GrCF2 W1-Balti District Heating Phase 2

Location:

Moldova

Project number:

52019

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

B

Approval date:

07 Dec 2021

Status:

Signed

PSD disclosed:

09 Dec 2021

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

The proposed Project (the "Project") is a follow-on investment in the District Heating ("DH") system in the City of Balti under the EBRD Green Cities Framework.

The new investment builds on the improvements realized under the first project, successfully completed in 2019, and addresses the priority environmental challenge of climate mitigation Balti identified in the Green City Action Plan (GCAP), approved by the City Council on 23 November 2021.

Project Objectives

The Project aims to address legacy infrastructure issues and promote the system's decarbonisation. Its objective is to enhance district heating operational and energy efficiency through improved system control, introduce apartment level consumption-based billing to district heating consumers, which is one of the Bank's major policy objective for the district energy sector and further optimise the use of highly efficient combined heat and power plant.

The Project will strengthen the Company's governance and will also promote equal opportunities practices as well as women's engagement in climate policy at the municipal level. It will help the Company tackle low consumer satisfaction and enhance energy efficient behaviour among consumers, while raising awareness among citizens with regard to gender and climate change issues.

Transition Impact

ETI score: 70

The Project will primarily help to promote the Green transition quality via the installation of Individual Heating Substations and Horizontal Networks; this will allow the introduction of apartment level consumption based billing and the resumption of affordable domestic hot water supply for most of the population.

It is expected to enable 18 per cent energy savings and reduce net CO2 emissions by over 23,000 tonnes per annum (30 per cent compared to baseline), as a result of avoided gas and electrical consumption from individual boilers and optimised operation of the DH system.

The Project will also support the Competitive objective through the introduction of digital tools such as SCADA and a Hydraulic Model, aiming to efficiently operate the DH system, expand the modernisation of the Company and improve the quality of DH services.
Digital tools will enable the Company's management to have easy access to comprehensive and consistent data to be used for targeted decisions on maintenance, improvements and investments. 

In addition, the settlement of the historic gas debt will enable the Company to operate at its full potential and will contribute to its continuing financial stability.

Client Information

MOLDOVA SOVEREIGN

Borrower: The Republic of Moldova, represented by the Ministry of Finance ("MoF"). The loan proceeds to be on-lent to the Project Entity.

Project Entity: CET-Nord JSC ("the Company"). The Company was established in 1997 and is 100 per cent owned by the Moldovan Government via the Public Property Agency.

EBRD Finance Summary

EUR 14,000,000.00

The EBRD facility consists of a sovereign loan of up to EUR 14.0 million, in two tranches committed at loan signing:

  • Tranche 1 of up to EUR 8.5 million will finance demand side measures, introduce digitalisation and thermal storage to further modernise and improve District Heating ("DH") infrastructure in Balti, enhancing energy efficiency, reducing gas and heat consumption and improving the quality of DH service in the City. 
  • Tranche 2 of up to EUR 5.5 million will settle the Company's historic gas debt, which will enable it to operate at its full potential, decide on the best use of its cash flows and enhance its financial stability.

Total Project Cost

EUR 17,000,000.00

Total Project cost is EUR 17.0 million. Tranche 1 of the EBRD Loan is expected to be complemented by a loan of EUR 1.0 million from the Green Climate Fund ("GCF") and by an investment grant of EUR 2.0 million, with the most likely source being the Eastern Europe Energy Efficiency and Environmental Partnership ("E5P").

Additionality

The additionality sources for the Project are:

-Financing structure;

-Risk mitigation;

-Standard-setting: helping Projects and clients achieve higher standards;

-Knowledge, innovation and capacity building.

 

Environmental and Social Summary

Categorised B (2019 ESP). The Project includes financing of the demand side measures including installation of individual heating substations; construction of horizontal networks in buildings and thermal energy storage and will result in environmental and social benefits associated with the overall improvement in the quality of heating and hot water services, improved energy efficiency, reduction in fuel consumption and heat and water losses, and lower air emissions. As a result, net reduction of Green House Gas ("GHG") emissions will be around 23,000 tons/year of CO2 equivalent.

An independent Environmental and Social Due Diligence ("ESDD") was undertaken of the Project. It included an environmental and social analysis of the proposed investment, a review of environmental, social, health and safety policies and procedures. It also assessed the capacity of the Company to manage risks associated with the proposed Project in line with the EBRD's Performance Requirements ("PRs"). The Company is a current Client to the Bank with satisfactory performance. Furthermore, the ESDD confirmed that the Company has the institutional capacity to implement the Project in compliance with the Bank's PRs and is compliant with National legislation, as well as having all valid locally required environmental permits. However, the Company still does not have a systematic environmental management system and needs to enhance capacity for environmental & social risk management to implement the Bank's PRs and to address Occupational Health and Safety ("OHS") risks linked to the COVID response.

The Project implementation is limited to the urban area within the boundaries of the current urban development and no sensitive ecological receptors or protected zones will be affected. Any potential adverse impacts from the Project will be site specific and addressed through appropriate mitigation measures. It is confirmed that the Project will not have significant adverse social impacts to local communities or other project affected parties, nor will the Project require the acquisition of land or result in involuntary resettlement or economic displacement.

An Environmental and Social Action Plan ("ESAP") has been developed and agreed with the Company to address the areas for improvement identified during the ESDD and carry out the necessary mitigation measures including development and implementation of the Environmental Management and Occupational Health & Safety Management Systems. The environmental and social performance of the Project and implementation of the ESAP will be monitored through annual E&S reports and site visits when deemed necessary.

Technical Cooperation and Grant Financing

Pre- Signing:

  • Feasibility Study to conduct a technical, financial, environmental and social due diligence. The cost of the assignment is EUR 200,000, financed by the Early Transition Countries Fund ("ETCF").

 Post-signing: 

  • Project Implementation Support to the Company for: (i) preparation of tender documents; (ii) preparation of design; (iii) assistance with tender; (iv) supervision of works and assistance with the supply contracts administration; (v) support in disbursement and reporting to the Bank. The estimated cost of this assignment is up to EUR 810,000, expected to be financed from an international donor or the EBRD Shareholder Special Fund ("SSF").
  • Promoting equal opportunities, energy-efficient consumption practices, and women's participation in climate policy. The estimated cost of the assignment is up to EUR 120,000, to be financed by the GCF.

Company Contact Information

Marian Brinza
office@cet-nord.md
+(373-231) 53-359
https://cet-nord.md/ro/
168, Stefan cel Mare street Balti, MD-3102 Republic of Moldova

PSD last updated

09 Dec 2021

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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