Project Description
The provision of a senior loan of up to US$ 50 million (in US$ and/or KZT equivalent) to Shokpar Wind Power Station LLP for the development, construction, and operation of a wind power plant with an installed capacity of 100MW located in Sarysu district of Zhambyl region.
Project Objectives
The project will support Kazakhstan in its objective to increase the share of renewable energy in the energy mix, contribute to reducing Kazakhstan's carbon intensity, and address the country's increasing electricity demand.
Transition Impact
ETI score: 70
The Transition Impact arises from the Green and Inclusive qualities:
Green - the project entails the addition of 100MW of RES capacity added to Kazakhstan's generation profile.
Inclusive - the project will contribute to Gender inclusion and promote access to employment and entrepreneurship opportunities for women in Kazakhstan's renewables sector.
Client Information
SHOKPAR WIND POWER STATION LLP
Shokpar Wind Power Station LLP a special purpose entity incorporated in the Republic of Kazakhstan to implement the project, will act as the borrower.
The borrower will be jointly owned by China Power International Holding Ltd. (63 per cent) and Visor International DMCC (37 per cent). China Power International Holding Ltd. is a Chinese state-owned power utility 100 per cent owned by the State Power Investment Corporation Limited. Visor International DMCC is a private investment holding firm founded by a group of Kazakh investment bankers.
EBRD Finance Summary
USD 47,071,908.49
A senior loan of up to US$ 50 million (in US$ and/or KZT equivalent) to Shokpar Wind Power Station LLP. The EBRD financing is anticipated to be accompanied by a CTF and/or GCF loan of up to US$ 10 million, and another IFI/DFI loan of up to US$ 40 million.
Total Project Cost
USD 123,817,279.23
US$ 135.6 million.
Additionality
The EBRD is providing a long-term loan with a tenor that is scarcely available on the commercial market in Kazakhstan, especially for structured project finance transactions of this nature. Under the current circumstances, long-term local currency financing is not readily available in Kazakhstan. Moreover, the EBRD's good track record in the country provides comfort to the sponsor, enabling its entry into the Kazakh market. The Bank is also additional in terms of requiring adherence to EHS aspects and the EBRD PRs, which are stricter than local requirements. Through the project, the Bank will support policy and regulatory work to promote inclusion opportunities in the renewable energy sector.
Environmental and Social Summary
Categorised B (ESP 2019). The project entails a development, construction, and operation of a wind power plant ("WPP") with an installed capacity of 100MW located in Sarysu district of Zhambyl region (the "Project"). It is located in the adjacent plot to the existing Zhanatas wind power plant owned by the Shareholders, and will be connected to the same Opornaya substation (located 15 km from the WPP site) via a 70 km 220 kV transmission line. The project site is spread on a 164-hectare (ha) area comprising twenty-two (22) Envision (EN-156) wind turbine generators, which will be placed on the northern slope of the Ulken Aktau Ridge along the Karatau-Zhanatas R-43 highway.
The project is associated with potential environmental and social impacts and risks, such as habitats and supply chain and therefore was subject to external Environmental and Social Due Diligence ("ESDD") by the Bank. National EIA was approved in early 2022.
An independent consultant was retained by lenders and undertook an Environmental and Social Due Diligence ("ESDD") including a gap analysis of the client's EIA, assessment of cumulative impacts from the Project and the associated infrastructure, community health and safety, livelihood impacts, gender and labour risks during construction and operation, as well as supply chain risks associated with the sector. The ESDD has been undertaken jointly with other co-lender Asian Infrastructure Investment Bank ("AIIB").
The Bank is providing financing into the Project after commercial operation date ("COD") where the main construction and delivery of wind turbines will be finished. The Client used the wind turbine generators manufactured by Envision, a Chinese multinational company headquartered in Shanghai. Envision has a total of 10 wind turbine manufacturing plants located in Jiangsu, Shandong, Hebei, Inner Mongolia, Anhui, Liaoning, Qinghai, Yunnan and Jilin Provinces in China. Due to the high-risk profile of the country, an enhanced supply chain due diligence was conducted during Bank's ESDD while the construction phase was ongoing. An independent labour auditing firm was procured to assess labour and working conditions at the Envision production and assembly facility used for the Project. The audited facility included Bayannaoer Economic and Technological Development Zone, Inner Mongolia Autonomous Region, China. Since the Bank to disburse the funds post construction, the risk of supply chain non-compliances may remain during the operations phase and warranty period of the constructed wind turbines. Therefore, the Project was structured to ring fence the audited production facility in Inner Mongolia region of China and seven core sub-suppliers that were risk screened to service the project's supply needs during the operations.
No forced and child labour was identified in the project supply chain during the supply chain due diligence and labour audits ("SCDD"). Envision implements a comprehensive HR policy and a Supplier Code of Conduct, covering strict zero-tolerance policies for forced labour and child labour, as well as wage standards, health and safety standards, among other provisions. Review of these documents demonstrated that Envision's policies are generally in line with the Bank requirements for supply chains. Further improvements are required with the policy implementation through management systems and compliance assurance. The outcomes of the labour audit were consistent with the outcomes of another EBRD financed wind project (Bash and Dzhankeldy, signed in December 2022) where Envision was supplying the wind turbines. The labour audit conducted for Shokpar WPP project, produced a number of findings and recommendations, which are being addressed by both our Client and Envision through a corrective action plan ("CAP"), follow up actions, monitoring and reporting of labour risks in their supply chains to the Borrower and the Bank. The enhanced mitigation measures to address supply chain risks to be further translated into ESAP requirements, supplemented by Commitment Letters, and reinforced via legal rider for the Facilities Agreement, which will require the Borrower to cascade the relevant provisions to the O&M agreement. Should the project require changing any of these ring-fenced and screened suppliers, Envision will inform the Borrower on supplier change details, conduct a detailed assessment of any new supplier selected and obtain the Borrower's prior written approval before executing contractual agreement with the new supplier.
The Shokpar WPP site is not located in environmentally and/or socially sensitive areas, and there are no protected or designated nature reserves within a 30-km radius of the Project.
The ESDD included detailed review of the potential impacts on avifauna and need for mitigation measures based on a bird collision risk assessment, undertaken in consultations with international bird experts. Biodiversity baseline surveys were conducted within the 1500 ha site allocated for the WPP and within a 2km buffer around the site for some ornithology receptors and included information on all species present at the site, including red lists species. Further habitat survey of the Shokpar WPP using the relevant EUNIS classifications will be undertaken including Critical Habitat Assessment. A project Biodiversity Management Plan will be produced outlining all the impact mitigation, management, and post construction monitoring protocols at Shokpar WPP facility, in order to benefit the species' conservation and to demonstrate no net loss for the species concerned, through minimisation of habitat fragmentation, creation of biological corridors, restoration of habitats during operations and/or after operations and implementation of biodiversity offsets.
Based on the external ESDD, no significant social impacts were identified in relation to the project implementation. The land secured for the wind farm is remote and away from the residential areas. According to stakeholder consultations conducted so far, there is a general support for the Project and no known objections have been reported. Consultations included engagements with the local authorities and the families of local herders who are using the land within and around the project footprint. Based on availability and accessibility of grazing land, the ESDD determined that there would be no need for the development of a livelihood restoration plan. Any potential disturbances during construction phase and during operations are being monitored and mitigated by the Company through their existing facilities and based on the ongoing stakeholder engagement process detailed in the Stakeholder Engagement Plan ("SEP") and grievance procedure developed for the Project. All required archaeological surveys have been conducted and formal archaeological expertise conclusion obtained.
Based on this ESDD, including SCDD, a detailed ESAP, containing both corporate and project-specific requirements have been developed and agreed with the Company and among the Lenders. Other than biodiversity and social mitigation measures described above, it includes, inter alia, develop an integrated ESMS covering the entire facility and project phases, as well as an E&S Policy, monitoring and reporting. The ESAP includes development of Operation Environmental and Social Management and Monitoring Plan ("O-ESMMP"), corporate social responsibility programme, dedicated E&S resources at the project level, development of corporate E&S management systems, operational Health and Safety measures, contractor and traffic management, ongoing monitoring of supply chain risks, community and stakeholder engagement.
The Company will be required to further develop cumulative assessment and develop a robust reporting and disclosure approach to ESG information, notably bird and bat studies and communication with local community.
A Non Technical Summary ("NTS") is available for the Project and will be disclosed on the Company website before the end of month. The Company are committed to cascading all mitigation measures from the ESAP and topic-specific requirements into all relevant Operational Environmental Management Plans. The Bank will be monitoring the implementation of the Project and ESAP through annual environmental and social reporting and site visits.
Technical Cooperation and Grant Financing
n/a
Company Contact Information
Nauryzbek Zhumagazin
info@sarysuwpp.kz
+7 727 355 8844
+7 727 355 8833
https://sarysuwpp.kz
Republic of Kazakhstan, Zhambyl region, Zhanatas, Sarysy microdistrict 1, 2-4.
Implementation summary
PSD last updated
15 May 2023
Understanding Transition
Further information regarding the EBRD’s approach to measuring transition impact is available here.
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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.
