Energodar District Heating

Project Description

The EBRD is considering providing a senior loan to Energodar TeploVodocanal, a combined water and district heating utility company wholly-owned by the city of Energodar, to finance priority capital expenditure programmes aimed at reducing costs and increasing the quality of energy supply for the population. The project will include the transfer of connection of an area presently served by a local thermal power plant to the nuclear power plant, which already serves the remainder of the city.

Transition Impact

Key reform elements include a shift to a modern demand driven district heating system based on individual substations with metered consumption, meter-based billing and a cost and consumption reflective tariff methodology (elimination of subsidies).

The Client

The combined water and district heating company TeploVodocanal, a municipal utility wholly-owned by the city of Energodar.
The city will provide a financial guarantee in support of the project.

EBRD Finance

EUR 8 million

Project Cost

EUR 9.9 million
(Funds not provided by EBRD are expected to be funded by donors under technical cooperation funds and local contributions)

Environmental Impact

Screened B/1. An environmental analysis of the proposed investment and an environmental, health and safety audit of the existing operations and facilities of the Client were conducted by ÅF, an independent engineering and consulting company, in August 2008. The environmental due diligence has concluded that, in general, the investment programme will have mainly beneficial impacts on the local environment. The positive impacts of the Project will arise from the reduction in the disruption rate in heat network as well as from energy savings. Currently a key environmental issue related to the district heating activity is the poor energy efficiency and high water consumption.

The Project may cause some localised, short term environmental impacts and occupational health risks during the construction phase, related to:

(i) inappropriate disposal of excavated materials, construction debris, and small quantities of hazardous wastes and materials related to construction activities;

(ii) damage caused by contractors during construction activities; and

(iii) nuisance during construction (noise, dust, and traffic disruption).

In order to minimise impacts during implementation of immediate investments, contractors will be responsible, under the clauses of the bidding documents, for keeping work sites pollution-free, returning sites to their original conditions, and minimising dust, noise and other work-related nuisances. They will also be responsible for notification of the discovery of, or any problem related to, previously unknown historical sites. These impacts will be also managed through an Environmental Management Plan currently being agreed with the Company.

The due diligence has also identified that the Company has allocated key EHS responsibilities. The Company’s EHS performance and practices are satisfactory considering the planned mitigation measures, monitoring, control and documenting procedures. The company keeps records of its emissions, wastewater discharges and waste handling. The emissions and waste amounts are reported to the authorities continuously and special reports on generation of water and the wastewater treatment plant performance are delivered periodically.

New employees receive a minimum 30 hours of training covering information about the company, technical information, law and regulations, responsibilities, first aid, electrical safety, fire safety, etc. The employees are trained annually on safety matters and specific training is arranged when needed.

The Company will need to comply with applicable Ukrainian national public consultation requirements as well as with EBRD requirements for local disclosure of the summary of environmental impacts prior to the Final Review of the project. The Company shall also comply with Ukrainian national environmental, health, safety and labour regulations and standards and with pertinent EU standards. The Company shall submit to the Bank an Annual Environmental Report satisfactory to the Bank.

Technical Cooperation

A total of EUR 280,000 of TC assistance is required to prepare, design and implement the Project. It will include:

• Technical and Environmental Due Diligence (EUR 30,000) – financed from the Bank’s own resources;
   
• Restatement and Audit Services for TeploVodocanal (EUR 50,000) – financed from the Bank’s own resources;
   
• Procurement Support to the Project Implementation Unit (the “PIU”), Project Engineer and Supervisor of Implementation Works (EUR 200,000).

Donors for the design and implementation phase assignments are yet to be identified.

 

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