Long term financing for existing client VEZ Svoghe AD in the context of the company's acquisition by an experienced renewable energy developer. The proceeds of the loan will be used to refinance the existing EBRD loan and provide additional funds to enable the sponsor to develop new greenfield renewable energy projects (wind or solar) in countries where the EBRD invests, of a minimum amount equivalent to the EBRD loan amount.
The EBRD loan will support the sponsor, an experienced international renewable operator to expand its activities in Bulgaria and enable the development and financing of its renewable energy pipeline in Central and Southeast Europe to be constructed over the next four years.
ETI score: 60
The project's transition impact stems from increasing the competitiveness of the borrower via new operational approaches that will have a significant effect on the efficiency of client operations ("competitive" quality). The transaction will also enable the sponsor to invest in new renewable energy projects (wind or solar) in countries where the EBRD invests ("green" quality).
VEZ SVOGHE AD
VEZ Svoghe AD, a Bulgarian company owns and operates a portfolio of five small hydro power plants with a total installed capacity of 15.5MW along the river Iskar.
EBRD Finance Summary
Up to EUR 17.6 million of senior secured debt to be provided to VEZ Svoghe AD.
Total Project Cost
EBRD financing will be part of a larger financing package, co-financed by a commercial lender on a parallel basis. Total financing will be for the amount of up to EUR 28 million, where the parallel lender will provide up to EUR 10.5 million.
The Bank's loan will provide long-term project financing with a structure, which includes a significant portion of merchant revenues and as such, is not typically available on the market. The project will also mobilise additional commercial funding to be provided by a local parallel financing bank.
Environmental and Social Summary
The Project has been Categorised B in line with the 2019 ESP: the small hydro plants are known to the EBRD under the management of the Borrower and EBRD has appointed independent consultants to monitor the project implementation arrangements and operational performance, most recently in 2018. E&S monitoring reports have confirmed that the assets were operating in line with EBRD's Performance Requirements with some minor recommendations to be addressed to ensure compliance with national permitting requirements.
Under the new transaction, the requirements for project monitoring and reporting will be increased to ensure good international practice is met as stipulated by the more recent iterations of EBRD's ESP and associated guidance notes for the hydropower sector.
In addition to the monitoring reports commissioned by EBRD, the Borrower has provided biodiversity monitoring reports, which indicate that measures to mitigate impacts on aquatic biodiversity have been effective. Furthermore, the Sponsor has undertaken pre-acquisition technical due diligence which confirmed the assets are operating in line with national E&S permit conditions with some recommendations for E&S improvements in the operational regime.
As no new construction activities are planned as part of this transaction, the focus on operational optimisation and E&S improvement is achievable with a commitment to good E&S stewardship. An E&S Acton Plan has been developed and includes measures to implement all existing E&S recommendations in a timely manner and to undertake a detailed post-acquisition review of the operations against EBRD's Good Practice Note for small-HPPs.
In addition, the company is committed to reviewing corporate level E&S policies and developing procedures to bring all exist portfolio assets in line with EBRD's requirements and to structure any potential future projects to meet the Performance Requirements.
Technical Cooperation and Grant Financing
Company Contact Information
PSD last updated
19 Mar 2021
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Environmental and Social Policy (ESP)
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More information on the EBRD’s practices in this regard is set out in the ESP.
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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 firstname.lastname@example.org to get guidance and more information on IPAM and how to submit a request.