A sovereign guaranteed loan of up to EUR 300 million, composed of tranches of EUR 200 million and EUR 100 million, in favour of Javno preduzece "Elektroprivreda Srbije" Beograd ("EPS," or the "Company"), a fully state-owned power utility in Serbia. Loan proceeds will be used to support the Company's liquidity needs required to maintain stability of the national electricity sector.
The proposed loan addresses an emergency liquidity gap by providing financial support to EPS, thus helping the Company manage an unprecedented spike in electricity import prices and operational difficulties.
EBRD loan proceeds are to be ring-fenced from the Company's fossil fuel assets.
The investment will include the development of a credible and tangible de-carbonisation strategy and action plan for the Company, including a coal phase out strategy by 2050, with the aim to help Serbia enhance its long-term security of power supply and create an enabling environment for the transition to clean energy.
The investment builds on the EBRD's long engagement with the Company and will provide a further push to the Company's prolonged corporate reform programme, with the aim to strengthen its corporate governance and management as well as build opportunities for re-skilling the workforce affected by the green economy transition.
ETI score: 62
Transition impact will be derived from Resilient and Inclusive qualities.
Resilient: The Project will increase the resilience of the energy sector to systemic shocks and the ongoing electricity market crises.
Inclusive: The Project will enhance the capacity of EPS to actively contribute to a 'just' transition by promoting the reskilling of its workforce affected by the green economy transition and by strengthening its HR function.
JP EPS BEOGRAD
Name: Javno preduzece "Elektroprivreda Srbije" Beograd
EPS is a vertically integrated power and mining utility 100% owned by the Republic of Serbia. EPS' operations consist of the generation and supply of electricity. The Company usually provides around 90% of the entire domestic production.
EBRD Finance Summary
Total Project Cost
The Bank's additionality stems from:
- offering financing at terms and conditions which are not available from commercial sources;
- supporting EPS to enhance its climate corporate governance and develop a decarbonisation roadmap;
- supporting the reskilling of EPS' workforce affected by the green economy transition;
- helping the Company achieve higher gender inclusion standards.
Environmental and Social Summary
Categorised B (2019 Environmental and Social Policy). The liquidity support element of this transaction has limited direct environmental or social impacts and due diligence for this component will be carried out in-house via questionnaires and a review of reporting for previous EPS projects. EPS' environmental and social performance is well known to the Bank as, under the existing Environmental and Social Action Plan (ESAP), it is required to carry out three-yearly environmental and social audits of all its operations, with the next audits due in 2023. The majority of items under the existing ESAP have been implemented however some relating to the organisation of Environment, Health, and Safety management have been delayed by the lack of progress on the corporate restructuring of the Company. EPS faces significant environmental challenges, including issues related to air emissions, greenhouse gas emissions and occupational health and safety, largely linked to the age and condition of its plant and equipment.
EBRD will require EPS to develop and adopt a credible decarbonisation plan by the end of 2025 (to be aligned with Serbia's National Energy and Climate Plans (NECP) and national strategic documents), which will include targets and key performance indicators with specific timeframes, including a coal phase out strategy by 2050. The strategy should include tangible actions, clear timelines and an indication of funding sources and affordability. The transaction does not invest in fossil-fuel related physical assets (capex), and is expected to be consistent with the Nationally Determined Contributions (NDC) based on the requirement of the EPS decarbonisation strategy being in line with national ambitions. EBRD loan proceeds are to be ring-fenced from fossil fuel assets and operations. The adaptation assessment will look at climate risk at major asset locations, as EPS has been exposed to significant flooding events, and reduced hydrological availability in the past.
EBRD will prepare an updated ESAP, to be agreed with the Company. EPS will also prepare and disclose a non-technical summary that includes detail of the transaction and summarises
Technical Cooperation and Grant Financing
Technical assistance will be provided for the purposes of:
- Supporting the preparation of a de-carbonisation strategy and action plan, aligned with the National Energy and Climate Plan and other strategic documents, that would ensure security of supply and facilitate green energy sector transition;
- Helping with the implementation of climate risk reporting in accordance with recommendations of the Task Force on Climate-related Financial Disclosures;
- Supporting the design of a Corporate Development Programme in line with the company reforms commitment;
- Addressing human capital challenges.
Company Contact Information
Javno preduzece "Elektroprivreda Srbije" Beograd
Balkanska 13 11000 Beograd
PSD last updated
10 Feb 2023
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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).
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