Chernivtsi District Heating Project

Location:

Ukraine

Project number:

47359

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

09 Dec 2015

Status:

Signed

PSD disclosed:

13 Aug 2015

Translated version of this PSD: Ukrainian

Project Description

The EBRD is providing a loan to the district heating utility Municipal Communal Enterprise “Chernivtsiteplokomunenergo” (the “Company”), operating in the City of Chernivtsi (the “City”) to finance the installation of individual heating sub-stations, biofuel boilers, network replacement with pre-insulated pipes,  modernisation of boilers and control systems, and the installation of monitoring and dispatching system in the City (the “Project”). The project aims at significantly improving the energy efficiency, reducing energy losses, gas and electricity consumption and improving the quality of heat and hot water supply services in the City.

Transition Impact

The Project is part of an Integrated Approach to Reform in the Ukrainian District Heating Sector that sets out specific transition objectives for the sector which, by their nature, would benefit from a multi-project and strategic approach, to create a synergy between priority investments, technical cooperation, and sector policy dialogue. The transition impact of the project is expected to derive from:

Framework for markets: The Project will support a tariff setting methodology development and adoption at the National Utility Tariff Regulator level with a view to ensuring: (i)  full operating cost recovery and cost control; (ii) full investment cost recovery based on the investment programme assessment to be performed by the National Utility Tariff Regulator and (iii) improved revenue predictability and planning through a process of formalised, regular, transparent and timely adjustment of rates. The City and the Company will enter into a Public Service Contract, which will clearly define the City and the Company’s rights and obligations regarding the district heating services provision and capital improvements including the tariff setting rules and policy. The demand-side measures proposed by the project will help the Company increase its consumption-based billing and further improve revenue collection.

Demonstration of successful restructuring: Through physical investments and commercialisation resulting from implementation of the Corporate Development Programme, the project will improve the operational and financial performance of the Company and will have a significant demonstration effect for other cities and utilities in Ukraine concerning ways to improve energy efficiency of district heating operations and reduce losses and costs.

Energy Efficiency: Through investment programme implementation the project is expected to result in significant energy efficiency gains as well as enable better energy management at the building level, thereby providing incentives for energy-savings by end-users.

The Client

Municipal Communal Enterprise “Chernivtsiteplokomunenergo”, a communal district heating utility operating in the City of Chernivtsi and wholly owned by the City of Chernivtsi.

EBRD Finance

€ 7 million EBRD loan to the Company, and € 3 million from the Clean Technology Fund (CTF), both secured by a municipal guarantee of the City.

The project is expected to be co-financed by a grant of up to € 4 million from the Eastern Europe Energy Efficiency and Environment Partnership (E5P).

The project is expected to be co-financed by a local contribution of up to € 2 million.

Project Cost

Up to € 16.9 million
 

Environmental and social categorisation, impact, and mitigation
 

The project has been categorised B in accordance with EBRD's 2008 Environmental and Social Policy. The priority investments into the rehabilitation and modernisation of the district heating infrastructure are expected to bring environmental and social benefits associated with the overall improvement in the quality of heating and hot water services in the City, improved energy efficiency, reduction in fuel and electricity consumption, heat and water losses, and lower air emissions.

The due diligence is on-going and includes a corporate review of the Company’s corporate environmental, health and safety and social management capabilities and procedures in relation to its own workforce and construction contractors, and an analysis of the environmental and social impacts and benefits of the proposed priority investment programme to establish the level of the project's compliance with EBRD's Performance Requirements (PRs). Any adverse impacts are expected to be limited to short-term environmental, health and safety issues arising from construction works which can be adequately mitigated by taking environmental protection measures into consideration in construction planning and work practices.

An Environmental and Social Action Plan (ESAP), containing mitigation measures for identified issues along with a framework for the provision of information to stakeholders is expected to be developed and agreed with the Company. The Company will need to implement the ESAP, provide timely information to stakeholders affected by the Project and submit annual environmental and social reports to the Bank.

Technical Cooperation

Pre-signing

  • Feasibility Study. The total cost for the assignment was € 180,000 financed  under the Ukraine District Heating Project Preparation Framework by the Government of Sweden;
  • IFRS audit. The estimated total cost for the assignment is € 20,000, proposed to be financed by the Bank’s own resources;

Post-signing

  • Corporate Development Programme to improve financial and operational performance of the Company. The estimated total cost for the assignment is € 250,000, proposed to be financed by a bilateral or multilateral donor or the EBRD Shareholder Special Fund (“SSF”);
  • Project Implementation Support covering procurement advisory services, implementation support and contract supervision. The estimated total cost for the assignment is € 450,000, proposed to be financed by a bilateral or multilateral donor or the SSF.

Company Contact

Mr. Oleksandr Melenchuk, Director

Tel: +380 3722 41135

Fax: +380 3722 47844

E-mail: chernivtsitke@gmail.com

 

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Public Information Policy (PIP)

The PIP 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. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.