Translated version of this PSD: Romanian
The EBRD is considering to provide a senior loan of RON 675 million (€152 million equivalent) to CEZ Distributie S.A. (“CEZ Distributie”), an electricity distribution company incorporated in Romania and operating in the south-western region of Romania. CEZ Distributie is 100 per cent owned by the CEZ Group in Czech Republic. The proceeds of the loan will be used to cover CEZ Distributie’s 2015-2016 investment programme in the distribution network aiming at reducing losses, improving efficiency and installing smart meters, and the restructuring of CEZ Distributie’s balance sheet in order to optimise its capital structure with the tariff methodology in place in Romania. The investment will allow the company to reduce its technical and commercial losses while improving its SAIDI and SAIFI operational quality indicators.
With this investment the Bank supports the implementation of smart metering in Romania together with new communication equipment that will contribute to improving the operation of the network. CEZ Distributie will be one of the Romanian electricity distribution companies to roll out such smart metering program, replacing 50 per cent of the meters by 2020. In addition the investment programme will contribute to setting new standards for business conduct in Romania since it will primarily aim at reducing technical and commercial losses, leading to CO2 emission savings of up to 285,000 tons per year.
CEZ Distributie S.A., a Joint Stock Company incorporated in Romania and responsible for the distribution of electricity in Romania’s south west. CEZ Distributie is fully owned by CEZ Group, an integrated electricity utility headquartered in Czech Republic and operating in central, south-eastern Europe and Turkey.
A senior loan of RON 675,000,000 (circa €152 million equivalent).
Total project costs RON 675,000,000 (circa €152 million equivalent).
Environmental and social categorisation, impact, and mitigation
1- Screening category and rational for classification
Categorised B (2008). Independent due diligence undertaken to date has confirmed that environmental and social impacts associated with the installation of smart meters and electricity grid reinforcement are likely to be site specific, readily identifiable and addressed through appropriate mitigation measures.
2- Information reviewed
Independent environmental and social due diligence (ESDD) is still ongoing and comprises field visit by the appointed consultant to selected project sites, reviewing the corporate environmental, health and safety management systems and human resources policies of the company, other environmental and social relevant documents and studies carried out by company to date and management discussions. This project summary document will be further updated upon the completion of the ESDD.
3- Environmental and social issues
Independent ESDD confirmed that CEZ Distribute has a good environmental, health, safety and security management systems and procedures and has the capacity to implement the Bank’s environmental and social performance requirements. Furthermore, the ESDD confirmed that the company is in compliance with the national and EU requirements and the investment programme will not have material impact on any Natura 2000 sites. Moreover, the company has an ongoing programme of GIS mapping of all high and medium voltage transmission lines. The completion of the GIS mapping by 2020, will allow for better environmental management of CEZ sites and identification of sensitive areas and receptors in the future from with Company operational sites.
Independent ESDD also confirmed that CEZ Distributie has good labour standards and is continuously implementing regional corporate and social responsibility programmes, which include external & internal communication and crisis management. Furthermore, a strong community engagement programme is implemented by CEZ Distribute and under a platform named “Energy for Wellbeing” including community interaction on education, health, environment, culture and infrastructure. The platform brought CEZ Romania in 2014 the “Best Corporatist Citizen” title in the frame of a Romanian competition called “Energy Oscars” and aimed at rewarding best practices in Romanian energy sector.
4- Environmental and social opportunities
The Project will benefit more than 1.4 million customers in Romania’s south west Romania by improving service provisions of power distribution to both residential and industrial customers with regard to reliability and accessibility.
5- Summary of environmental and social action plan
Independent ESDD identified number of areas requiring further strengthening of environmental, health and safety practices. This will be included in the Environmental and Social Action Plan (ESAP). Key actions, among others, are:
Further training of staff on environmental, health and safety issues: this will include a review of staffing and resources allocated for coordination of environmental issues and environmentally-integrated management system aspects of CEZ Distributie.
Further identification and then mapping of transmission line sections crossing Natura 2000 sites and other sensitive areas/receptors and based on this the development of procedures and guidelines for managing works in such areas.
Developing of internal guidelines for biodiversity mitigation measures for implementation at all interventions performed on infrastructure located in Natura 2000 and other natural (non-protected) areas including the list of mitigation measures as obligation for implementation on case by case basis by contractors.
Development of guidelines and approach to cultural heritage chance finds embracing relevant operational procedures of CEZ as deemed applicable.
Non Technical Summary (NTS) – English Version and Romanian Version
Stakeholder Engagement plan (SEP) English version and Romanian Version
The Project financed Distributie Energie Oltenia SA (former CEZ Distributie S.A. - the “Company”), an electricity distribution company incorporated in Romania, to carry out critical infrastructure investments in the country’s distribution grid. The bank's financing supported the roll out of the first distribution network automation and digitalization programme, starting with the automation and digitalization of transformer stations and their integration in SCADA systems, automation of medium voltage networks by integrating remote control systems and smart metering through Smart systems in the low voltage network.
The successful implementation of the automation and digitalization programme provided a baseline for other distribution companies to follow suit making the distribution grid more efficient and reliable to customers. The Project hence met its transition impact of (i) demonstrating of new products and new replicable behaviour and (ii) setting standards for corporate governance and business conduct. The Bank’s financing facilitated the Company’s roll-out of smart meters programme and the upgrade and reinforcement of its distribution network, resulting in more efficient and reliable energy supply. The investment significantly reduced the Company’s grid losses and improved the quality and efficiency of its distribution services to its customers.
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