Translated version of this PSD: Turkish
A senior loan of up to USD 60 million to Gurmat Elektrik Uretim A.S. ("Gurmat Elektrik" or the "Company") to finance the EFE-6, EFE-7 and EFE-8 geothermal power plants (GPPs) located in Aydin province, Turkey (the 'Project' or 'Efeler Extension Project') which will be a part of a financing package to be provided together with other lenders.
Support the development and construction of renewable power generation in Turkey.
The Project aims to contribute to the development of base load, indigenous energy resources in Turkey which are essential to support macro-economic stability in a sustainable manner to reduce Turkey's needs for energy imports.
The Project will target the 'Competitive' and 'Inclusive' transition qualities. The extension of the existing geothermal facility will further increase the amount of generation capacity in operation by the private sector and provide secure, baseload power to the Turkish system. The Bank will work with the Company to help the company ensure that women and men are able to equally access employment and career opportunities, and accede to the UN Women's Empowerment Principles (WEP), recognizing the Company adoption of international best practices and policies regarding equal opportunities.
GURMAT ELEKTRIK URETIM AS
Gurmat Elektrik is owned 85% by Mogan Enerji Yatirim Holding A.S. ("Mogan Enerji"), 0.56% by Gurenerji Elektrik Uretim Ltd. Sti. ("Gurenerji"), 4.72% by Guris Holding A.S. ("Guris Holding") and 4.72% by Guris Insaat ve Muhendislik A.S. ("Guris Construction", together with Mogan Enerji, Guris Holding and Guris Construction, the "Sponsors"). The remaining 5% of the Company is owned by Mr. Musfik Hamdi Yamanturk.
Gurmat Elektrik was established in 1999 to construct and operate a set of GPPs based on the Germencik geothermal field in Western Anatolia. Currently, Guris has Turkey's second largest GPP portfolio, which represents almost one-fifth of the country's total capacity.
Efeler Extension Project : Up to USD 60,000,000.
The Project is Category "A" in accordance with the EBRD E&S Policy (2014). The Project involves the expansion of the existing Bank financed (DTM 44596) Efeler Geothermal Power Plant ('Efeler GPP') with additional 3 GPP units (Efe-6, Efe-7 and Efe-8 Geothermal Power Plants (GPPs) as well as the associated boreholes, pipelines and transmission lines. The Project will increase the existing total operating capacities of Efeler GPP by 97.6 MWe, from 162.3 MWe to 259.9 MWe.
Due to the size, location and cumulative impacts, the Project requires an Environmental and Social Impact Assessment (ESIA) in accordance to the Bank's Environmental and Social Policy prior to Board consideration. The ESIA for the original project was publicly disclosed on 24 September 2014 and an extension of the Project disclosed on the 13th of November 2018. Additional due diligence was undertaken in 2019 following stakeholder concerns and additional updates on the Project and planned expansion as well as mitigation measures.
An independent consultant was retained to undertake an Environmental and Social Due Diligence (ESDD) of the Project and planned extensions. The ESDD confirmed that the Project’s existing and anticipated environmental and social risks and impacts have not materially changed since disclosure in November 2018, but the scrutiny on the industry in Turkey and challenges to geothermal operations have heightened. It also confirmed that the Efeler Extension Project will have no impacts on any protected areas, will not be associated with any resettlement, and is structured to comply with the Bank's Performance Requirements, National and IFC requirements. The project has been subject to a national Environmental Impact Assessment (EIA) procedure and permits have been granted by the Ministry of Environment and Urbanization (MoEU) for Efe-6, Efe-7 and Efe-8 Geothermal Power Plants (GPPs). The MoEU's approval of the Efe-8
EIA was challenged by a local NGO in Aydin in July 2017 in the local Administrative Court, which revoked the approval in September 2018. An appeal decision by the Chamber of the Council of State reversed the lower court's decision in December 2018, thus rendering the initial granting of the EIA approval valid and in effect while sending back the case to the lower court for re-examination and rendering of a further decision. With this Council of State decision, the Company can proceed with the construction of Efe-8 on the ground of the initial EIA approval however the approval needs to be reconfirmed by the Administrative Court. The Bank will continue to monitor this process.
The Company already operates five geothermal power plants with a combined capacity of 162.3 MWe, with the first plant commissioned in 2009. The Bank's due diligence and Project’s ESIA have taken account of the cumulative impacts and performance of these plants as well as the client's compliance with the original ESAP. The ESDD has confirmed that the Company have been implementing an EHS management system at the existing geothermal power plant sites in line with the national legislations and have had good experience with addressing EHS management. However, additional areas for improvement have been identified during the ESDD study and an updated Environmental and Social action plan (ESAP) has been developed to ensure that that the Project and current operations are in compliance with the Bank's Performance Requirements. Measures to mitigate environmental impacts during construction, operation, and in case of incidents such as leakage of geothermal fluids, are included in the design of the Project and relevant E&S documentation. A participatory stakeholder engagement will be established to oversee the project impacts. The Company will collaborate with the other Geothermal developers to manage the cumulative impacts in the long run as part of the Technical Cooperation Project being implemented in cooperation with Ministry of Environment and Urbanisation and the Bank.
The ESDD confirmed that while the Project applies satisfactory occupational health and safety measures, it needs to enhance the scope of its emergency response planning and fill gaps between current implementation of labour and working conditions and EBRD PR2. The following mitigation and management measures will be implemented: human resource procedures are to be streamlined and strengthened in respect of non-discrimination; a management plan for security personnel is to be developed in line with the Voluntary Principles on Security and Human Rights; and the employees' Grievance Redress Mechanism (GRM) and employees' representation are to be enhanced. The Company plans to increase gender diversity and representativeness of its Community Relations function and to raise gender awareness across its operations. Regular environmental and health and safety (EHS) and labour audits will be conducted during construction of Efe-8 to ensure compliance across the Company, contractors and the supply chain.
As per the 2018 ESIA addendum and confirmed by the 2019 ESA, land acquisition for the Project was completed on a willing-buyer/willing-seller basis, and no direct/indirect physical displacement or disruptions in livelihood have occurred. Compensation was assessed by the EBRD to have been satisfactory. Outstanding land acquisition for Efe-8's transmission line by the national power distribution company will be monitored by the Company for compliance with PR1 and PR5.
Operational impacts on agricultural production such as olives and figs will be analysed to avoid negative impact on livelihoods. A Chance Find Procedure will be put in place for management of the archaeological chance finds, particularly during the piping works for the Efe-8 GPP.
The Bank has engaged with the Ministry of Environment and Urbanization (MoEU) and initiated a Technical Cooperation project to undertake the Cumulative Impact Assessment of geothermal resources exploration and development in the geothermic areas to address the concerns of CSOs and standardise best practices for the sector. The Company agreed to cooperate with the MoEU, local authorities and other geothermal companies in mitigating the cumulative impacts which will be identified through the Cumulative Impact Assessment Study in the region. Overall this will enable EHS and social issues to be managed collectively in a similar manner for all operations and therefore reduce cumulative impacts. This TC is currently under way and will be completed by end 2019.
The GPP does not involve the combustion of fossil fuels, thus the power generation itself does not generate emissions. However, geothermal fluids contain non-condensable gases, of which the great majority (98%) is carbon dioxide (CO2) that need to be degassed as part of the process, thus leading to the release of CO2. The emission from the projects has decreased with time and the existing units are currently attaining emission factors of 0.61 tCO2e / MWh. The planned capacity expansion is estimated to emit around 0.56 tCO2e / MWh. The total emission from the Project is projected at around 425,000 tonnes CO2-e per annum, with total emission from the Gurmat-operated GPP plants will be around 1.315 million tonnes per annum, with an average emission factor of 0.62 tCO2e / MWh. Based on monitoring the existing Efeler GPPs’ NCG emissions and geological modeling of the reservoir, the NCGs and associated CO2 emissions are forecasted to significantly decrease over the lifetime of the Project. The Company is investigating methods to further reduce emission of non-condensable gases.
The emissions to air will also contain trace levels of hydrogen sulphide (H2S) - also a non- condensable gas. Whilst the H2S levels within the emissions to air are below regulatory threshold limits, the H2S emissions will continue to be monitored. Experience to date with existing geothermal power plants operated by Guris within the same area has been well managed; however, there have been a number of concerns raised by CSOs in the region as to geothermal operations. The Company will continue to monitor emissions from the Project as part of the ESAP implementation.
In order to manage the stakeholder concerns, an updated comprehensive SEP in English and Turkish, together with the ESA and ESAP, was posted in May 2019 on the Sponsor's website and June 2019 on the EBRD's website, outlining outreach activities to further enhance stakeholder engagement and E&S management and monitoring commitments that will be implemented throughout the lifetime of the Project. The Company intends to further engage with project affected people on the findings of the ESA and management measures comprised in the ESMP. The existing Project-level grievance redress mechanism (GRM) will be enhanced to cover all activities related to land acquisition activities and its public outreach strengthened in line with the EBRD's requirements. For this purpose, the Company has recruited an experienced Community Relations Manager. The Project will also publicly disclose in summary form its environmental and social performance on an annual basis, including its GHG emissions.
Following the ESIA disclosure and the Company will conduct disclosure meetings with affected communities in June and July 2019 and all concerns raised will be summarised and responded to for EBRD consideration.
The Company will report semi-annually on its E&S performance and compliance with the ESAP requirements during the construction phase, and thereafter on an annual basis. The Company will also publicly disclose annually a summary of its E&S performance, including its GHG emissions. A third-party E&S Audit will be conducted upon commissioning of Efe-8, and five years after Financial Close. The Lenders will jointly or independently conduct an annual supervision mission, and regularly monitor the permitting status of the Project and public opinion toward not only the Project but also the geothermal industry in Turkey.
There is an Environmental and Social Impact Assessment available for this project.
As agreed in 2016 under the previous financing the Bank has engaged with local authorities to develop a Cumulative Impact Assessment of Geothermal development in the geothermic areas to address some concerns of CSOs and develop best practice standards. Overall this will enable EHS and social issues to be managed in a similar manner for all operations and therefore reduce cumulative impacts. This Technical Cooperation is currently under way and will be completed in 2019.
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