The EBRD is considering lending €12 million to Tetkron for the rehabilitation and modernisation of the District Heating network in Brasov City. The Bank’s investment will be used for
(i) installation of individual heating substations, at the level of each block of apartments
(ii) conversion of the existing distribution system from four-pipes to two-pipes, and
(iii) rehabilitation of the transmission network and construction of a by-pass in the north area of the City.
The Project will focus on enhancing the reliability and quality of District Heating services, reducing network losses, and increasing efficiency. The Project is expected to result in the Company regaining and expanding its customer base.
The Project is expected to result in the following transition impacts:
- Restructuring the municipal District Heating provision. Creating demonstration effects for municipal companies, which supply some 4 million people in nearly 70 urban centres of the country.
- Energy efficiency savings. Through physical investments in the transmission network, the Project aims to decrease the losses (estimated at 40 per cent) in the district heating system.
- Setting standards for corporate governance and business conduct. Enabling the Company to improve management through the introduction of a Financial Improvement and Operational Programme (FOPIP).
- Transfer and dispersion of skills. The involvement of international consultants will allow relevant employees of the Company to tap international financial, managerial, procurement and engineering expertise.
Tetkron was created in August 2010 and currently distributes heat to 17,000 residential customers in Brasov under a 20-year operating lease contract with the City. The Municipality directly owns 98 per cent of the Company and 2 per cent through its subsidiary RIAL, a company managing the public patrimony on the City’s behalf.
Senior loan up to €12 million.
Up to €15.23 million.
Categorised B. The due diligence of the Project will include an environmental and social analysis of the proposed investment and an environmental, health and safety audit of the existing operations and facilities of the Company. The Project is expected to bring about environmental improvements due to potential reduction in loss of water and heat. The Project might also be associated with temporary impacts such as increased noise and dust levels, generation and disposal of construction waste and wastewater during the construction phase. There might also be some disruptions of supply of heat and hot water to the community and restricted access to the residential areas during the excavation and pipe replacement works. The ESDD will need to be finalised and an Environmental and Social Action Plan agreed prior to the Final Review of the Project.
All TC assignments are proposed to be non-reimbursable. A total of €879,500 of TC assistance is required to design and implement the project. It will include:
- Technical/Economic and Environmental/Social Feasibility Study (€179,500)
- Financial and Operational Performance Improvement Programme (€300,000)
- Project Implementation Support (€300,000)
- Reform of the DH subsidy framework (€100,000)
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