Energaz Financing

Location:

Turkey

Project number:

45081

Business sector:

Power and energy

Notice type:

Private

Environmental category:

B

Target board date:

04 Oct 2017

Status:

Signed

PSD disclosed:

07 Jun 2013

Translated version of this PSD: Turkish

Original version of PSD

Project Description

The EBRD is considering increasing its commitment to Enerya Gaz Dagitim A.S. ("Enerya") by TRY 100 million (EUR 24 million). EBRD's financing will be used by Enerya to extend its gas distribution operations to 18 new towns in 8 regions. The EBRD's original loan for USD 50 million was signed in October 2013.

The loan will be part of a TRY 200 million (EUR 48 million) financing to be provided alongside Garantibank (TRY 100 million - EUR 24 million).

Project Objectives

The objectives of the original loan have largely been achieved. The proposed transaction will enable the Company to add more subscribers to scale up its operations.

Transition Impact

The proposed extension will complement the transition impact of the existing transaction promoting green and integrated qualities by increasing the number of gas subscribers and encouraging fuel switching from less efficient, more expensive fuels like LPG, fuel oil and electricity used in Turkey.

Client Information

ENERYA GAZ DAGITIM AS

Enerya is a Turkish natural gas distribution company owned by two reputable shareholders: STFA of Turkey, a diversified conglomerate founded in 1938 that provides services in the construction and energy fields; and Partners Group of Switzerland, a global private markets investment manager.

EBRD Finance Summary

USD 86,006,315.00

Additional senior secured loan of up to TRY 100 million (EUR 24 million) to Enerya to be used for capex investments.

The loan is part of a wider financing package alongside a commercial bank, Garantibank, which will provide TRY 100 million (EUR 24 million) for capex investments and the refinancing of a short-term facility.

Total Project Cost

USD 336,006,315.00

The total extension project costs amount to TRY 200 million (EUR 48 million).

Environmental and Social Summary

The original project was categorised B and the environmental and social due diligence (ESDD) was carried out by independent consultants in 2013. The ESDD included a corporate EHSS review, an audit of the Company's selected facilities and operations, and an environmental and social analysis of the proposed project. EBRD also visited the company in May 2013.

The ESDD concluded that typical adverse environmental and social impacts that result from expansion of inner city networks and construction of new pressure control stations are limited and can be avoided or mitigated by adhering to good construction practises and generally recognized standards and guidelines. The main issues related to operations of Enerya were associated with potential gas leaks, emissions from heaters and pumps, noise and waste generation. The risk of leaks was controlled using a monitoring system which at the time covered only the city gates. A SCADA system covering all the network was put in place as part of the project. Seismic risk has been assessed by the Company and included in the designs.

The proposed operational change will not change the project category or the findings of the Environmental and Social Due Diligence (ESDD) undertaken in 2013.
At ESDD stage in 2013, the locations and specifications of the investment components were not known. Therefore, EBRD due diligence assessed the typical impacts that might result from standard construction activities to be carried out during the distribution network expansion. A corporate Environmental and Social Action Plan (ESAP) was developed requiring, among others, that Enerya to carry out environmental and social appraisals for non-routine components of their investments as
their annual investment programmes got approved by the authorities. An appraisal procedure has been developed by Enerya to set the appraisal process for future investments. These have not yet been carried out for planned 2017 and 2018 investments but completion of these assessments will be covenanted in the legal agreements.

Enerya has an integrated quality, environment, and health and safety management system which is comprehensive and appropriate to the company's issues and risks. The system is implemented in all facilities and networks where Enerya operate. Enerya is certified to ISO9001, ISO14001 and OHSAS18001.

Domestic use of gas is relatively new in the cities covered by Enerya and the company is carrying out a number of initiatives to increase the awareness of safety issues, including distribution of leaflets and educational visits to schools. Enerya advertises an emergency number for people to report suspected leaks. The emergency response office is staffed 24 hours. It has an IT system that tracks calls, and is linked to the customer database and the emergency response teams. The company is committed to getting a response team to an incident site within 15 minutes, and until now achieved 100 per cent compliance with that target.
Stakeholder engagement is considered adequate. Customers can contact the gas companies in each city by phone, email, or in writing, and Enerya commits to respond to any issues raised within 48 hours.

Based on the ESDD carried out in 2013, an ESAP was developed including among others, the need for further institutional strengthening and developing additional contractor management procedure as well as strengthening the grievance system. Overall the Company has been implementing the ESAP requirements and no significant environmental, health & safety or social issues have been reported or identified. The Bank will update the ESAP prior to signing based on current in-house ESDD.

The Company will continue to provide the Bank with annual environmental and social reports, including updates on the implementation of the ESAP. The Bank may also conduct monitoring visits, as required.

Technical Cooperation

None.

Company Contact Information

Elif Usluer
elif.usluer@enerya.com.tr
+90 533 727 6256
#çerenköy Mahallesi, Ye#ilvadi Sk. No:6, 34752 Ata#ehir/Istanbul, Turkey

 

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