will be verified by an independent consultant for point of origin. The Financing Agreement and ESAP require the Sponsor and the Borrower to maintain due diligence and management procedures for the sourcing of solar modules in accordance with Good International Practice. Due to the size of the Project there are a number of potential suppliers of solar modules, all of which have provided supply chain maps to the polysilicon level and all of which have been subject to enhanced due diligence.
The Project will be monitored regularly by independent Environmental and Social consultants to ensure compliance with the ESAP and the Performance Requirements.
Technical Cooperation and Grant Financing
Company Contact Information
PO Box 54115, Abu Dhabi, UAE
PSD last updated
19 Jan 2023
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Environmental and Social Policy (ESP)
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Independent Project Accountability Mechanism (IPAM)
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